The World Bank has revised the threshold for extreme poverty to 1.25 US dollars a day. The previous poverty line of one dollar a day was based on figures for the cost of living from 1993, figures that were 15 years out of date.
 
The new poverty assessment is based on the findings of the World Bank’s 2005 International Comparison Program, according to which more people live in extreme poverty thann previously thought. Today 1.4 billion people in the developing countries are living below the new poverty threshold of 1.25 dollars a day; in 1981 there were 1.9 billion. Thus – according to the World Bank – the number of people living in extreme poverty has dropped significantly in the last 25 years, although in the same period the number living on between 1.25 dollars and two dollars a day has doubled, from 600 million to 1.2 billion.
 
Therefore in 2005 a total of 2.6 billion people were living on less than two dollars a day. This number has hardly changed since 1981. According to Sanjay G. Reddy, Assistant Professor of Economics at Barnard College, the poverty line of 1.25 US dollars a day is too low. In a paper published by the International Poverty Centre he draws attention to the fact that the new threshold was determined using the same methods as the previous poverty line of one dollar a day, with the result that it has the same weaknesses.
 
More information:
www.worldbank.org
www.undp-povertycentre.org