Solutions to poverty start with good data

Posted on May 7, 2014 in Social Security Debates – Opinion/Editorials
May 7, 2014.   By Ottawa Citizen Editorial Board

New measurements that suggest absolute poverty is far less prevalent on Earth than anyone thought. This might seem like nothing more than pushing numbers around in columns. After all, those newly reclassified people do not have any more this week than they did last week. Their children go to the same schools; their parents go to the same doctors. They eat the same food and drink the same water.

All the same, poverty statistics do matter. We can’t solve a problem we don’t understand. We can’t compare the antipoverty approaches of, say, India and Bangladesh, unless we can compare the poverty of India to the poverty of Bangladesh.

Purchasing power parity, or PPP, is what economists use to make such comparisons. It is more complicated than a simple currency exchange rate or inflation adjustment; it is meant to capture the actual differences in the cost of living in different parts of the world.

The recent report of the International Comparison Program looks dry, but it contains information that could change the way humanity sees itself in this century. According to the Centre for Global Development, “preliminary estimates suggest the share of people in the developing world living below the absolute poverty line of $1.25 per day in 2010 “fell” by nearly half, from about 19.7 percent to 11.2 percent, thanks to the revisions.”

People living in absolute poverty may need different sorts of infrastructure than people who are living above the cutoff of $1.25 per day. These measurements also serve as an accountability mechanism for both national governments and donor countries, as they inform initiatives such as the Millennium Development Goals. The more accurate these numbers are, the better Canadians can evaluate their own country’s development and trade policies.

The numbers suggest that the economic and geopolitical realities of the world are shifting. Using the new numbers, China is poised to become the world’s largest economy by the end of this year, surpassing the United States. “The American century ends, and the Pacific Century begins,” wrote The Economist. Our notions of leadership are tied up with our understanding of prosperity.

No methodology can reduce quality of life to an incontrovertible number; no set of poverty statistics is ever perfect. But Canada’s foreign policy, especially when it comes to development, trade and aid, should reflect the best possible information. This is not just about re-evaluating pie charts. It’s about re-evaluating priorities.

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