World Bank researchers have been trying to assess the extent of extreme poverty across the world since 1979 and more systematically since the World Development Report 1990, which introduced the dollar-a-day international poverty line. From the beginning, the idea was to measure income poverty with respect to a demanding line which, first, reflects the standards of absolute poverty in the world’s poorest countries and, second, corresponded to the same real level of well-being in all countries. The first requirement led researchers to anchor the international poverty line on the national poverty lines of very poor developing countries. And the second requirement led them to use purchasing power parity exchange rates (PPPs) – rather than nominal ones - to convert the line into the US dollar and, more importantly, into the currencies of each developing country.
poverty and inequality measurement
Despite hundreds of millions spent on more and better household surveys across Africa in recent decades, we only have a very rough idea about the levels and trends in income poverty and inequality in sub-Saharan Africa. Many reasons contribute to this unfortunate state of affairs.
There has been much discussion around the World Bank on the choice of a "global poverty target" that can be used to measure global progress against poverty. To be successful, such a target needs to be (a) simple to understand, and (b) relevant to all World Bank client countries.
This follows on part I posted earlier today – we choose to split the post into two because of length.
Part 2: What does Martin’s proposal imply?
Survey responses to questions on incomes (and other potentially sensitive topics) are likely to contain errors, which could go in either direction and be found at all levels of income. There is probably also non-random selection in terms of who agrees to be interviewed, implying that we get the weights wrong too (as used to "gross-up" the sample estimates to the population).