Articles by Sanjay G Reddy

The "updated" estimates of global poverty by the World Bank do not address the basic problem with the past and current estimates, which is the lack of a clear criterion for identifying the poor. There is no basis to conclude that the new set of purchasing power parity rates employed to generate the new poverty estimates are closer to the "truth". We can only conclude that they are differently distorted than the earlier ones. There is, however, a feasible alternative method that would place at its core an identification criterion for the poor based on elementary human capabilities. The careful coordination of household surveys and poverty line construction across countries so as to capture whether individuals have the resources necessary to achieve these capabilities can ensure enduring comparability of poverty estimates over time and space.

The estimates of the extent, distribution and trend of global income poverty provided in the World Bank's World Development Reports for 1990 and 2000-01 are neither meaningful nor reliable. The Bank uses an arbitrary international poverty line unrelated to any clear conception of what poverty is. It employs a misleading and inaccurate measure of purchasing power "equivalence" that vitiates international and intertemporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws is likely to lead to a large understatement of the extent of global income poverty and to an incorrect inference that it has declined. A new methodology of global poverty assessment is feasible and necessary.