ARE THE VERY POOR DOING BETTER?

ARE THE VERY POOR DOING BETTER? I missed the point of Dick Weisfelder’s comment on my post HOW TO LIVE ON ONE DOLLAR A DAY. Dick wrote, “I wonder whether pundits who measure the percentage living on a dollar a day have controlled for inflation and the buying power of the dollar. Moreover, I remember reading something that pointed out the following. Hypothetically 20% of people could move from 98¢ per day to $1.02 producing the sort of data described above, but with no meaningful change in their situation whatsoever.” I responded: “These studies are supposed to have been corrected for price changes. At this level of income, measurement errors could make a large difference. And measurement problems mean for me that I am reluctant to draw conclusions except when the differences are quite large. And there is something baffling for us in the Western world: can it really be one dollar a day? Nevertheless, I think these conclusions hold up. This is how a lot of people live.” I was so happy to have a link to the article by Banerjee and Duflo, which contains so many important facts, that I passed right over the claim by Tim Horford that the percentage of people living on one dollar a day declined from about 40% to 20% from 1981 to 2001. I agree with Dick. I don’t think we can make precise measurements on this issue. Horford relied for his statement on this article by Chen and Ravaillon. I would highlight the first sentence of the article: “A cloud of doubt hangs over our knowledge of the extent of the world’s progress against poverty.” A couple interesting points from their article: Chen and Ravaillon find that more people living on $2 a day became worse off during the period from 1981 to 2001 than those who gained. The improvement they find took place entirely in China. The number of people living on $1 a day outside China increased during the period.