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Introduction
A cloud of doubt hangs over our knowledge about the extent of the world’s progress
against poverty. A widely cited estimate from World Bank (2002) is that there were 200 million
fewer poor in the world in 1998 than in 1980. This figure has been contested, and for good
reasons. Deaton (2002a) contrasts this seemingly optimistic assessment of the world’s progress
against poverty with that in the World Development Report, Attacking Poverty (World Bank,
2000), which appeared to show little or no progress. Deaton (2002a) argues that the claim in
World Bank (2002) was based on methodologically inconsistent estimates from two studies,
namely Bourguignon and Morisson (2002) (up to 1992) and Chen and Ravallion (2000) (beyond
that).2 With reference to the relevant chart in World Bank (2002) (which he refers to as
Globalization) Deaton writes:
“The historical data in this chart were assembled by Franзois Bourguignon and Christian
Morrisson… They derive their estimates by applying (sometimes sketchy and outdated)
distributional information to the consumption figures from national accounts data, a technique
that is almost certainly the only methodology that would allow the construction of data for a
century and a half. … After 1993, when the Bourguignon and Morrisson data end, Globalization
uses the poverty estimates that were assembled by Shaohua Chen and Martin Ravallion…. But
Chen and Ravallion's data from 1987 to 1993, which is when poverty increased, are dropped from
the chart. In consequence, and without any new information, we go from an assessment that the
number of poor people in the world was showing little or no decline from 1987 to 1998 in
Attacking Poverty to an assessment, in Globalization, of a continuous and accelerating decline
from 1980 to 1998.”
These concerns are too important to ignore. We agree with Deaton that the splicing of these
different data sources is highly questionable. The only solution is to construct a new, internally
consistent, series over the 1980s and 1990s.
This paper offers a new assessment of progress in reducing poverty over 1981-2001 using
consistent data and methods — closely following the methods underlying the Attacking Poverty
numbers, which had been based on Chen and Ravallion (2000). In common with our past
estimates, we draw on nationally representative surveys as much as feasible. The paper reviews
our methods of measuring poverty from those surveys and notes any changes from past
estimates, though we refer readers to other sources for further discussion of our methods and
alternatives.3 The new estimates presented here supersede all our previous estimates, in that we
have re-calculated everything back in time on a consistent basis incorporating the new data.4
This paper summarizes our results in a standard regional tabulation following past work.
However, we have also created a web-based interactive tool, PovcalNet that allows users to
access the primary distributions and so estimate poverty measures for alternative country
groupings or for a selected set of individual countries (http://iresearch.worldbank.org/povcalnet).
A notable feature of these new estimates is that we go back to the early 1980s, allowing
an assessment of the validity of the aforementioned claim in World Bank (2002). We have
previously resisted going back this far, given our concerns about the coverage and quality of the
survey data available for the early 1980s. Our efforts to expand coverage have helped allay our
fears about reliability for the early 1980s. However, it is clear that our estimates for the first year
in our series, 1981, are not as reliable as the rest of the series.
We find that the 200 million figure is probably an under-estimate. Indeed, our best
estimates suggest that it is almost twice that number. That is good news. However, a closer inspection of the data leaves little room for complacency about the world’s progress against
poverty. Indeed, the picture that emerges is one of highly uneven progress, with serious setbacks
in some regions and time periods. And we find that the number living under $2 per day rose.
It should not be forgotten that there are limitations to our measures. There are continuing
concerns about aspects of the underlying data, including the Purchasing Power Parity exchange
rates, the accuracy and comparability of the surveys used, and intrinsic limitations of the welfare
measures based on those surveys. A potentially important example of the latter is the fact that
our definition of poverty does not directly reflect inequality within the household.
The next section describes the coverage of the survey data. We then discuss the poverty
line and exchange rates, followed by the measures of poverty. Our main results are then
discussed before concluding.
Footnotes:
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We are grateful to numerous colleagues at the World Bank who helped us obtain the necessary
data and answer our many questions and the staff of the numerous governmental statistics offices who
collected the primary survey data. The able assistance of Prem Sangraula is gratefully acknowledged.
Angus Deaton, Johan Mistiaen, Dominique van de Walle and the Observer’s Editorial Board made useful
comments on the first draft. Address for correspondence: schen@worldbank.org,
mravallion@worldbank.org.
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Wade (2004) also questions the 200 million figure. However, misdiagnoses the problem, by
confusing changes in the methods used to count the world’s poor with the methodological issues related
to the way World Bank (2002) used different data sources. In fact, the Chen-Ravallion estimates used in
World Bank (2002) would be judged internally consistent by Wade’s criteria. The Deaton critique is more
persuasive since it is grounded on a well-researched understanding of the methods involved.
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