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Submitted by Eric V. Swanson on

Martin adopts the US poverty line as a standard against which to measure countries' capacity to redistribute from rich to poor on pragmatic grounds: it might be easier to explain to a US citizen why a country that cannot reach even the US poverty line needs some further assistance. But the result of his own analysis is to leave a large group of undifferentiated countries "censored" at the 100 percent line. And it may be no easier to engage a US or European legislator in a discussion over setting a floor of $13 a day for the incomes of developing country citizens. As Branko Milanovic notes in his recent working paper (WPS 6269) “Those who are considered nationally poor in the United States or the European Union have incomes which are many times greater than the incomes of the poor people in poor countries and moreover often greater than the incomes of the middle class in poor countries. “

Martin’s analysis seems to overlook his oft cited finding that above an absolute minimum (currently estimated at $1.25 per person per day in 2005 prices)national poverty lines rise with income. Taking this line as an international standard, it would be interesting to recalculate the capacity of countries at each income level to redistribute income to the poor. In other words, assess their effort by their own standards, not those of rich countries. Given the nature of regression lines, we would expected to find as many countries above as below it and only a few topped out at 100 percent. But the size of the gaps might reveal interesting information about the poltical economy of each country.

Does this help us to reset the income clusters currently used by the World Bank? I'm not sure that it does. That requires another discussion, which is already underway.