A Proposal for Truly Global Poverty Measures

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Abstract

Standard absolute poverty measures probably understate poverty rates in rich countries, given that their residents face higher welfare costs of social inclusion and relative deprivation. At the same time, standard measures of relative poverty probably understate the extent of poverty in poor countries, given that these measures attach little value to social inclusion needs at low mean income. This article provides the first estimates of a new class of truly global measures that aim to avoid these deficiencies of past measures. The results indicate that worsening distribution in the set of high-income countries has pushed up the incidence of relative poverty since 1990, but not by as much as success against absolute poverty has swelled the ranks of the relatively poor in the developing world. The incidence of purely relative poverty is now higher in the developing world than among rich countries – reversing the historical pattern.

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