In September 2015, Heads of State will convene at the General Assembly of the United Nations to agree upon a set of sustainable development goals (SDGs). The first target of the first SDG proposed by the Open Working Group (OWG) of Member States is to "eradicate extreme poverty for all people everywhere" by 2030. The second target is to reduce at least by half the proportion of people living in poverty according to national definitions. These are noble and historic targets for global progress--they deserve their status at the top of the list. At the same time, they illustrate issues affecting a considerable number of the 169 development targets proposed by OWG, such as how do we measure them and are they plausible?
These two questions are linked. How we resolve the challenges of measurement will have a profound impact on the targets' power to motivate as well as on the likelihood that those targets will be met. Poverty lines at the national and local level are frequently revised upward, and there are good reasons for this. This approach, however, risks the possibility that steady development progress will not yield poverty reduction, simply because the poverty line keeps moving too.
As OWG suggested, extreme poverty is "currently measured as people living on less than US $1.25 a day", although that is unlikely to be the case for long. The "official" extreme poverty line and the number of people living below it are calculated by a (well-meaning) cabal in the bowels of the World Bank headquarters. They are working on a revision that could have a dramatic impact on the dollar consumption figure, declared as the "extreme poverty line", as well as on the number of people living below that threshold.
In the past, the global extreme poverty line established by the World Bank was set to reflect the value of national poverty lines in the world's poorest countries. The original 1990 "dollar a day" poverty line was "typical of low income countries"1 at the time. In 2008, it was updated to match the latest available average national poverty line of the world's 15 poorest countries, converted at an exchange rate designed to reflect the different prices of the same goods and services across countries.
The World Bank is in the process of proposing a new global line and other poverty numbers based on more recent national poverty lines, as well as on data from a 2011 global survey of prices. By the time the World Bank decides that it is ready to release the...