How Many People in the World Are Actually Poor?

Good news: Economists at Oxford have come up with a better method for measuring global poverty. Bad news: There are way more poor people than previously thought.

Ricardo Moraes/Reuters

Poverty got redefined this week.

The Oxford Poverty & Human Development Initiative (OPHI) released a report,  the Global Multidimensional Poverty Index 2014 (MPI), on Tuesday looking at the state of poverty in the world today. It is being touted as the most accurate reflection of the world’s poor, a sort of census of the global impoverished population.

Didn’t that exist already? For more than a decade, the United Nations Development Programme has measured world poverty using its Human Poverty Index (HPI). The HPI defined poverty as those making less than $1.25 a day, a measurement used by the World Bank.

But it lacked in two key areas. First, it counted countries as one whole mass, unable to differentiate degrees of poverty within a country and locate the worst pockets. And second, it placed all of its scrutiny on income, without considering other indicators such as health and education.

Sure, making a certain amount a day is one way to measure the physical comforts a person might be lacking: home, food, clothing. But what about limited (or a total lack of) access to medical care? Or barriers to getting an education? And just because someone has a roof over his or head doesn’t mean it’s a sanitary, safe place to live—impoverished people in cities are often concentrated in slums where open sewage, crowding, and rickety housing make for dangerous living conditions. Consequently, many didn’t consider HPI’s income index to be particularly accurate.

So OPHI reconsidered poverty from a new angle: a measure of what the authors term generally as "deprivations." They relied on three datasets that do more than capture income: the Demographic and Health Survey, the Multiple Indicators Cluster Survey, and the World Health Survey, each of which measures quality of life indicators. Poverty wasn't just a vague number anymore, but a snapshot of on-the-ground conditions people were facing.

OPHI then created the new index (the MPI) that collected ten needs beyond “the basics” in three broader categories: nutrition and child mortality under Health; years of schooling and school attendance under Education; and cooking fuel, sanitation, water, electricity, floor, and assets under Living Conditions. If a person is deprived of a third or more of the indicators, he or she would be considered poor under the MPI. And degrees of poverty were measures, too: Did your home lack a roof or did you have no home at all?

Perhaps the MPI’s greatest feature is that it can locate poverty. Where the HPI would just tell you where a country stood in comparison to others, the MPI maps poverty at a more granular level. With poverty mapped in greater detail, aid workers and policy makers have the opportunity to be more targeted in their work.

So what did we find out about poverty now that we can measure it better? Sadly, the world is more impoverished than we previously thought. The HPI has put this figure at 1.2 billion people. But under the MPI's measurements, it's 1.6 billion people. More than half of the impoverished population in developing countries lives in South Asia, and another 29 percent in Sub-Saharan Africa. Seventy-one percent of MPI’s poor live in what is considered middle income countries—countries where development and modernization in the face of globalization is in full swing, but some are left behind. Niger is home to the highest concentration of multidimensionally poor, with nearly 90 percent of its population lacking in MPI’s socioeconomic indicators. Most of the poor live in rural areas.

In the midst of these depressing statistics, there are bright spots. Nepal is improving its situation the fastest among developing countries—and it’s in South Asia, the poorest region. In five years, Nepal reduced its MPI numbers from 65 percent of its population to 44 percent. Other classically poor countries, like Rwanda, Ghana, Bangladesh, and Cambodia are also improving, not just getting richer but also seeing some narrowing of the gap between rich and poor.

For the full report, click here.

This post originally stated that the Human Poverty Index is based on information provided by the United Nations Development Programme rather than the World Bank. We regret the error.