Comment by Riaz Haq on June 15, 2014 at 11:22pm

Here's an except of a blog post from Global Policy blog on ICP poverty recalc:

The future of aid is related – to some extent – to trends in global poverty and where the poor live. But new price data is causing a rethink of the global poverty numbers (and which countries are absolutely or relatively poor, but I will save that for another blog).

This rethink needs some explanation so apologies for a longish and very wonkish blog. If you want the quick take away it’s this: poverty didn’t change in real life but how we measure it will as a result of the new data.

First, the statistical earthquake: the International Comparison Program (ICP) has released new data on prices around the world, known as purchasing power parity (PPP) rates.

Doesn’t sound too contentious? These data compare prices across countries for similar items in order to estimate what could be bought in the US with a country’s currency. These numbers matter for various reasons not least because they feed into the estimates of how many poor people there are and where they live.

The latest data really is an earthquake (as were the last set of revisions a few years ago) because the extent of the revision for a number of countries is very large.
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First off the starting block were folks at the Centre for Global Development (CGD) who use US inflation to recalibrate the poverty line. So the CGD poverty line is US$1.25 in 2005 dollars, or US$1.44 in 2011 dollars.

So instead of 1.2bn poor people, that gives you about 550m poor, meaning about half the level of global poverty that was previously thought. In fact estimated global poverty halved largely because the number of poor people in a series of populous countries fell drastically (recall most of the world’s poor people live/lived in a small set of populous countries): estimated poverty in India fell from 400m people to 100m people. In Nigeria, the numbers of poor people almost halved from 90m to 50m people. Poverty more than halved in Bangladesh from 65m to less than 30m. In Pakistan, poverty fell from 35m to less than 5m.
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A second approach is that of the Brookings folks who – more or less loyally – reproduce the existing World Bank method of calculating the global poverty line, (the national poverty lines in the world’s 15 poorest countries), to recalibrate the US$1.25 poverty line to US$1.55 in 2005 dollars (or $1.78 in 2011 dollars).

The Brookings folk looked at the average increase in the existing 15 national poverty lines used by the World Bank for these poorest countries in 2008 and then looked at the average increase in the national poverty lines for the current poorest 15 countries and took an average of the two averages (about 25 per cent) to adjust the global poverty line (thanks to the authors for these details).

That new poverty line means that there are 950m poor (or 870m poor if you change the survey data used in two populous countries – India and Nigeria). Global poverty, therefore, is quite a bit lower than we thought. For instance, in India poverty estimates halved from 400m to perhaps less than 200m poor (how much depends on whether one changes the data). In Nigeria, poverty estimates fell to about 65m (ditto). In Bangladesh they fell to 50m. And estimated poverty in Pakistan fell to less than 20m...

http://www.globalpolicyjournal.com/blog/16/06/2014/donors%E2%80%99-...

http://www.brookings.edu/blogs/up-front/posts/2014/05/05-data-extre...

Comment by Riaz Haq on June 1, 2016 at 3:54pm

#Pakistan's new higher #poverty line of Rs. 3,030.32 pm per adult to classify 59m as poor: Planning Commission

http://www.dawn.com/news/1261693/govts-new-poverty-line-to-classify...

Pakistan has performed exceptionally well in reducing monetary poverty over the past 15 years, down from nearly 35pc of the population in 2001-02 to under 10pc in 2013-14.

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As the country’s population is estimated to be around 200 million, the new poverty line set by the government will allow 6.8 to 7.6 million households or 53 to 59 million people to be classified as poor, according to a Planning Commission document.

This demonstrates the government’s commitment to reaching low-income households through its policies and interventions, and to improving the lives of all of Pakistan’s people, the document says.

Read: New poverty line makes a third of Pakistanis poor

The commission says that by resetting the poverty threshold the government is reaffirming its commitment to a sustainable and inclusive development path which is aligned with its policy priorities.

According to poverty rates based on the 2013-14 re-estimation, the new poverty line is Rs3,030.32 per adult equivalent per month, and 29.5 per cent of the population will be considered poor.

Based on the most recent Household Income and Expenditure Survey, conducted in 2013-14, Pakistan’s poverty line was equal to Rs2,259.4 per adult equivalent per month. This number translates into Rs2,502.32 per person per month.

The commission mentioned its commitments on Sustainable Development Goals (SDGs), a robust social protection programme, and the creation of more and better jobs for the poor.

According to the commission, most developing countries revisit their poverty threshold when poverty rates get as low as those seen in Pakistan today.

In light of this, the government has made a decision to raise the bar on which it will consider the poor in Pakistan today.

Pakistan has performed exceptionally well in reducing monetary poverty over the past 15 years, down from nearly 35pc of the population in 2001-02 to under 10pc in 2013-14.

The last time a poverty line was set in Pakistan was in 2001-02. The line used the food energy intake method, with a reference group that included the bottom three quintiles of the distribution of expenditure as the reference group.

It also used a caloric threshold of 2,350 calories per adult equivalent per day — higher than the FAO standard used in much of the region.

In Pakistan, the reduction in poverty led to an increase in dietary diversity for everyone. For the poorest, the share of expenses devoted to milk and milk products, chicken, eggs and fish, as well as vegetables and fruits increased.

In contrast the share of cereals, which provide the cheapest calories, declined steadily between 2001-02 and 2013-14.

Since foods like chicken, eggs, vegetables, fruits and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption increased the amount that people spend per calorie over time.

The commission’s document says that many secondary and tertiary cities have sprung up in the rural periphery and, with them, the informal economy has burgeoned. This needs to be better captured in national data, including the GDP, and is likely an important source of the reduction in poverty.

An important indicator is the lack of change in the share of the employed in the rural economy combined with the reduction in male participation in agricultural work.

These issues need to be carefully examined in order to understand both the key determinants of the decline in poverty thus far and the prospects for a continued robust decline in poverty.

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