Current international poverty line misleading: Study

NEW DELHI: The currently-used international poverty line is misleading, and billions of foreign aid dollars could be utilised more effectively if the line was more accurate statistically, a study revealed on Tuesday.

The international poverty line, set by the World Bank, averages national poverty lines across low-income countries to ensure cross-country comparability based on food and non-food expenses.

As per the new statistical analysis, published in the journal Humanities and Social Science Communications, there are many faults in the estimation of the line.

A team led by Dr Michail Moatsos, a research fellow in the Department of International Development, King’s College London, said that the current poverty line shows a very skewed image of poverty, citing the case of Covid-19 which he believes impoverished many individuals but they are not represented properly because of the fault in this line.

The main problem with the current method, the team said, lies in the comparisons of ‘purchasing power’.

Dr. Moatsos argued that outdated purchasing power parity calculations mislead poverty statistics, potentially affecting as many as 190 million individuals.

Purchasing power parities are used by economists to compare average incomes across countries but are sometimes also used in comparing living standards.

While it is an easy idea to implement, it does not serve the real purpose of reducing poverty.

The team advocated for abandoning the current 'one-size-fits-all' approach in favour of implementing the UN's Copenhagen Declaration on Social Development in 1995, which defines what absolute poverty is.

However, this is not yet implemented consistently across member states.

The team suggests that there is an urgent need for official consideration of alternative approaches to monitoring global poverty.