The Poverty of Numbers

Several weeks ago the number of people living in ‘extreme poverty’ in the world fell by half.

Any thoughtful reaction to this should of muted exuberance. Why? Because this rather large change in world living standards did not happen as quickly as the statistics show. This dramatic decrease is due to a recalculation of the purchasing power parity (PPP) numbers from around the world. It is however, remarkable as the world is, in fact, richer than we previously believed.

PPP statistics allow us to compare living standards across countries by relating the amount of money people have to live on converted into US dollar terms.For example, when the new calculations showed 11% of the world lives on less than $1.25 per day (down from 21%), that means 11% of the world lives on the local equivalent of living on $1.25 per day in the US. This is a fascinating statistic and has important uses, but it is not hard to imagine large swaths of life that are left out by such a statistic. For example, the calculations only measure private spending. Public spending, and the benefits it brings to citizens, is not counted. Therefore it may actually be impossible to compare life in the US to life in Niger simply on expenditures alone.

TenindicatorsThis brings me to the latest multidimensional poverty index (MPI) released and updated for the fourth time since 2010. The MPI measures poverty on a three dimensional scale with ten equally weighted indicators (see table 1). Health measured by nutrition and child mortality. Education measured by years of schooling and school attendance. And living standard measured by cooking fuel, sanitation, water, electricity, floor, and other assets. As you can imagine the MPI can get rather complicated rather quickly. It may, however, allow us to measure poverty a bit more closely than simply by measuring expenditure levels relative to the US dollar.  

Duncan Green, strategic advisor for Oxfam Global, and relentless development blogger highlighted a few lessons from the newly released 2014 MPI. Here are a few important highlights:

  • A total of 1.6 billion people are living in multidimensional poverty; more than 30% of the people living in the 108 countries analysed (compare that with a global figure of 1.2 billion in income poverty).
  • The country with the highest percentage of MPI poor people is still Niger; 2012 data from Niger shows 89.3% of its population are multi-dimensionally poor.
  • Of the 1.6 billion identified as MPI poor, 85% live in rural areas; significantly higher than income poverty estimates of 70-75%.
  • Of 34 countries for which we have time-series data, 30 – covering 98% of the MPI poor people across all 34 – had statistically significant reductions in multidimensional poverty.
  • Nepal made the fastest progress, showing a fall in the percentage of the population who were MPI poor from 65% to 44% in a five-year period (2006-2011). Other star performers include Rwanda, Ghana, Bangladesh, Cambodia, Tanzania and Bolivia
  • Over 638 million people are destitute (see table 2) across the 49 countries analyzed so far – half of all MPI poor people.
    • India is home to 343.5 million destitute people – 28.5% of its population is destitute.
    • In Niger, 68.8% of the population is destitute – the highest share of any country.



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