Why redraw the line for extreme poverty internationally? What was wrong with 1$ a day?
• The new price data from the 2005 round of the ICP show that we had underestimated the cost of living in many poor countries. Because the cost of living is higher, the number of people shown to be living in poverty is higher. • The same data show that the national poverty lines in the 15 poorest countries in the world are now valued at about $1.25 a day in 2005 prices after correcting for differences in the cost of living. Therefore the extreme poverty line has been reset to reflect the new findings. • The old “dollar a day” poverty line was chosen to represent the threshold of extreme poverty. Based on new data, consumption of $1.25 a day in 2005 prices now represents the best estimate of the extreme poverty line. The new line is the average line for the poorest 15 countries.
