Thursday, October 26, 2017

Defining poverty

According to the World Bank, if you're living on $1.90 a day or less, you're living in extreme poverty.
The 767 million people in that category have $1.90 a day or less in purchasing power to fulfill their daily needs.
Most of that money goes for food – only it may not be enough to purchase nutritious food or to stave off hunger. Hundreds of millions of the extreme poor are malnourished.
Their housing may be of low quality. And they may not have enough money for school fees (primary education isn't always free) or health-care expenses.
Millions of the extremely poor live in the world's low-income countries. But here's a surprising fact: Well over half of the extremely poor live in middle income countries like India, Nigeria and China.
And here's another point to consider: You can have more than $1.90 a day to spend on the basic necessities and still live in relative poverty.
As the World Bank puts it in a poverty FAQ: "Not surprisingly, richer countries tend to have higher poverty lines, while poorer countries have lower poverty lines."
That's why the World Bank has come up with two new "poverty line" figures for the world's middle-income countries: $3.20 a day for lower middle-income nations (like Egypt, India and the Philippines) and $5.50 a day for upper middle-income nations (like Brazil, Jamaica and South Africa).
Of course, it's natural to be a bit befuddled about the meaning of these new figures.
"The challenge the World Bank has is to make sure people don't get confused," says Homi Kharas, senior fellow and co-director of the Global Economy and Development Program at the Brookings Institution.
In a nutshell, there's extreme poverty ... and just plain poverty.
"If you're living in shantytown slums around Lima with no basic services and scraping to get basic subsistence, you would say, 'Yeah, I'm poor,' — even though the World Bank might measure your income at $4 a day," says Justin Sandefur, a senior fellow at the Center for Global Development.

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