Last updated on June 26, 2011
When it’s measured in purchasing power parity. From a post on Owen Barder’s blog:
“If you have traveled in a developing country, you may have noticed that some things seem really cheap. Perhaps that bus journey only cost you 10 cents, or you remember buying beer for 30 cents. It is easy to assume that the reason people can survive on a dollar a day is that a dollar goes further in developing countries.
Apologies for being the bearer of bad tidings, but if that is what you thought you need to know that the poverty line is measured at purchasing power parity.
What does that little piece of jargon mean? It means that the calculations take account of this difference in prices. When we say that a quarter of the people in the developing world are living on less than $1.25 a day, we mean that they are living on the equivalent of what $1.25 would buy you in America. Not what it would buy you in Mali.”
I really wish more people knew about this.