The Bottom 1.4 Billion

In April 2007 the World Bank announced that 986m people worldwide suffered from extreme poverty—the first time its count had dropped below 1 billion. On August 26th it had grim news to report. According to two of its leading researchers, Shaohua Chen and Martin Ravallion, the “developing world is poorer than we thought”. The number of poor was almost 1.4 billion in 2005.

This does not mean the plight of the poor had worsened—only that the plight is now better understood. The bank has improved its estimates of the cost of living around the world, thanks to a vast effort to compare the price of hundreds of products, from packaged rice to folding umbrellas, in 146 countries. In many poor countries the cost of living was steeper than previously thought, which meant more people fell short of the poverty line.

Ms Chen and Mr Ravallion have counted the world’s poor anew, using these freshly collected prices. By this definition, people are poor if they cannot match the standard of living of someone living on $1.25 a day in America in 2005.

I had gotten all excited when I thought the number of people living in extreme poverty had gone below 9 digits but apparently that was a little premature now that $1.25 is the new $1 a day.

via The Economist