Global poverty: A Review of Measurement, Levels, and Trends in a Historical Perspective

Abstract

AbstractGlobal poverty both in terms of conceptualization and measurement has been the point of a long‐standing debate for at least the last 20 years. The debate mostly evolves around the appropriateness of the dominant dollar‐a‐day approach—conceptualized and popularized by the World Bank since the early 1990s—and the quest for (better) alternatives. The most prominent alternatives are the cost of basic needs method and the capabilities/multidimensional. However, the later lacks medium and long run global reach due to data limitations. In addition, global poverty estimates across the literature resist meaningful direct comparison due to the substantial methodological differences between each attempt, even using the same broad methodological framework. More welfare demanding definitions of cost of basic needs implementation, building upon the EAT‐Lancet healthy reference diet, indicate that global poverty has reduced at a much lower rate, and its estimates diverge at an increasing rate from the dollar‐a‐day definition of extreme poverty. This review compares the two main approaches on the definition and measurement of global poverty and contrasts available results with a focus in the long run implementations.