Working Paper: NBER ID: w26211
Authors: Martin Ravallion
Abstract: The paper critically assesses prevailing measures of global poverty. A welfarist interpretation of global poverty lines is augmented by the idea of normative functionings, the cost of which varies across countries. In this light, current absolute measures are seen to ignore important social effects on welfare, while popular strongly-relative measures ignore absolute levels of living. It is argued that a new hybrid measure is called for, combining absolute and weakly-relative measures consistent with how national lines vary across countries. Illustrative calculations indicate that we are seeing a falling incidence of poverty globally over the last 30 years. This is mainly due to lower absolute poverty counts in the developing world. While fewer people are poor by the global absolute standard, more are poor by the country-specific relative standard. The vast bulk of poverty, both absolute and relative, is now found in the developing world.
Keywords: No keywords provided
JEL Codes: I32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| current absolute measures of poverty ignore essential social effects on welfare (I32) | economic welfare (D69) |
| popular relative measures neglect absolute living standards (I31) | economic welfare (D69) |
| hybrid measure (combining absolute and weakly relative measures) (C52) | economic welfare (D69) |
| incidence of poverty globally has been decreasing (F63) | absolute poverty counts in developing countries (I32) |
| fewer people are poor by the global absolute standard (I32) | relative standards of poverty (I32) |
| poverty measures directly influence perceptions of economic welfare (I32) | social inclusion (O35) |