World Bank Sets Two New Poverty Lines To Measure Poverty In Middle Income Countries : Goats and Soda If you live on $1.90 a day or less, the World Bank says you are extremely poor. Two new poverty lines offer a way to measure poverty in middle income countries.

What's The Meaning Of The World Bank's New Poverty Lines?

According to the World Bank, if you're living on $1.90 a day or less, you're living in extreme poverty.

The 767 million people in that category have $1.90 a day or less in purchasing power to fulfill their daily needs.

Most of that money goes for food – only it may not be enough to purchase nutritious food or to stave off hunger. Hundreds of millions of the extreme poor are malnourished.

Their housing may be of low quality. And they may not have enough money for school fees (primary education isn't always free) or health-care expenses.

Millions of the extremely poor live in the world's low-income countries. But here's a surprising fact: Well over half of the extremely poor live in middle income countries like India, Nigeria and China.

And here's another point to consider: You can have more than $1.90 a day to spend on the basic necessities and still live in relative poverty.

As the World Bank puts it in a poverty FAQ: "Not surprisingly, richer countries tend to have higher poverty lines, while poorer countries have lower poverty lines."

That's why the World Bank has come up with two new "poverty line" figures for the world's middle-income countries: $3.20 a day for lower middle income nations (like Egypt, India and the Philippines) and $5.50 a day for upper middle income nations (like Brazil, Jamaica and South Africa).


The idea is that the new numbers offer a better way to measure poverty in middle-income countries.

"These new numbers are closer to the individual country's national poverty lines," says Homi Kharas, senior fellow and co-director of the Global Economy and Development Program at the Brookings Institution.

They represent a "fixed benchmark to judge whether poverty is going up or going down in the world" – and for middle-income countries to see how they're doing.

Of course, it's natural to be a bit befuddled about the meaning of these new figures.

"The challenge the World Bank has is to make sure people don't get confused," says Kharas.

In a nutshell, there's extreme poverty ... and just plain poverty.

"If you're living in shantytown slums around Lima with no basic services and scraping to get basic subsistence, you would say, 'Yeah, I'm poor,' — even though the World Bank might measure your income at $4 a day," says Justin Sandefur, a senior fellow at the Center for Global Development.

He also notes that "there almost isn't anyone in middle-income countries as poor as the most people in Ethiopia."

As for efforts to help the world's extreme poor — there's good news on that front.

Between 1990 and 2013, the number of people living on $1.90 a day or less has been cut roughly in half. The United Nations has committed to ending extreme poverty as one of its Sustainable Development Goals, an ambitious set of 17 targets for the world to reach by 2030.

But that doesn't mean poverty will vanish. The new poverty line numbers serve as a reminder, says Sandefur, that even though extreme poverty is declining, "we still have deep, intractable pockets of poverty in many countries."