World Bank taking wider view of poverty reduction goal

by Steven Langdon

There has been controversy for some years over the “Poverty Line” approach of the World Bank to analyzing poverty levels in poorer countries.  Some critics have argued that many items included in the basket of goods/services measured to assess income levels country-by-country are not consumed by the poor — and that poverty line changes should be based on prices of only those goods that the poor do consume.  Other critics have stressed that such public goods as basic education are left out of comparative consumption measures.

Dhiraj Sharma has now written an article for the Brookings Institute in the U.S. that reviews such critiques and explains how the World Bank has been broadening and deepening its statistical analysis of poverty reduction. (“Why the World Bank is taking a wide-angle view of poverty,” November 14, 2018, brookings.edu)

While the Bank’s conventional approach suggests 10% of the world’s population lives below the poverty line (with particularly high levels in Sub-Saharan Africa,)  including educational and health public goods in the analysis would increase the level to over 18%, Sharma notes.  At the same time,  the Bank has been developing a measure of relative poverty — and that would suggest one third of the world’s population is poor.

As noted in a previous post,  the Bank has developed a Human Capital Index to capture educational and health conditions amongst countries and how they contribute to poorer economic prospects for children born in countries with lower Index numbers.  The 2019 World Development Report has just been issued by the Bank and outlines this analytic approach in detail.

For further information see the following:

Why the World Bank is taking a wide-angle view of poverty

http://worldbank.org/en/publication/wdr2019

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