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More Relatively-Poor People in a Less Absolutely-Poor World

Authors


  • Note: This is the Richard and Nancy Ruggles Lecture delivered by Martin Ravallion at the Annual Conference of the International Association for Research on Income and Wealth, Boston, August 2012. Many colleagues at the World Bank have helped the authors in obtaining the necessary data for this paper and answered our many questions. An important acknowledgement goes to the staff of over 100 governmental statistics offices who collected the primary household and price survey data. The authors thank Prem Sangraula and Qinghua Zhao for their invaluable help in setting up the datasets we have used here. They have also benefited from the comments of numerous colleagues throughout the World Bank and participants at presentations given at the Bank, USAID, and the University of Technology, Sydney and the aforementioned Ruggles Lecture. The support of the World Bank's Knowledge for Change Program is gratefully acknowledged. These are the views of the authors and should not be attributed to the World Bank or any affiliated organization.

Correspondence to: Martin Ravallion, Development Research Group, World Bank, 1818 H Street NW, Washington DC, 20433, USA (mravallion@worldbank.org).

Abstract

Relative deprivation, shame, and social exclusion can matter to the welfare of people everywhere. The paper argues that such social effects on welfare call for a reconsideration of how we assess global poverty. We argue for using a weakly-relative measure as the upper-bound complement to the lower-bound provided by a standard absolute measure. New estimates of poverty are presented. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day, consistently with national poverty lines. We find that the incidence of both absolute and weakly-relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981.

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