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Income Poverty has been Halved in the Developing World, even when Accounting for Relative Poverty

Author

Listed:
  • Benoit Decerf

    (University of Namur)

  • Mery Ferrando

    (Tilburg University)

Abstract
The first Millennium Development Goal was to halve extreme absolute poverty over the period 1990-2015. This goal has been met by a large margin, but the simultaneous increase in within-country inequality has led to an increase in relative poverty. As absolute and relative poverty evolved in opposite directions, whether or not overall poverty – which combines both absolute and relative poverty – has been reduced typically depends on the arbitrary priority assigned to absolutely poor individuals. We develop a new method for overall income poverty evaluation thatcan potentially provide judgments that do not depend on that priority parameter. We show that, if we assume that an individual who is absolutely poor is poorer than an individual who is only relatively poor, overall poverty in the developing world has been (at least) halved over the period, regardless of the value chosen for the priority parameter. This result is robust to alternative specifications of the poverty lines and to the exclusion of China or India. Alternative approaches find much less overall poverty reduction because they violate our normative assumption.

Suggested Citation

  • Benoit Decerf & Mery Ferrando, 2020. "Income Poverty has been Halved in the Developing World, even when Accounting for Relative Poverty," Working Papers 546, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2020-546
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2020-546.pdf
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    References listed on IDEAS

    as
    1. Decerf, Benoit, 2017. "Why not consider that being absolutely poor is worse than being only relatively poor?," Journal of Public Economics, Elsevier, vol. 152(C), pages 79-92.
    2. Francisco H. G. Ferreira & Shaohua Chen & Andrew Dabalen & Yuri Dikhanov & Nada Hamadeh & Dean Jolliffe & Ambar Narayan & Espen Beer Prydz & Ana Revenga & Prem Sangraula & Umar Serajuddin & Nobuo Yosh, 2016. "A global count of the extreme poor in 2012: data issues, methodology and initial results," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 141-172, June.
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    Cited by:

    1. Benoit Decerf, 2021. "Combining absolute and relative poverty: income poverty measurement with two poverty lines," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 56(2), pages 325-362, February.
    2. Goedemé, Tim & Decerf, Benoit & Van den Bosch, Karel, 2020. "A new poverty indicator for Europe: the extended headcount ratio," INET Oxford Working Papers 2020-26, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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    More about this item

    Keywords

    Income Poverty; Relative Poverty; Absolute Poverty; Developing World.;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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