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Development Economy

Extremely ridiculous extreme poverty lines (WFP)

In a previous video post, we discussed uncertainty in World Bank data and methodology measuring extreme poverty (see What is happening to poverty? (Rammelt and Surace)). The Bank (and the UN) overestimate progress towards reaching the first Millennium Development Goal of halving extreme poverty. In our video, we made the point that the $1, $1.25 or $2 poverty lines are extremely low (especially considering the rise in food prices). Here is a simple illustration of this point. Melese Awok, World Food Programme Public Information Officer in Ethiopia, finds out what he can buy for a dollar at a food market in Addis Ababa.

Note that Melese is using the official exchange rate ($1 = Br16 in 2011, when the video was made). However, $1 buys a lot more in Ethiopia than it does in the US. For the purposes of comparing international poverty levels, this difference in purchasing power has been accounted for in World Bank estimates of global poverty (We explain this in our video, and in our article for AIDWATCH here). In 2011, $1 adjusted to purchasing power in Ethiopia was not Br16, but less then Br6 a day (see conversion factors here). Melese should have asked: “what can I buy for $0.37?”

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