The Hindu : National : ADB offers new poverty measure

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ADB offers new poverty measure

Special Correspondent

NEW DELHI: The Asian Development Bank has offered a new way to measure poverty in the Asia and Pacific region, a day after the World Bank issued an update based on revised norms. The new poverty line, called the ‘Asian Poverty Line’, is roughly $1.35 a day.

In its report ‘Key Indicators 2008’ released on Wednesday, the ADB describes important methodological issues involved in generating internationally comparable estimates of poverty. Titled ‘Comparing poverty across countries: The role of purchasing power parities,’ the report also provides comparable rates of poverty using price data specific to the Asia and Pacific region and, critically, to the poor.

An ADB statement said a major contribution of the report is its examination of the sensitivity of poverty estimates to different methods for evaluating purchasing power parities (PPP). PPPs are conversion factors that ensure a common purchasing power over a given set of goods and services.

The report, using original data collected specifically for its study, examines where the poor shop, what they buy, in what quantity and their quality. The prices they pay are used to generate a new set of PPPs — poverty PPPs. “Our aim was to shed light on how alternative approaches to compiling purchasing power parities can influence internationally comparable estimates of poverty,” ADB’s Chief Economist Ifzal Ali said. Using consumption PPPs, the report estimated that in the 16 countries that participated in the study, 1.042 billion people would have been living below $1.35 a day in 2005. Under more robust poverty PPPs, this estimate would drop to 843 million people.

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