Jim Kim’s $1.25 fig leaf

Lant Pritchett cogently points out that the WB insistence that we can “end extreme poverty” relies on a very arbitrary definition of extreme poverty, namely people living below $1.25 a day.

Lant notes that, “No person in history has ever celebrated crossing the dollar a day threshold—any more than any other income gain—there is no line.”

But then he kind of drops the ball by not really attempting to answer the key question he poses, which is,

“So why does the thousand dollar a day crowd try to project an imaginary (and extreme) poverty line into a world in which it doesn’t exist—even as a social construct?”

I’ve written about that question before, and I think the focus on $1.25/day is simply a CYA, keep the money flowing, pay no attention to the man behind the curtain, attempt by the World Bank to find something, anything that doesn’t make them look like a complete failure.

Because $1.25 a day is the only “line” they can draw where it looks like they are doing a good job wrt reducing extreme poverty.

Lant talks about $10 a day as a realistic “line”; hell let’s just consider $2.00 a day!

Here’s the data (from the WB, clic the pic for a more legible image):


As you can see, there could be no claim of 800 million people lifted out of extreme poverty if we used even this paltry (and equally artificial) $2.00 “line”. It would be only around 100 million, with well over 2 billion left behind.

This puts the lie to WB claims that great progress has been made and that they are on the verge of eliminating extreme poverty. 

So pay no attention to Jim Kim’s $1.25 fig leaf. The simple truth is that the WB has been a massive failure with respect to eliminating extreme poverty.