How many poor people are there?

Scott Forbes linked me to a thought-provoking 2005 article titled "How not to count the poor"by Sanja Reddy and Thomas Pogge at Columbia University (PDF). The bottom line is that the simple question of how many poor people there are in the world is surprisingly hard to answer.

Reddy & Pogge argue that "[t]he World Bank’s approach to estimating the extent, distribution and trend of global income poverty is neither meaningful nor reliable. The Bank uses an arbitrary international poverty line that is not adequately anchored in any specification of the real requirements of human beings. Moreover, it employs a concept of purchasing power "equivalence" that is neither well defined nor appropriate for poverty assessment. . . In addition, the Bank extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates." Furthermore: "There is some reason to think that the distortion is in the direction of understating the extent of income poverty."

(A rebuttal by Mark Ravallion at the Bank can be found here.)

Their alternative: construct poverty lines in each country using a "common achievement interpretation". Such poverty lines would use the local costs of achieving universal, commonly specified ends like being adequately nourished. (Ravallion argues this is pretty much what countries already to do create national poverty lines.)

Reddy & Pogge argue that such poverty lines "would have a common meaning across space and time, offering a consistent framework for identifying the poor. As a result, they would permit of meaningful and consistent inter-country comparison and aggregation."

The catch seems to be that such an approach requires one "to carry out on a world scale an equivalent of the poverty measurement exercises conducted regularly by national governments, in which poverty lines that possess an explicit achievement interpretation are developed." This is difficult politically, since a common core conception of poverty will have to be agreed, and financially, since local poverty commissions in each country would have to be funded to construct and update poverty lines over time.

The authors don't claim that their metric would lead to substantially different, or better, policies. Better then, perhaps, to spend money on poverty-focused development assistance rather than improving the metrics. However, the Bank should be more honest about the flakiness of its numbers by at least not reporting them "with six-digit precision".

Cutting world hunger as a US policy goal

There are two groups who think harder about allocating scarce resources than the rest of us: professional economists, and poor people. Recently an eminent collection of economists concluded that helping poor people was the best way to use scarce resources to solve the world's biggest problems.

The challenge of the “Copenhagen Consensus” was as follows: Imagine you had $75bn to donate to worthwhile causes. Where should we start?

The most effective action we could take, according to eight leading economists, including five Nobel Prize winners, was to combat malnutrition in the 140 million children who are undernourished.

Providing vitamin A capsules and a course of zinc supplements for 80% of the children who lack essential vitamins would cost just $60 million per year, and yield benefits of more than $1 billion per year. This means that each $1 spent on this program creates benefits worth more than $17 in the form of better health, fewer deaths, and increased future earnings

Explaining why this project came out on top of the list, Nobel Laureate Douglass C. North said that “it has immediate and important consequences for improving the wellbeing of poor people around the world - that's why it should be our number one priority.” As soaring food prices put tens of millions of people at risk of hunger, vitamin supplements for children are critical to protect vulnerable populations.

The remaining priorities of the Copenhagen Consensus include opening agricultural markets; disease control; expanded immunization of children; increased education, especially for women and girls; and community-based nutrition promotion.

These priorities come as no surprise. In 2000, the United States joined all countries in the world in committing to the Millennium Development Goals to improve life for the world's poorest people by 2015; these goals include all the priorities identified by the elite cadre of economists at the Copenhagen Consensus. We are now half-way to 2015, and running behind schedule; we need to strengthen the United States' commitment to meeting these goals.

We should re-commit to cutting hunger and poverty by making it an official goal of U.S. policy. We must modernize and streamline U.S. assistance to ensure the maximum benefit reaches those in greatest need. According to Bread for the World, 12 departments, 25 agencies, and almost 60 government offices plan and implement U.S. global development policies and programs—hardly a model of seamless efficiency.

Last year Congress passed the Global Poverty Act, a bill introduced by a bipartisan group of lawmakers, including Rep. Adam Smith, and co-sponsored by Representatives Brian Baird, Norm Dicks, Jay Inslee, Rick Larsen, Jim McDermott, and Dave Reichert. The legislation aims to focus U.S. efforts to meet the most pressing Millennium Development Goal: cutting in half by 2015 the number of people living on less than $1 a day. The Global Poverty Act would also require a coordinated strategy to achieve this goal through U.S. aid, debt relief, and trade policies. The strategy would emphasize cooperation with other countries, international institutions, faith-based groups, and the private sector.

Senator Maria Cantwell was one of the original sponsors of the companion bill in the Senate, and Sen. Patty Murray is a co-sponsor. The Global Poverty Act now has 21 co-sponsors in the Senate. Senators Murray and Cantwell should use their influence on Capitol Hill to garner additional support for the bill.

America needs wise and active partners in every country to build a safe and prosperous world. Healthy and flourishing people in Africa will not only use our software, ride in our planes, and buy wheat from the Palouse; they will also help us write software, produce goods we need, and enrich our intertwined cultures. Alleviating hunger and poverty in the developing world is part of building a better America, as well as being the most cost-effective way to solve the world’s most pressing problems.