By Deon Filmer, Haishan Fu, and Luis Felipe López-Calva
For 35 years, the World Bank Group has measured global poverty to track progress toward eradicating what is considered the most severe deprivation of basic human needs—extreme poverty. This goal is at the very heart of our organization’s mission.
The introduction of the international poverty line in 1990 gave us a global benchmark that captured the daily cost for a person to meet their basic needs in a low-income country, which at that time was $1. The line has been updated several times since then to reflect changing prices and the costs of meeting basic needs. The most recent update, which happened this month, sets it at $3 per person per day.
However, this remains an extremely low bar and reflects the cost of meeting basic needs in the poorest countries of the world. To gain a more comprehensive view of poverty, we also look at other thresholds that reflect the cost of meeting basic needs in countries with somewhat higher income levels. The World Bank introduced two additional poverty lines in 2017, one for lower-middle-income countries and the other for upper-middle-income countries. All three poverty lines reflect the median value of national poverty lines of countries in their respective income groups.
In 2024, we also developed the Prosperity Gap, which helps monitor the shortfall facing low- and middle-income countries from minimum subsistence levels typical of high-income countries.
This relevant and timely data has enabled us to observe long-term trends in global poverty reduction, indicating where progress has been made and where it has not. Insights arising from these measures also help the international community spotlight areas that need greater policy focus in the fight against poverty worldwide.
These indicators show how poverty has changed significantly since the 1990s. At that time, the vast majority of people living in poverty were in three regions: East Asia and Pacific, South Asia, and Sub-Saharan Africa. Since then, the share of people living in poverty has declined dramatically in East Asia and Pacific and South Asia, and has become increasingly concentrated in Sub-Saharan Africa.
The world’s demographics have also shifted considerably. In 1990, almost 60 percent of people lived in low-income countries, while today it’s less than 10 percent. Meanwhile, middle-income countries are home now to around three quarters of the world’s population.
Evolving measurement
As standards of living worldwide have evolved over time, so has how we measure global poverty. We have updated the poverty lines several times to account for higher living costs, to improve measures of household consumption, and because of changes in national poverty lines.
Central to these updates are Purchasing Power Parities (PPPs), which help us understand how price levels differ from one country to another. PPPs are used to convert national poverty lines and the value of household incomes and consumption to a common currency across countries, while capturing differences in living costs around the world.
The first update to the international poverty line happened in 2001, with subsequent revisions in 2008, 2015, 2022, and more recently this month. This latest update, which also applies to the poverty lines for middle-income countries, follows the release last year of a new set of PPPs based on prices collected in 2021 by the International Comparison Program. It also reflects changes in national poverty lines, which is a big reason for the increase, especially for the line that tracks extreme poverty.
Based on these revised factors, the international poverty line for low-income countries is now up from $2.15 to $3 per person per day. For lower-middle-income countries it’s changed from $3.65 to $4.20 per day and for upper middle-income countries it went up from $6.85 to $8.40.
Regardless of the updated amounts, however, the international poverty line still measures the percentage of people living in extreme poverty in the same way it has done since 1990. It shows the share of people living in absolute poverty according to the standards of the world’s poorest countries.
Data at the core
Data provided by countries through their household surveys is key to measuring and monitoring poverty at the national, regional, and global levels. Household surveys provide representative data on people’s incomes, consumption, and expenditure habits as well as their living conditions, especially for groups that do not otherwise appear in other administrative or digital data sources.
In recent years, the scope and quality of information provided by household surveys has improved enormously, especially in low-income and lower-middle-income countries, offering us a clearer view into people’s welfare and day-to-day lives.
For example, many surveys now reflect the full range of goods and services that households consume, including food away from home, housing, and maintaining durable goods such as mobile phones. This improved data now underlines countries’ respective measures of monetary deprivation—and ultimately allow us to better monitor global poverty.
But we know we can do more to enhance the accuracy, timeliness, and policy relevance of household surveys, and we will continue to work with countries to build their statistical capacity and help fill persistent data gaps.
Where do we go from here?
Currently there are 1.5 billion fewer people living in extreme poverty compared to 1990. However, global poverty reduction has slowed substantially in the last decade due to several interconnected crises, including slow economic growth, high indebtedness, conflict and fragility, and severe weather-related shocks. An estimated 808 million people are still living today in extreme poverty. At this pace of progress, it would take decades to eradicate extreme poverty.
While the global poverty lines provide us with a high-level view, they should only be used for cross-country analysis. To evaluate poverty rates in a particular country, its national poverty line is the most appropriate benchmark. These are critical for governments in designing policies to improve the lives of their people and lift them out of poverty and destitution.
We must also recognize that poverty is multidimensional and there are many non-monetary indicators that are essential for understanding people’s welfare, such as access to education, health, sanitation, water, and electricity. Different measures of poverty help provide a broader view and can guide policy decisions to improve the lives of the poorest and most vulnerable.
To advance on the World Bank Group’s mission to end poverty and boost shared prosperity on a livable planet, we rely on strong data, which is the bedrock for policy. This data is critical for monitoring poverty trends and motivating countries to ensure poverty reduction remains a key policy priority. Strengthening how we measure global poverty ensures we continue moving in the right direction.
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