The World Bank’s Report on Poverty and Shared Prosperity 2018 is titled: Piecing together the Poverty Puzzle.
In his Foreword, the outgoing WB President Jim Yong Kim points out that the world had impressively got its act together in implementing the Millennium Development Goals to bring down extreme poverty from 33% in 1990 to 10% in 2015. He is sure that global efforts will continue under the new Sustainable Development Goals, to reduce extreme poverty to less than 3% percent by 2030.
He goes on to point out that most of the world’s poor now live in middle-income countries, and research indicates that those countries tend to have a more demanding view of poverty. Drawing on national poverty lines, the World Bank now also report poverty rates at two higher thresholds—$3.20 per day and $5.50 per day—which are typical of standards in lower-middle-income countries, like India, and upper-middle-income countries, like China.
These higher-valued poverty lines reflect social assessments of what defines minimum basic needs in countries at these income levels. As may be expected, these two standards for measuring poverty portray a less encouraging picture of the level of well-being in the world relative to the measure of extreme poverty, which is forecast now to be in single digits. Nearly half the world (46 percent) lives on less than US$5.50 per day, a standard that defines poverty in a typical upper-middle income country, while a quarter of the world lives on less than US$3.20 per day.
The Societal Poverty Line (SPL) to measure poverty relative to the standard of that society is a combination of the absolute income-based poverty line (IPL), and a poverty line that is relative to the median consumption (or income) level of each country. Specifically, it is equal in value to either the IPL or US$1.00, plus half of daily median consumption in the country, whichever is greater. This means that, for the poorest of countries, the value of the SPL will never be less than the IPL, although after a certain point, as countries get richer, the value of the SPL will increase as the consumption level of the median individual in that country increases.
This increasing value of the SPL corresponds with the fact that the value of national poverty lines typically increases as countries grow richer. In fact, the SPL is constructed in such a way that it directly corresponds to the average value of national poverty lines at different levels of (median) consumption for each country of the world. In this sense, societal poverty provides a global measure of poverty that corresponds on average with how all countries of the world define being poor.
When poverty is defined this way, the number of people who are poor stood at 2.1 billion as of 2015, almost three times more than those living under the US$1.90 level.
This Report also presents the World Bank’s first exercise in multidimensional global poverty measurement to account for multiple and overlapping components of poverty. The multidimensional approach highlights how the ways deprivations interact vary widely from country to country, and can be extended to include, in addition to education and access to basic infrastructure services, two other dimensions: health and nutrition, and security from crime and natural disaster. (See: Dimensions of Urban Poverty).
Including additional dimensions of deprivation in measures of poverty can provide valuable insight into how policies can be directed to have the most effect on poverty. The profile of the poor can change as we take a multidimensional view of poverty – as becomes starkly evident in the South Asian Region.
In this regard, the World Bank was anticipated by pioneers of the Sustainable Livelihoods approach, which looks at 5 types of capital available to an individual or a community, and it is the sufficiency or insufficiency of these ‘capitals’ which determine the extent and expanse of one’s livelihood polygon. This can be a great tool to decide the relative focus on various aspects of a poverty alleviation programme. In slum rehabilitation for instance, emphasis seems to be on providing basic physical infrastructure (water, roads, drains) while totally neglecting human development aspects of health and education. As a result, the livelihood polygon of the slum-dweller remains narrowly restricted, and the poverty becomes endemic as it passes from generation to generation (See Sustainable Livelihoods).