Economist.com | By invitation: Martin Ravallion

Economist.com | By invitation: Martin Ravallion:

There is an argument as to the right way to measure poverty. In a previous Economist article, data published by Xavier Sala-i-Martin of Columbia University was presented as challenging the poverty estimates of the World Bank.

Mr. Sala-i-Martin uses GDP from national accounts to measure average per capita income, and uses household survey findings to estimate how that average per capita income is distributed across households. GDP includes much more than household consumption; private investment and government spending, for example, are included in GDP. The World Bank's numbers are based on actual surveys of household incomes; they do not include allowances for investment and government spending; they typically include only the most basic food and other consumption needs. Mr Sala-i-Martin's poverty lines should therefore be higher than those of the Bank. The number of people living below a given dollar value of GDP per capita will necessarily be lower than the number of people living below the same dollar value of household income.

I am sure that Mr. Sala-i-Martin and Mr. Martin Ravallion (writing for the World Bank) would agree that whatever the uncertainty in the data, the number of people living in abject poverty is too large, and that neither would want to bring up their own family on $2 per person per day of household income.