News & Stories FAQs
The International Poverty Line
Last year the World Bank adjusted the International Poverty Line from US$1.25 to US$1.90 per day.
This shift occurred due to the need for our definition of poverty to reflect changes over time in the goods that people need to buy to stay out of poverty, and changes in what those goods cost. But why a move from US$1.25 to US$1.90? Let’s go a little deeper…
The International Poverty Line has been defined according to an assessment of purchasing patterns and costs in 15 of the poorest countries in the world, inflated to 2011 prices, and converted into US$ using the Purchasing Power Parity (PPP).
The PPP can be described as the quantity of a country’s currency required to buy a specified basket of common goods and services. PPP is determined in each country based on its relative cost of living and inflation rates.
Although the US$ value of the poverty line has increased, poverty levels under the new definition are little changed (this is because the US$ has also weakened in the poorest countries). For example:
- In India, a child living at the poverty line of US$1.90 is 60% more likely to be malnourished.
- In Niger, an infant at the US$1.90 poverty line has a mortality rate at triple the international average.
The International Poverty Line is a point of reference for the new Sustainable Development Goals and is used to track global poverty and measure other poverty indicators. However, once this line is defined according to a new PPP, other lines are defined around it in order to target different groups. For example, with the previous poverty line (US$1.25 a day), a US$2.50 a day line was also adjusted to US$3.10.
The Opportunity International Network also collects poverty data from the countries we work in to ensure our programs have maximum impact on families in need, based on the defined international poverty lines as well as the Progress Out of Poverty Index (PPI). The PPI is a country-specific poverty measurement tool, consisting of 10 questions, that helps us measure poverty outreach (the portion of clients who live below the poverty line), assess the performance of our services among our clients and track poverty levels over time. At Opportunity, we promote the use of the PPI across our partners as a practical and low-cost survey management tool to improve outreach to people living in poverty.
As referenced in our 2015 Social Performance Report, our loan recipients based in the Philippines who have been in our program longer show a reduced likelihood of remaining in poverty compared with newer clients. We are working to expand our tracking of poverty levels against international poverty lines using tools such as the PPI, but these initial results suggest a positive impact on poverty levels from our programs over time.
Consider Beatris for example. She was raised on a farm in the Philippines where there was barely enough food for her 10 siblings to eat. Since receiving a small loan in 2009 to start a rope weaving business, Beatris’s income has grown 10 times over and above her pre-loan income.
She is able to provide her family with the comfort of shelter, regular meals, clean water and electricity, as well as jobs for more than 40 employees so they can earn incomes too.
For all the statistics and figures on how Opportunity’s programs are impacting the lives of families in poverty, take a look at our latest Annual Review.