Currently, poverty is considered apparent when someone lives on less than $1.25 a day, but some question the reliability of this simplistic measurement. Therefore, the World Bank has announced that a new commission will propose revisions to the International Poverty Line to account for the many components of poverty in every country.

It turns out that the way we have been thinking about poverty is in over-generalized terms. When the United Nations announced its post-2015 Sustainable Development Goals, first on the list was the eradication of poverty “in all forms.” The notion that global poverty is multi-faceted is becoming universally accepted, and is acknowledged by the Bank’s chief economist, Kaushik Basu, who said, “The Global Commission will advise us on other dimensions of poverty that the Bank should collect data on, track, analyze and make available to policymakers for evidence-based decisions.”

A more data-driven reason for revising the way we measure poverty comes from a 2011 price survey from the International Comparison Program, which analyzes economic activity and poverty in almost every country. But evaluating the data gets complicated; depending on how the data is used, the results vary greatly, showing either a dramatic decrease in poverty or little decrease. Prices and exchange rates are changing, so the $1.25 a day standard must account for this.

Another problem with the current International Poverty Line occurs when a country’s poverty level decreases; it can be dropped from the list of countries averaged to set the IPL, resulting in a skewed measurement of progress. In addition, economic comparisons among countries include the exchange of all goods, while assessing only some goods is significant for impoverished communities.

The commission advising the Bank will consist of 24 leading international economists, and the report will be finished by April 2016. The World Bank hopes that a revised IPL will increase the possibility of attaining its two goals; the first goal is to bring the number of impoverished people to less than 3 percent of the global population by 2030, and the second is to increase per capita income of the poorest 40 percent of each country’s population.

Alterations in the International Poverty Line will change the way we define poverty in the first place, impacting philanthropy everywhere. Basu said, “We expect the Commission report to be influential not only for our own work on poverty but also in shaping global research and policymaking on this most important challenge of our times.”

– Jordan Reabold

Sources: Devpolicy, World Bank 1, World Bank 2
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