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Measuring the Poverty line in Developing East Asia and Pacific

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Piecing together the poverty puzzle means widening the ways in which we define and measure poverty, acknowledging that poverty is neither one-dimensional nor solely monetary in nature.

Broader measures include two higher-value poverty lines to complement the $1.90 international poverty line—$3.20 and $5.50/day, which are typical of standards among lower-middle and upper-middle income countries.

Poverty is a complex and multifaceted problem

In 2018, the number of poor in developing East Asia and Pacific at the $5.5 poverty line is almost 18 times more than at the $1.90 line.

Poverty exists in other forms that are not monetary; thus, a multi-dimensional poverty measure (MPM) is useful to assess deprivations in multiple aspects of life.

In developing East Asia and Pacific, the share of poor according to a multidimensional definition that includes consumption, education, and access to basic utilities is about 50 percent higher than monetary poverty based on the $1.9 poverty line.

As highlighted in this chapter, poverty is multi-faceted. A larger suite of poverty measures broadens our view and understanding of poverty in the developing East Asia and Pacific region.

Broader measures of poverty are important

As countries have grown economically, the yardstick for measuring extreme poverty based on the International Poverty Line (IPL)—$1.90/day 2011 PPP—has gradually become less relevant to the developing East Asia and Pacific region, which is today comprised exclusively of middle-income countries.

The more prosperous countries in the region, such as China, Malaysia, Mongolia, and Thailand have international poverty rates less than 1 percent.

However, many citizens in these countries would not believe that poverty does not exist.

Their conception of poverty and the standards of living they aspire to are much higher than what is benchmarked by the IPL. At the same time, poverty is a complex and multifaceted problem.

In addition to monetary deprivation, individuals may suffer from lack of access to basic infrastructure, education, and other critical services.

In line with these ideas, the World Bank has recently introduced new poverty measurements based on the recommendations of the Commission on Global Poverty, led by the late Professor Sir A. B. Atkinson, to consider complementary indicators to the core indicator of extreme poverty (World Bank 2017).

Higher poverty lines are needed in developing East Asia and Pacific

Given rising incomes and wealth over the past three decades, the IPL may now be too low to define whether someone is poor in developing East Asia and Pacific.

Higher international poverty lines are needed that are better suited to tracking progress and matching aspirations in more developed countries .

For people living in countries with higher overall income levels, there is value in monitoring progress with higher poverty lines that reflect the increasing costs of basic needs and services in a growing world.

https://openknowledge.worldbank.org/handle/10986/31500

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