A loaf of bread, a package of eggs or a packet of chewing gum – one euro can’t buy much in Germany. According to the World Bank, anyone who does not have 2 euros a day (or 2.15 US dollars) is living in extreme poverty.

Since the World Bank began collecting data in 1990, the number of people living in extreme poverty has fallen significantly. During the pandemic this number increased significantly, but has now returned to approximately pre-pandemic levels of 690 million people. It took three years from the start of the pandemic for this to happen. In other words, for three years the world was losing the fight against poverty.

In high- and middle-income countries, poverty was already falling as of 2020 thanks to extensive social assistance programs. The situation is worse in low-income countries, as well as in those where there is conflict or instability. Poverty rates are still higher there, while extreme poverty is increasing in some states.

China’s success

Poverty has fallen worldwide since 1990, but not in all regions of the world, says Sebastian Vollmer of the University of Göttingen. The decline is largely due to data from China. “Because China is such a populous country, it has a correspondingly large impact on the World Bank’s poverty data,” says the development economics professor.

“The Chinese have really made huge progress,” argues Rainer Thiele of the Kiel Institute for the World Economy (IfW). From 1990 to 2015, China managed to reduce extreme poverty in its territory from 60% to 6%. Other Asian countries have also achieved great success.

But the situation is different in Africa, where between 1990 and 2019 extreme poverty fell from 50% to 23%. “However, because of population growth there are more poor people in Africa today in absolute numbers,” Thiele points out.

How accurate is the data?

However, there are some doubts about the validity of the data. The World Bank itself admits that, since it receives the data from the statistical offices of the states, there is a margin of error, because many countries did not collect the necessary data during the pandemic.

Methodologically, the approach is absolutely correct, as Thiele says. But while the World Bank’s standards are sound, “how they are ultimately applied in countries is sometimes questionable,” especially in countries where the government has limited data collection capabilities. Furthermore, self-sufficient households in rural areas may not even know the value of their production when answering questionnaires.

The data from China is also disputed, but for different reasons. As Sinologist Hans Kiener from the University of Munich explains, “the figures come from official Chinese statistical agencies and cannot be verified. Whether we can trust them is, as everyone knows, debatable.”

Defining extreme poverty is important

Also, while many people in China and India can afford more than the US$2.15 threshold, “they are still of course poor from our point of view,” says IfW’s Thiele .

A lot of people can maybe give three or four dollars to live on, but that’s still considered poverty. If we set a limit higher than $2.15, China’s successes would no longer seem so spectacular, the expert emphasizes.

As Sebastian Vollmer explains in turn, many areas of China are now so developed that a purchasing power equivalent to $2.15 a day is not enough to live there. And, even if it is sufficient, it offers nothing more than mere survival.

The World Bank’s poverty line is set on the assumption that a person needs 2,100 calories a day, Vollmer explains. A case “extremely problematic, since people cannot live on this caloric intake alone”.

Vollmer’s team at the University of Göttingen calculated how much poverty would be if it were assumed that the diet not only had to have a minimum calorie limit, but was also healthy, that is, it contained sufficient nutrients. “Applying this method one realizes that many more people are actually living on the poverty line,” Vollmer states.

The goal of sustainable development remains achievable

Although at a slower rate, “poverty will continue to decline,” Thiele says, “unless there’s another pandemic.” Taking measures for the poorest people in underdeveloped countries is difficult, however. “With economic development as the only vehicle, people who live in areas where, for example, there is a civil war, will not get out of poverty,” he explains.

“If current trends continue, it is estimated that by 2030 7% of the world’s population will live in conditions of extreme poverty – that is, about 575 million people,” says the latest related report of the United Nations. Most of them will live in sub-Saharan Africa.