How the Dollar-a-Day Poverty Line Came into Being

Even after thirty years, there are still misconceptions about how the dollar-a-day standard used to measure poverty in the developing world came into being.  Some, usually those critical of the World Bank, claim that Hollis Chenery, one of the World Bank’s chief economists, casually threw out the number over cocktails (or brandy, depends on who is telling the story) and World Bank staff ran with it from there.  This is incorrect.  Hollis, always the professional, was never casual, and anyway he’d left the World Bank long before the idea of measuring the extent of poverty had arisen.  Many others, including former and current colleagues at the World Bank, assume that it was introduced in the 1990 WDR on poverty.  This is also incorrect.  The term is nowhere to be found in that report.

Here’s what happened.  As director of the 1990 WDR, I wanted a way of documenting the extent of poverty around the world, something that had not been attempted to that point.  For this, a poverty line separating the poor from the non-poor was needed.  The danger, of course, was that a poverty line introduced by the World Bank, no matter how well intentioned, would be seen by those critical of the institution as something ‘imposed’ on the poor by World Bank technocrats and end up fodder for Chenery-type jokes.

To establish an international metric with credibility, I proposed that it should reflect the poverty lines actually used in the poorest countries of the world.  But what did national poverty lines in those countries look like?  Fortunately, the very best possible researchers were at hand to put together all available information on national poverty lines in low-income countries.  Their findings showed that poverty lines in the least developed countries clustered around a single figure — $370 a year [1].  That was how we arrived at the poverty line used in the 1990 WDR.

The dollar-a-day poverty line was never mentioned in the report.  How then could that phrase appear in the press immediately after publication of the report?  In a meeting to brief Barber Conable, then President of the World Bank, two or three days before release of the report, Tim Cullen, the Bank’s press secretary, pointed out that $370 a year translated neatly into a dollar a day, a much more graphic way of presenting the measure.  Tim had a talent for coining easy-to-understand terms for development data and concepts, and Conable was delighted with this suggestion.  He used it in his opening remarks at the WDR press conference on July 5, 1990, the first time the metric was used in public.  Thereafter, its use became widespread.

This short historical note on poverty lines provides me with an opportunity to pay a personal tribute to Martin Ravallion who, as I’m sure everyone knows, passed away recently.  As someone who worked with Martin over many years, I saw first-hand what a huge contribution he made to measuring poverty.  Thanks to him, our knowledge of the extent and depth of poverty is no longer limited to just a few countries but now covers almost the entire developing world.  What an extraordinary achievement, an inestimable boon to policy makers and his fellow researchers.

The technical skill, attention to detail, and perseverance this task required was, I am convinced, well beyond the compass of most other professionals.  A second Martin (for surely there must have been two of them) was, however, simultaneously producing countless high-quality research papers on virtually every aspect of poverty.  Martin, whether through data or through analysis, has done more to inform the world about poverty than any other researcher.  In life Martin was, and in memory he always will be, one of the profession’s giants.

* Lyn Squire served at the World Bank as Chief Economist for the Middle East and North Africa, Director of the Policy Research Department, and Director of the 1990 WDR on Poverty.

[1] “Quantifying the Magnitude and Severity of Absolute in the Developing World in the mid-1980s”. A background paper for the 1990 World Development Report, prepared by Martin Ravallion, Gaurav Datt, Dominique van de Walle (a WDR team member), and Elaine Chen.

KEYWORDS   Martin Ravallion, poverty line, WDR 1990