Stress-testing the international poverty line and the official global poverty statistics

Abstract

AbstractWe investigate the current method of derivation of the international poverty line used for monitoring SDG 1 in two key directions: (a) we ask whether the official method used by the World Bank is fit for the purpose of measuring extreme poverty and if their method is defensibly valid both internally and externally; and (b) we ask whether the resulting statistics perform acceptably well in terms of accuracy and precision. Using comparative analysis, error accounting methods, and minimization criteria, on key poverty indicators, our investigation gathers compelling evidence that leans towards a negative answer to both questions. We conclude that the adoption of alternative methods for monitoring global poverty should be considered in an official capacity with urgency.