A Ray of Hope at the Bottom of the Income Ladder

The World Bank recently updated its global poverty estimates (bringing them up to 2008 from 2005), and there is good news, especially for those at the bottom--defined as people living on less than $US 1.25/day. In 1990, according to the World Bank, 43 percent of the world's population lived at that level of poverty, but by 2008 it had dropped to 22 percent. That was enough of a drop that, despite the growth in the world's population, the absolute number of people living at that level dropped from 1.9 billion in 1990 to 1.3 billion in 2008. Not surprisingly, sub-Saharan Africa and south Asia continue to have the highest poverty levels. The Economist picked up the story.

Most of the progress has been concentrated among the poorest of the poor—those who make less than $1.25 a day. The bank’s figures show only a small drop in the number of those who make less than $2 a day, from 2.59 billion in 1981 to 2.44 billion in 2008 (though the fall from a peak of 2.92 billion in 1999 has been more impressive). According to Mr Ravallion, poverty-reduction policies seem to help most at the very bottom. In 1981, 645m people lived on between $1.25 and $2 a day. By 2008 that number had almost doubled to 1.16 billion. Even if many of these middling poor move up, their places are often taken by those who have just escaped from absolute poverty; population growth does the rest. The poorest of the poor seem to have escaped the worst of the post-2007 downturn. But the growth in the middling poor shows there is much to be done.

And they add this interesting tidbit:

The poverty data chime with other evidence. Estimates by the Food and Agriculture Organisation that the number of hungry people soared from 875m in 2005 to 1 billion in 2009 turned out to be wrong, and were quietly dropped. Derek Headey of the International Food Policy Research Institute has shown that despite the world food-price spike, people’s assessment of their own food situation in most poor and middle-income countries was better in 2008 than it had been in 2006.