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Defining poverty

Defining poverty
17 Oct
2015
The benchmark for extreme poverty was established as a daily wage of $1 per day in 2000, as an average poverty line across developing countries and had been viewed as a suspiciously neat figure

It was raised in 2008 to $1.25 to reflect higher price levels in many countries than had previously been estimated, then again to $1.90 following recalculations of earnings in those nations.

‘The benchmark for not being poor was set very low,’ admits Dr Willem van der Geest, a principle economist at the UN’s Department of Economic and Social Affairs. ‘It’s so little, that even in countries where goods and services are cheap, you would not be able to do much with that money.’

At the Overseas Development Institute (ODI)Dr Claire Melamed, Director of Poverty and Inequality, agrees, but says the figure played a totemic role. ‘The $1.25 a day figure was set a long time ago, when the world was much poorer. It was a neat figure, it developed its own importance and symbolism, and it’s stuck, even though the landscape has changed.

‘If you’re a government trying to make sensible policy then $1.25 was probably not very useful, it didn’t reflect how poverty is relative – if people have a figure in mind it is usually a percentage of average income of the country, or it’s relative to others around them. But if you are the UN or a campaigner trying to get public support for spending taxpayer’s money on aid, the figure was useful, you wanted something simple.’

Melamed also cautions that $1.25 ‘was not a poverty line’ that many countries would recognise. ‘Even when we have ended poverty as defined by that figure, there will be many countries that will have large numbers of people in what they still consider to be extreme poverty.’

Mark Rowe's full report on the current state of global poverty will be published in the November 2015 edition of Geographical Magazine.

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