An Adjustment to Global Poverty Line

Since the introduction of the dollar-a-day poverty line in the 1990 World Development Report, the World Bank has used purchasing power parities (PPPs) — exchange rates that account for relative price differences across countries — to derive the international poverty line and estimate global poverty. The international poverty line is set as the typical national poverty line in the world’s poorest countries.  PPPs are used to convert national poverty lines as well as the value of households’ income and consumption — the backbones of global poverty measurement — to a common currency across countries.

The international poverty line increases over time primarily because prices tend to increase.  As new PPPs have been released, the World Bank has revised the international poverty line from $1 a day in 1985 PPPs to $1.08 with 1993 PPPs, to $1.25 with 2005 PPPs, and to the $1.90 line with 2011 PPPs that is used today.

We are now about to adjust it again.

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