The Truth About the Poverty Line

I learned something new about the poverty line of “$1.25 per day” today. I’d thought it was an absolute number. That as you moved from one country to another, $1.25 would buy you more or less stuff, depending on how much the goods and services of a particular country were going for.

Poorer countries tend to have cheaper things, so in really poor countries $1.25 will go a long way. But I was wrong. It doesn’t work that way.

From the book The Life You Can Save by Peter Singer:

In response to the “$1.25 a day” figure [cited by the World Bank], the thought may cross your mind that in many developing countries, it is possible to live much more cheaply than in the industrialised nations. Perhaps you have even done it yourself, backpacking around the world, living on less than you would have believed possible. So you may imagine this level of poverty is less extreme than it would be if you had to live on that amount of money in the United States, or any industralised nation. If such thoughts did occur to you, you should banish them now, because the World Bank has already made the adjustment in purchasing power: Its figures refer to the number of people existing on a daily total consumption of goods and services–whether earned or home-grown–comparable to the amount of goods and services that can be bought in the United States for $1.25.

I was shocked when I first read this. Whenever I read about the poverty line I’d think to myself sure, $1.25 isn’t much, but it’d probably buy me much more in a third-world country. To me, it didn’t make sense to live on so little each day. It wasn’t part of my world view at all. It was as if you told me that there were two moons in the sky–I wouldn’t, couldn’t, believe it.

It’s made me think. And I hope you, too.