World Bank researchers have been trying to assess the extent of extreme poverty in the world since 1979. Two ingredients have been key: an international absolute poverty line and purchasing power parity (PPP) exchange rates. The latest PPP update led to a substantial re-assessment of relative purchasing powers around the world, and hence to a large nominal change in the poverty line: from $1.25 to $1.90/day. In this Policy Research Talk, Francisco Ferreira reviewed the principles, practices, and pitfalls involved in the latest update, and then discussed some of the ideas being floated for the future of global poverty measurement.
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