HLEG thematic workshop on Measurement of Well Being and Development in Africa, 12-14 November 2015, Durban, South Africa, More information at: www.oecd.org/statistics/measuring-economic-social-progress

1. A global count of the
extreme poor in 2012
The 2015 World Bank Poverty Update
Dean Jolliffe, World Bank Research Group
Slides prepared for Conference on “Measurement of Wellbeing and Development in Africa”, Durban, Nov 12-14, 2105. Materials are from:
Ferreira, F., Chen, S., Dabalen, A., Dihkanov, Y., Hamadeh, N., Jolliffe, D., Narayan, A., Prydz, E., Revenga, A. Sangraula, P., Serajuddin, U., Yoshida, N. “A Global Count of the Extreme
Poor in 2012: Data Issues, Methodology and Initial Results,” World Bank Policy Research Working Paper series no. 7432, 2015.
tinyurl.com/qjdrfjz

2. Presentation roadmap
1. Background & Data
i. A brief history of global poverty monitoring at the World Bank
ii. The database
iii. The 2011 Purchasing Power Parity exchange rates
2. Updating the international poverty line using the 2011 PPPs
i. Basic principles
ii. Updating the $1.25/day line to 2011 PPPs
iii. Alternatives, robustness
3. Results
i. Caveats – Measurement Challenges and Assumptions
ii. Country, Regional, Global level changes
iii. Changes to prospects for ‘ending poverty’ by 2030
(tinyurl.com/qjdrfjz)

3. i. A brief history of global poverty monitoring at the World Bank
Update: 1979
“India line”
1990
“Dollar-a-day”
2001
1.08/day
2008
1.25/day
2015
1.90/day
Source
Ahluwalia et
al (1979)
1990 WDR,
Ravallion, et al
(1991)
Chen and
Ravallion (2001)
Ravallion, Chen
and Sangraula
(2009)
This paper.
ICP data
1975 PPPs
Kravis et al
(1978)
1985 PPPs 1993 PPPs 2005 PPPs 2011 PPPs
Poverty lines used
1 (India) 8 countries 10 countries 15 countries
15 (same lines as
2008)
Method
India’s
poverty line
(46th pctile)
Inspection Median Mean Mean
Poverty line
(ICP base year USD)
$0.56 $1.01 $1.08 $1.25 $1.90
Poverty line in
1985 USD
$1.12 $1.02 $0.80 $0.69 $0.91
Poverty line
1985 IND Rs.
Rs. 4.15 Rs. 3.84 Rs. 4.65 Rs. 4.11

4. • Ravallion, Chen and Sangraula (WBER,
2009):
• Update the line to $1.25-a-day using 2005
PPPs for consumption.
• New compilation of national poverty lines
from the Bank’s country-level Poverty
Assessments (for 74 countries)
• Poverty lines considered appropriate to living
standards in each country,
• Consultation with Government, or Government’s
own poverty line.
• Reference group of the poorest 15 countries.
• Malawi, Mali, Ethiopia, Sierra Leone, Niger, Uganda,
Gambia, Rwanda, Guinea-Bissau, Tanzania, Tajikistan,
Mozambique, Chad, Nepal and Ghana.
0
100
200
300
Nationalpovertyline($/monthat2005PPP)
3 4 5 6 7
Log consumption per person at 2005 PPP
Note: Fitted values use a
lowess smoother with
bandwidth=0.8
Figure 1: National poverty lines for 74 developing countries plotted
against mean consumption using consumption PPPs for 2005
i. A brief history of global poverty monitoring at the World Bank

5. i. A brief history of global poverty monitoring at the World Bank
Update: 1979
“India line”
1990
“Dollar-a-day”
2001
1.08/day
2008
1.25/day
2015
1.90/day
Source
Ahluwalia et
al (1979)
1990 WDR,
Ravallion, et al
(1991)
Chen and
Ravallion (2001)
Ravallion, Chen
and Sangraula
(2009)
This paper.
ICP data
1975 PPPs
Kravis et al
(1978)
1985 PPPs 1993 PPPs 2005 PPPs 2011 PPPs
Poverty lines used
1 (India) 8 countries 10 countries 15 countries
15 (same lines as
2008)
Method
India’s
poverty line
(46th pctile)
Inspection Median Mean Mean
Poverty line
(ICP base year USD)
$0.56 $1.01 $1.08 $1.25 $1.90
Poverty line in
1985 USD
$1.12 $1.02 $0.80 $0.69 $0.91
Poverty line
1985 IND Rs.
Rs. 4.15 Rs. 3.84 Rs. 4.65 Rs. 4.11

6. i. A brief history of global poverty monitoring at the World Bank
Update: 1979
“India line”
1990
“Dollar-a-day”
2001
1.08/day
2008
1.25/day
2015
1.90/day
Source
Ahluwalia et
al (1979)
1990 WDR,
Ravallion, et al
(1991)
Chen and
Ravallion (2001)
Ravallion, Chen
and Sangraula
(2009)
This paper.
ICP data
1975 PPPs
Kravis et al
(1978)
1985 PPPs 1993 PPPs 2005 PPPs 2011 PPPs
Poverty lines used
1 (India) 8 countries 10 countries 15 countries
15 (same lines as
2008)
Method
India’s
poverty line
(46th pctile)
Inspection Median Mean Mean
Poverty line
(ICP base year USD)
$0.56 $1.01 $1.08 $1.25 $1.90
Poverty line in
1985 USD
$1.12 $1.01 $0.80 $0.69 $0.91
Poverty line
1985 IND Rs.
Rs. 4.15 Rs. 3.84 Rs. 4.65 Rs. 4.11

7. i. A brief history of global poverty monitoring at the World Bank
Update: 1979
“India line”
1990
“Dollar-a-day”
2001
1.08/day
2008
1.25/day
2015
1.90/day
Source
Ahluwalia et
al (1979)
1990 WDR,
Ravallion, et al
(1991)
Chen and
Ravallion (2001)
Ravallion, Chen
and Sangraula
(2009)
This paper.
ICP data
1975 PPPs
Kravis et al
(1978)
1985 PPPs 1993 PPPs 2005 PPPs 2011 PPPs
Poverty lines used
1 (India) 8 countries 10 countries 15 countries
15 (same lines as
2008)
Method
India’s
poverty line
(46th pctile)
Inspection Median Mean Mean
Poverty line
(ICP base year USD)
$0.56 $1.01 $1.08 $1.25 $1.90
Poverty line in
1985 USD
$1.12 $1.01 $0.80 $0.69 $0.91
Poverty line
1985 IND Rs.
Rs. 4.15 Rs. 3.84 Rs. 4.65 Rs. 4.11

8. ii. The database: PovcalNet
• Global poverty estimates are based on more
than 1,000 income and consumption
distributions in PovcalNet from national
household surveys from 131 ‘developing’
countries.
• Increasing use of microdata in 2015 update,
declining use of grouped data.
• Survey data from 2010 to 2014 used in the 2012
estimate cover:
• 86% of the developing world’s population
• >90% in EAP, ECA, LAC and SAR
• 68.7% in AFR
• 37.4% in MENA
Grouped
Micro
data Total
Income 3 29 32
Consumption 3 96 99
Total 6 125 131
2015 Poverty Update – Distribution types

9. • International Comparison Program collects globally price data to estimate
an exchange rate for maintaining purchasing power in terms of goods and
services, including nontradeables.
• WBG’s global poverty estimates use PPP exchange rates, but data is
collected at irregular intervals: 1985; 1993; 2005; and most recently in
2011 (released in 2014)
• Changes from 2005
• Increased coverage of countries: from 146 economies in 2005 to 199 in 2011,
covering 99% of nominal world GDP
• Increased coverage of rural prices
• 18-ring-country approach from 2005 replaced by subset Global Common Core List
iii. 2011 Purchasing Power Parity exchange rates

10. Presentation roadmap
1. Background & Data
i. A brief history of global poverty monitoring at the World Bank
ii. The database
iii. The 2011 Purchasing Power Parity exchange rates
2. Updating the international poverty line using the 2011 PPPs
i. Basic principles
ii. Updating the $1.25/day line to 2011 PPPs
iii. Alternatives, robustness
3. Results
i. Caveats – Measurement Challenges and Assumptions
ii. Country, Regional, Global level changes
iii. Changes to prospects for ‘ending poverty’ by 2030
(tinyurl.com/qjdrfjz)

11. Basic Principles
1. 2011 PPPs. Use the most accurate set of prices available to compare the standards of living across countries with very
different prices for non-tradable goods and services.
2. Minimize changes to the goalpost. Acknowledge that the Bank’s poverty reduction goal and the UN’s SDG #1 are set
explicitly in terms of the $1.25 line at PPP2005 exchange rates.
3. 15 countries, RCS. The price levels most relevant for this exercise are those faced by the world’s poorest
people
• Derive the new line by:
i. Start with LCU values of the 15 RCS lines in 2005, inflate to 2011 using domestic deflator.
ii. Convert the resulting values to US dollars (in 2011 prices) using the 2011 PPPs
iii. This means that the poverty line continues to be supported by poverty and inflation data from
15 countries (eg. see Deaton for critique). Evidence later on whether the support is adequate.

12. Basic Principles
1. Use the most accurate set of prices available to compare the standards of living across
countries with very different prices for non-tradable goods and services.
2. Acknowledge that the Bank’s poverty reduction goal (and the UN’s SDG #1) are set explicitly in
terms of the $1.25 line at PPP2005 exchange rates. Minimize changes to the goalpost.
3. The price levels most relevant for this exercise are those faced by the world’s poorest people
• Derive the new line by:
i. Start with LCU values of the 15 RCS lines in 2005, inflate to 2011 using domestic
deflator.
ii. Convert the resulting values to US dollars (in 2011 prices) using the 2011 PPPs
iii. This means that the poverty line continues to be supported by poverty and inflation
data from 15 countries (eg. see Deaton for critique). Evidence later on whether the
support is adequate.

13. Updating the RCS15 $1.25/day line to 2011 PPPs
Country Year 2005 PPP 2011 PPP
Malawi* 2004-05 0.86 1.34
Mali 1988-89 1.38 2.15
Ethiopia 1999-2000 1.35 2.03
Sierra Leone 2003-04 1.69 2.73
Niger 1993 1.10 1.49
Uganda 1993-98 1.27 1.77
Gambia, The 1998 1.48 1.82
Rwanda 1999-2001 0.99 1.50
Guinea-Bissau 1991 1.51 2.16
Tanzania 2000-01 0.63 0.88
Tajikistan* 1999 1.93 3.18
Mozambique 2002-03 0.97 1.26
Chad 1995-96 0.87 1.28
Nepal 2003-04 0.87 1.47
Ghana* 1998-99 1.83 3.07
Average 1.25 Round(1.88 )=>1.90
*Countries use category 4 price deflators in conversion.

14. Alternatives and robustness
How much is $1.25 in 2005 PPPs when expressed in 2011 PPPs?
Examining 101 countries in PovcalNet with PPPs in 2005 & 2011
LCU PPP
2005 X $1.25
2011 Y $ ?
Convert using 2005 PPPs
Convert using 2011 PPPs
Inflate
using
domestic
CPIs
Take simple average

15. Alternatives and robustness
How much is $1.25 in 2005 PPPs when expressed in 2011 PPPs?
Examining 101 countries in PovcalNet with PPPs in 2005 & 2011
LCU PPP
2005 LCU $1.25
2011 LCU $1.90
Convert using 2005 PPPs
Convert using 2011 PPPs
Inflate
using
domestic
CPIs
Take simple average
𝐶𝑃𝐼11/𝐶𝑃𝐼05
𝑃𝑃𝑃11/𝑃𝑃𝑃05

16. Presentation roadmap
1. Background & Data
i. A brief history of global poverty monitoring at the World Bank
ii. The database
iii. The 2011 Purchasing Power Parity exchange rates
2. Updating the international poverty line using the 2011 PPPs
i. Basic principles
ii. Updating the $1.25/day line to 2011 PPPs
iii. Alternatives, robustness
3. Results
i. Selected data issues – Measurement Challenges and Assumptions
ii. Country, Regional, Global level changes
iii. Changes to prospects for ‘ending poverty’ by 2030
(tinyurl.com/qjdrfjz)

17. Selected data issues
• As noted, PovcalNet includes both consumption and income
distributions
• This is possibly appropriate, given national differences and priorities. But the
two are very different concepts, and comparability is difficult
• Existence of zero incomes is a current issue, but also one that is likely to grow
with time
• Differences in questionnaires hamper comparability even among
consumption distributions
• E.g. URP vs. MMRP questionnaires in India
• For 6 countries, HH survey price index used in place of CPI
• 6 “Outliers” countries, PPP and/or CPI changes were large.

18. Fewer country re-rankings than in previous PPP revisions
BGD
BRA
CHN
IDN
IND
MEX
NGA
PAK
RUS
0
20406080
0 20 40 60 80
Poverty rate at $1.08, 1993 PPPs
RUS
MEX
IDN
BRA
CHN
PAK
IND
BGD
NGA
0
20406080
100
Povertyraterankat$1.25,2005PPPs
0 20 40 60 80 100
Poverty rate rank at $1.08, 1993 PPPs
2008 update from 1993 PPPs to 2005 PPPs 2015 update from 2005 PPPs to 2011 PPPs
Country level estimates are still preliminary
Changes to national poverty rates: 2008 vs 2015 update
0
20406080
Povertyrateat$1.90/day,2011PPPs
0 20 40 60 80
Poverty rate at $1.25/day, 20005 PPPs
Difference
is less than
2 points
for half the
countries

19. Global patterns largely maintained:
2011 estimate goes from 14.5% to 14.1% poor
2.4
5.9
8.5
22.2
44.4
14.1
0.5
4.6
7.9
24.5
46.9
14.5
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
Europe and Central Asia
Latin America and the Caribbean
East Asia and Pacific
South Asia
Sub-Saharan Africa
World
Poverty headcount rate 2011
2014 update ($1.25, 2005 PPPs) 2015 update ($1.90, 2011 PPPs)

20. 0
10
20
30
40
50
60
70
1990 1999 2011
East Asia and Pacific Europe and Central Asia Latin America and the Caribbean South Asia Sub-Saharan Africa
Regional trajectories and levels 1990-2011 maintained
Povertyheadcountrate
--- 2014 estimates (2005 PPPs, $1.25 line) ── 2015 estimates (2011 PPPs , $1.90 line)

21. 37.1
29
14.112.7
9.6
4.2
0
5
10
15
20
25
30
35
40
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
$1.25 2005 PPPs $1.90 2011 PPPs
Global trajectories and levels 1990-2030

22. Global prospects for 2030 look similar
2011 estimate goes from 4.9% to 4.2%
0.2
4.1
0.2
1.1
20.1
4.2
0.1
3.1
0.1
2.1
23.6
4.9
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
Europe and Central Asia
Latin America and the Caribbean
East Asia and Pacific
South Asia
Sub-Saharan Africa
World
Poverty headcount rate 2030
2014 update ($1.25, 2005 PPPs) 2015 update ($1.90, 2011 PPPs)

23. Conclusions
1. Need to update estimates based on 2011 PPPs. Given the prevalent
view that the 2011 PPPs capture price level differences across
countries more accurately, global and regional poverty estimates
needed adjusting.
2. 1.90 is the new 1.25. This meant we need to express the $1.25 line
(at 2005 PPPs) in 2011 PPP terms. Our goal was to avoid “moving
the goalposts” for the international goals.
 $1.90 at 2011 PPPs has roughly the same purchasing power in poor
countries as $1.25 at 2005 PPPs.
 As a result, changes to both levels and trends of poverty prevalence are
muted.

24. Thank you
www.worldbank.org/poverty
iresearch.worldbank.org/PovcalNet/
Ferreira, Francisco H. G.; Chen, S.; Dabalen, A.; Dikhanov, Y.; Hamadeh, N.; Jolliffe, D.;
Narayan, A.; Prydz, E.; Revenga, A.; Sangraula, P.; Serajuddin, U.; Yoshida, N. 2015. A global
count of the extreme poor in 2012 : data issues, methodology and initial results. Policy
Research working paper; no. WPS 7432. Washington, D.C. : World Bank Group.
tinyurl.com/qjdrfjz