The World Bank Progresses on Poverty Lines

The announcement via this blog that the World Bank will now routinely calculate and report multiple international poverty lines is an important advance for development.

Perhaps the big debate in development today is between on one side those who want to “define development down” to a set of low bar, individualized targets, attainable with logistical programs (like the MDGs), and those who want to retain the original vision that development was fundamentally a long-run national and social process of attaining economies with high productivity, polities accountable and responsive to their citizens, administrations and organizations capable of achieving implementation-intensive targets, and a society based on fair treatment of all (like a set of Millennium Development Ideals).

The exclusive reporting of international poverty based on the penurious “dollar a day” poverty line (morphed by inflation into the less lyrical “$1.90 a day” line) was a tool for “defining development down.” The only advantage of the “dollar a day” line was that it was as low as a poverty line could reasonably be (in fact this was its intellectual justification—that no country had lower lines so this was the lowest possible line). Someone below “dollar a day” was for sure poor and hence no one could accuse the “dollar a day” standard of overstating poverty.

But the “dollar a day” standard never had, nor was ever meant to have, any rationale or credibility as a standard for who was “not poor.” If poverty is regarded as “an unacceptable deprivation in human well-being” then there were billions of people who were above the “dollar a day” poverty line but were poor by many legitimate definitions and standards of poverty. What is “unacceptable” deprivation is scaled by norms of what is possible and hence country poverty lines increase as average country income increases. This is also reflected in other approaches to poverty like multi-dimensional poverty and in participatory approaches to poverty, neither of which produce anything like “dollar a day” as the univocal or a consensus definition of poverty.

The conceptual weakness of the low bar poverty lines like “dollar a day” (and its twice as large sibling “two dollars a day”) is revealed in the ridiculousness (as pointed out by Nancy Birdsall and others) of dividing the global population into “poor” “middle class” and “rich” and referring to people just above “two dollars a day” as “middle class.” A low bar poverty line necessarily treats both people just above the poverty line and people in considerable comfort and prosperity as “not poor” and hence necessarily creates false equivalences in which those just above and just below a poverty line were considered to be different (one “poor” and one “not poor”) but two people above the poverty line with very different incomes were treated the same (both “not poor”).   

The problem with defining the development agenda down to measures like “eliminating extreme poverty” and other “kinky” goals (as Todd Moss points out this extends to low bar goals in other domains like energy) is that is excludes most of the population in most developing countries as relevant for the “development” agenda. Indonesia, for instance, is a lower middle income country facing many challenges and no one considers Indonesia “fully developed” on any definition. Yet in 2016 headcount “dollar a day” poverty was only 10.6 percent so by this standard 9 in 10 Indonesians were not included in an “eliminate extreme poverty” development agenda.

The World Bank’s move away from the exclusive reporting of a low bar poverty line to the recognition of the legitimacy and importance of multiple poverty lines is an important step forward to recognizing development as a broad and inclusive agenda.