What does the World Bank's new poverty line mean for the PPI? >

Julie Peachey
• Posted in poverty lines

As many of you have heard, the World Bank updated the international poverty line from $1.25/day based on 2005 PPP to $1.90/day based on 2011 PPP.  This new poverty line reflects changes in purchasing power parity (PPP) [involving a substantial re-assessment of purchasing powers around the world] and prices between 2005 and 2011.  A fundamental aspect of the PPI is that it allows you to estimate whether a particular household or group of households is above or below various national and international poverty lines, such as $1.25/day 2005 PPP.  So, how does the new poverty line affect the PPI and its users?

It’s important to note that if you want to measure against the new $1.90/day poverty line, you can’t use the existing look-up tables with 2005 PPP lines because the 2011 PPP lines are not equivalent to any existing lines.  New and updated PPI scorecards will start incorporating the $1.90/day 2011 PPP line beginning in 2016.  You can view the current pipeline of PPIs being developed or updated here.  

We’ll be keeping the $1.25/day line in each look-up table to enable current PPI users to measure change over time.  For example, if an organization has collected and calculated PPI likelihoods in past years using the $1.25 line, it should continue to use that line when analyzing change over multiple years. Retrofitting the whole portfolio of PPIs (those that are not also otherwise getting updated) to include the $1.90/day 2011 PPP will be done on an on-demand basis in the short-term.  This is all similar to the process we went through in 2008 when the $1.00/day line was adjusted to $1.25.

We know that for 2005 PPP, there are a number of lines that people use ($1.25/day, $2.00/day, $2.50/ day, etc.). While we expect that people will also use multiples of the $1.90/day 2011 PPP lines, we do not yet know what those will be.  

Please write to us at ppihelpdesk@poverty-action.org if you have questions about how the new poverty line impacts use of the PPI.  For more detailed information about the World Bank’s process in calculating the $1.90/day 2011 PPP line, this blog post is a good summary.  You can also view this recording of a World Bank livestream event discussing the updated poverty line.