WASHINGTON, United States — The World Bank’s international extreme poverty line remains necessary despite decades of progress in reducing global poverty, economists have said, warning that 826 million people still live below the $3-a-day threshold.
In a World Bank Data Blog, economists Daniel Gerszon Mahler, Christoph Lakner and Umar Serajuddin said the benchmark remains important for tracking the world’s poorest people and directing limited resources to those in greatest need.
The international poverty line is currently set at $3 per person per day, calculated using 2021 prices.
It supports the first target of the United Nations Sustainable Development Goals, which seeks to eradicate extreme poverty worldwide.
The share of the global population living in extreme poverty has declined from 43 per cent in 1990 to about 10 per cent today.
China, India, Indonesia and Brazil, which previously recorded double-digit extreme poverty rates, now have rates of 4 per cent or lower. More than 100 economies have reduced extreme poverty to below 1 per cent.
The progress has prompted debate over whether the $3 threshold remains relevant. Some scholars have proposed replacing or supplementing it with poverty lines that are 10 or 15 times higher.
The authors acknowledged that any poverty threshold involves some uncertainty but gave three reasons for retaining a benchmark focused on the most severe deprivation.
First, they said eliminating extreme poverty remains an ambitious objective because the number of people affected is larger than the combined populations of the European Union and the United States.
Dozens of countries still have extreme poverty rates exceeding 40 per cent. At their historical pace of development, some would require at least three generations to bring the rate down to 3 per cent.
The World Bank economists warned that the poorest countries are progressing more slowly than historical trends and that the number of people in extreme poverty could increase during the coming decade.
Second, the benchmark directs attention and resources towards people facing the greatest hardship.
The poorest 10 per cent of the global population experienced annual income growth of only 0.1 per cent over the past decade, compared with approximately 2 per cent among those in the middle of the worldwide income distribution.
Official development assistance has also declined by about 30 per cent over the last two years.
The authors estimated that even if all global development assistance were channelled into highly effective cash transfers for people in extreme poverty, it would cover only one-third of the amount required to eliminate it.
Third, the $3 threshold reflects how the world’s poorest countries define poverty through their national poverty lines. These measures are generally based on the cost of meeting basic needs such as food and shelter.
The economists said higher and non-monetary measures should continue to be used because escaping extreme poverty does not mean a person has overcome every form of deprivation.
However, they maintained that the international extreme poverty line remains essential for measuring progress among those facing the most severe economic hardship.
The authors noted that the views expressed in the blog were their own and did not necessarily represent those of the World Bank Group.
