This blog post draws on data and research discussed in our entry on Global Extreme Poverty.
People are considered to live in extreme poverty if they live below the International Poverty Line. This line is set by the World Bank and corresponds to 1.90 international-dollars (int.-$) per person per day. By any standard this is an extremely low poverty line – the term "extreme poverty" is appropriate.
We have just completely updated our entry on extreme poverty, where we discuss the global picture, and how poverty is measured.
In the entry on extreme poverty we emphasize that the share of people living in extreme poverty has declined continuously for two centuries; and it has never declined faster than in recent years.
This long decline is one of the greatest achievements of humanity and I think it is the most important global development in our lifetime.
Are poverty rates really going down?
A claim that often comes up in discussions of extreme poverty is that the share of people in extreme poverty is declining only because international institutions deliberately choose a poverty line that is much too low. It is suggested then that "true poverty" in the world is actually increasing.
This allegation is unfounded. The following visualization of the global income distribution in 2003 and 2013 shows why.
To read this chart, choose a level of annual income on the y-axis (you can call this the true global poverty line); and then use the blue and red lines to find on the x-axis the corresponding share of the world population living with less than that income (the blue line gives the value in 2013, the red line in 2003).
If you think the poverty line should be higher than the International Poverty Line, and it should instead be 1,000 int.-$ per year, you can see that in 2003, 48% of the world population was below this poverty line; and ten years later, in 2013, 29% was below this line. A decline of 20 percentage points in one decade relative to this higher poverty line!
If you think the international poverty line should be much higher and should indeed be 4,000 int.-$, then you see that in 2003, 80% of the world population was below that poverty line. 10 years later: 67%. A decline of 13 percentage points!
The message from this chart is clear: No matter what global poverty line you choose, the share of people below that poverty line has declined.
The global income distribution in 2003 and 20131
The study by Mauro and Hellebrandt2 on which the above chart is based only has data from 2003 onwards. But there is some good data that allows going back further in time, as well as looking at absolute numbers of people in poverty (rather than shares).
The visualization below shows a breakdown of the population by per capita household consumption. As explained in the note underneath the chart it only includes non-rich countries, as the income of the large majority of people in rich countries is much higher and not included in this data source.
The chart shows the population relative to different poverty lines for more than 3 decades:
- Globally the share living with less than 1.25 int.-$ per day is declining.
- Globally the share living with less than 1.90 int.-$ per day is declining.
- Globally the share living with less than 3.10 int.-$ per day is declining.
- Globally the share living with less than 10 int.-$ per day is declining.
These numbers show that an income of 10 int.-$ per day – or 3,650 int.-$ per year – cannot be considered a reasonable cutoff for extreme poverty, since 65% of the world population has an income of less than this (this is clear from the previous chart).
Rates are going down – what about the total number of people in poverty?
Now let's change the question and think about the absolute number of people below a certain poverty line: How is the number of people below these higher global poverty lines changing?
The chart below gives the answer, again looking only at the people in non-rich countries (currently more than 6 billion people):
- Globally, the number of people with less than 1.25 int.-$ per day is declining.
- Globally, the number of people with less than 1.90 int.-$ per day is declining.
- Globally, the number of people with less than 3.10 int.-$ per day is declining.
- (If you are interested to see this country by country we have included a chart in the poverty entry that shows the share living with less than 3.10 int.-$ per day here.)
Notice that during recent years, even the number of people with less than 10 int.-$ per day is not increasing; in fact, since around 2005 it has actually declined slightly.
Even at the very low cutoff of 1.90 int.-$ per day there are still around 750 million people living in extreme poverty today. There is absolutely no reason to be complacent about poverty today, but we should be very clear: the share of the population living in extreme poverty is indeed falling.
I think it is important to know what the most important developments in the world are, and we should study them to learn how to further increase prosperity – and one day eradicate extreme poverty globally.