试听180秒079：Poverty Lines Around the World

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Hello, Himalaya’s subscribers. My name is Timothy Taylor.

And today  we're going to discuss poverty lines around the world. If you look back over all of human history and I'm talking about decades ago, centuries ago, even back to several thousand years ago, most people, most of the time, did not have the basic necessities of life. I mean they didn't have enough to eat. For example, a scientist to go back and look at old villages or grave sites can see signs of disease from lack of nutrition. You think many of them didn't have much shelter or the clothes they wore would look primitive by modern standards. 

Economic development all around the world can be thought of as a long movement away from this kind of absolute poverty. But if you go back only thirty years, this kind of deep absolute poverty was still quite common in many places around the world. By a standard measure we’ll talk about about thirty years ago, more than one third of all the people on planet earth were living in a situation where they lacked the basic necessities of life. Now that's dropped from more than one third to less than one tenth of all the people on planet earth living in a situation where they lack the basic necessities of life. 

This is truly an incredible change. Something like one quarter of all the people on earth have been lifted out of the most desperate and difficult kind of poverty in only about thirty years. There's really nothing like it in world history. As we'll see, the experience of China is a big part of this story. In 2018, it was common to hear China's government, they would sometimes refer to three tough battles for the next few years. And we've already talked about two of these battles in earlier lectures. One tough battle was to address the issues of financial risk and excessive borrowing in certain areas of China's economy. A second tough battle was the issue of pollution and how to find cost effective ways of reducing pollution while still encouraging economic growth. And now it's time to talk about the third tough battle. The third tough battle is reducing and eliminating absolute poverty. 

We'll discuss this in three parts. First, what's the definition of absolute poverty? Second, we'll talk about poverty lines in middle income and upper income countries, and third we’ll discuss the dramatic fall in poverty in China and around the rest of the world. So let's start with first, what is the absolute poverty line? Well, it's simple enough. Pick a level of income, and we'll say that anyone who has less than this level of income is poor, and those who have more are not poor. 

When you first hear this idea of a poverty line, it might seem a little bit strange. I mean, does this idea make sense? Does it make sense to say someone who is one yuan below the poverty line is poor and someone who is one yuan above the poverty line is not poor? I mean basically they're in the same category, right? And while this objection is true, It doesn't actually bother me very much. It's useful to have a poverty line not for making distinctions between individuals, but for looking at the whole society and seeing how many people are above or below that line. 

It doesn't mean we only have to pay attention to those below the poverty line. It makes some sense to worry more about the extreme poor who are very far below the poverty line. And we can still think about how to help the near poor who might be just barely above the poverty line. But either way it's useful to have a line so we can think about these different groups. How do we decide what the poverty line should be? Well, a little bit of history here. Let's go back to nineteen ninety, which is when China had started its rapid growth but was still classified as a low income country. At that time researchers at the World Bank looked all around the world and how governments of different low income countries were defining poverty in their own country. 

And there was some variation of course between countries, but there was a lot of similarity, too. Because if you think about it, basic human needs for things like nutrition, clothing, and shelter are going to be somewhat the same for people no matter where they live. These researchers wanted to have a common poverty line that they could use do comparisons across countries. And so based upon what they were hearing from different countries all around the world, they settled on what came to be known as the one dollar a day poverty line. What that meant was that poverty was defined as having consumption of about one dollar per person per day, and of course this would be expressed in the currency of each individual country. Back around 2005,researchers did the same exercise again and with various changes in prices and exchange rates that had happened. 

They set the poverty line at one twenty-five a day per person and in 2015 they did it all over again again with changes in prices and exchange rates and they set the poverty line at one dollar and ninety cents in consumption per person per day.Now in China, the official national poverty line is a two thousand three hundred yuan in RMB per year are measured using the price level in 2010 and right now if you convert that using the purchasing power parity exchange rate we talked about before, that's a little bit higher than the one ninety per person per day that the World Bank uses. If you use China's officially poverty line, China's National Bureau of Statistics reported that about thirty million people were below the official poverty line in China at the end of 2017. 

If you use the World Bank poverty line, it's a little bit lower income level. So the World Bank would estimate that China has about eighteen million people below its poverty line. But either way, the official goal for China is to essentially eliminate all poverty using the national poverty line by the year 2020. And we'll talk more about policies for doing that in a later lecture. Right now, I wanna turn to our second point, which is poverty lines in middle income and high income countries. This one dollar ninety per day poverty line applied to low income countries. 

But as an economy grows, the idea of poverty changes,too. The idea of what it means to be poor is different in a high income country like the US or countries of western Europe, compared with middle income countries like China or Brazil or Turkey. And that will be different then compared to low income countries, like Ethiopia or Afghanistan. So again, economists, the World Bank gathered data on how different countries at different income levels, decided on what their national poverty line would be. And eventually they decided that for countries that were lower middle income countries, the average national poverty line would be three twenty per person per day in consumption. For upper or upper middle income countries, a typical national poverty line is five fifty US dollars per person per day. And for high income countries, a typical poverty line is in US dollars twenty one dollars and seventy cents in consumption per person per day. 

For a specific example from a high income country in the US the official poverty line moves a little bit according to how many people and children there are in a household, but roughly it's about eighteen dollars per day per person in consumption and about fifteen percent of the US population falls below that poverty line. Now, again the goal for China is to reduce its official poverty line of the number of people below the official poverty line to zero. And it's quite possible China will be able to do this in the next few years. 

But at that point, I wouldn't be at all surprised to see China's government set a new higher national poverty line, since China is now a middle income country, and then China will continue its efforts in reducing poverty. Now, this idea that the poverty line goes up as nations become better off does raise some questions about what we mean by poverty. I mean, after all, if poverty is going to go up higher and higher, then it seems like poverty is not being defined in an absolute sense, but is being defined relative to what other people in society earn. And in fact, some European countries defining poverty in relative terms are explicitly. 

Their idea is instead of having a poverty line that is fixed and adjusts for the inflation level, they set the poverty line this way, calculate the median level of income in a country. And the median would be the level of income where half the people are above that level, and half the people are below that level. Then take sixty percent of the median level of income. And that will be the poverty line. Now this approach has some appeal. The poverty line will steadily go up as the economy grows. It also has some problems. 

Say that an economy has some really bad years, and the size of the economy actually shrinks. Well, then the poverty line will drop also, even though people aren't any better off than they were before, you can still end up with a situation where, say the economy grows and you end up with more people in poverty than before,not because people got worse off, but because the median income got higher and that pulled the poverty line higher as well. So my overall point is there's nothing wrong with defining poverty in relative terms, but it's useful to remember how the definition set when you're defining poverty in relative terms. It might be hard to eliminate poverty if the poverty line is going to keep rising steadily over time. 

So whenever poverty is higher or lower, just be sure you think about how poverty is being defined and what that actually means. Let's move to our final point, the reduction of absolute poverty in China and around the world. And here we'll go back to that definition of absolute poverty for the poorest people in the world. And I'll use the definition of one dollar and ninety cents per person per day in consumption, because it's easier to use that to compare across time and across countries. Back in 1990, about one point eight billion people around the world were below that poverty line. And as I noted earlier, that's roughly one third of all the people on earth. Right now only about seven hundred million people are below that poverty line and the numbers been falling dramatically. So that's one point one billion people who are not under the poverty line but would have been thirty years ago. Now that's just an extraordinarily large shift over a period of thirty years or so since 1990. There's really just nothing like it in world economic history and China is right in the middle of it. 

If you go back to about 1990, about one third of all the people in the world who were below the absolute poverty line lived in China. Now only about three percent of the people in the world who are below the absolute poverty line live in China. It's still true that thirty million people in China are in poverty but it's not hundreds of millions like it was thirty years ago and it seems to be headed for it near zero level of poverty really quite quickly. If you look around the world now the two countries with the highest share of absolute poverty are India which includes about one quarter of the world's poor and Nigeria which has about ten percent of those in the world below the absolute poverty line. 

There's also, I think, an interesting shift in where the poorest people in the world live. If you go back to about 1990, something like ninety percent or more of the world's poorest people lived in low income countries. But at that time, China was a low income country, and so is India, Pakistan, Indonesia, Nigeria. All of those countries,China, Pakistan, India, Nigeria, Indonesia, those are all middle income countries now. So actually, if you look around the world right now, about half of the people in the world who are below the poverty line in absolute poverty live in middle income countries like China. 

The other half live in low income countries, like I mentioned Afghanistan and Ethiopia before. Now this really makes difference when you think about policies to help the poor in the world. If you're in a low income country, you can get aid from places like the World Bank or from high income countries to reduce poverty. But middle income countries don't usually get foreign aid, and instead, middle income countries like China may be giving aid to others, and that means that those middle income countries need to figure out how to pay for reducing poverty on their own. 

Let's end here with a few review questions. What is a poverty line? How do economic researchers choose a global poverty line? What's the difference between an absolute poverty line and a relative poverty line? And how has absolute poverty changed in China and around the world in the last thirty or forty years? In the next lecture we’ll take a small detour, we’ll discuss how the ideas of poverty and inequality are related to each other from an economic point of view, and then we'll return to discussion of policies to fight poverty. 

I'm Timothy Taylor. Thank you for listening to Himalaya.