The World Bank started making international comparisons of poverty only about two decades back. For obvious reasons of convenience, it developed two simple notions of poverty. The lower poverty line was set at $1 a day per capita. Those below it were considered to be “the poorest of the poor.” The upper poverty line was set at $2 a day. Those living on $1 to 2 a day were still poor, but not as bad off.
However, there was a problem. It was realized that $1 goes much farther in purchasing necessary items of consumption in a poor country than in a rich one. To make purchasing power across countries comparable, economists developed what is known as the PPP (purchasing power parity) index. Taking into account the lower cost of living in impoverished countries, a conversion factor is now applied to market exchange rates to calculate what is minimally necessary to survive there. Using World Bank numbers, applying this conversion factor for India effectively means that if you survive on 1 PPP dollar a day in that country, it is equivalent to being given 20 cents in your hand in the U.S.
A dominant impression is that the poor are living on less than $1 a day. In fact, it would be enormously more accurate, as far as everyday English is concerned, to say that the poor across the world are living on less than 20 cents a day. The reason why this is not done is obvious: It would give an even-more-alarming picture of the scale and depth of poverty across this enormously wealthy world. Most decent people are shocked enough by the understated numbers in the form they are widely quoted. More reality would numb and paralyze even the grittiest of activists. “Humanity,” T.S. Eliot wrote, “cannot bear much reality.” He had the privileged in mind.
The most recent World Bank estimates for India are based on household surveys carried out in 1999-2000. It was found that almost 80 percent of India’s population was surviving on less than $2.15 a day (in PPP terms). That is, about 800 million people were living on 40 cents a day or less. Nearly 35 percent (350 million) were found to be living on 20 cents a day or less. Thanks to the subtleties of PPP calculations, it may quite possibly be the case that the number of people across the world who are not able to meet the minimum standards for adequate nutrition is anywhere from 3 to 4 billion, rather than the officially estimated 2.7 billion who are estimated to be living under $2 a day. No one really knows. In other words, we could be off by a whole continent!
IN OUR INCREASINGLY packaged consumerist world, even global poverty figures must ultimately arrive in a wrapping that is not unpalatably unattractive to the public. Trickle-down will ultimately work, we are repeatedly assured by growth economists. But faith in trickle-down, as John Kenneth Galbraith is said to have remarked, is a bit like feeding race horses superior oats so that starving sparrows can forage in their dung. All indications, especially in parts of the world like rural India, are that a decade and a half of corporate globalization has left undernutrition and malnutrition all but intact and might quite possibly have worsened the predicament for many millions.
Perhaps we would do well to remember Einstein’s counsel: “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.” We only count and measure what is useful, important, or interesting to us. By using a severely distorted measure like a poverty line pegged unreasonably low, public authorities and governments reveal that they don’t care nearly as much about poverty as they do, for instance, about the growth rate or the stock market index. The poverty measurement industry loses much sleep and sweat over details that do not matter much. The big picture, perhaps unsurprisingly, is inaccurately reported.
If global poverty statistics are not disseminated accurately, the facts on the ground will only get worse—thanks to misinformed policy-making, among other things. And the potential consequences across the globe could be nothing short of catastrophic.
Aseem Shrivastava was an independent writer when this article appeared.