The $1-a-day poverty line has long understated the true scale of global poverty. New research proposes a $21.50-a-day upper bound that would shift the focus of development policy towards broad-based economic growth.
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The $1-a-day poverty line has been a fixture of global development for nearly four decades, shaping how organisations, governments, and the public understand and respond to poverty. A new paper challenges the foundational logic of that line and proposes a radically higher alternative. In this episode of VoxDevTalks, Lant Pritchett discusses the origins of the original measure, why it has endured despite its flaws, and what a new upper-bound line would mean for how development is understood and funded.
The origins of a flawed benchmark
The $1-a-day poverty line was created for the World Bank's 1990 World Development Report, and the misgivings about it began immediately. Pritchett recalls being a junior economist at the Bank when the line was first proposed, and raising concerns that it was set far too low – not because everyone above it was well off, but because millions of people above it were, by any reasonable assessment, still poor.
"This poverty line is crazy, it's just crazy too low. Yes, everyone below this line is poor, but billions of people with higher incomes than this line are also poor by perfectly legitimate and reasonable ways."
Those concerns were dismissed at the time. The line served its purpose: it produced a large, legible number of poor people for a landmark report. What was not anticipated was how thoroughly that number would come to define the entire development enterprise.
Why a low poverty line suits the powerful
Pritchett argues that the persistence of the low-bar poverty line is not merely a matter of inertia or legibility – it is also politically convenient. A narrow definition of extreme poverty effectively excludes the near-poor from international concern, allowing rich countries and donors to treat poverty as a problem that developing countries can largely solve through internal redistribution.
"It completely got the rich countries off the hook. It excludes people who are legitimately poor… The way in which a low bar poverty line puts more emphasis on the poor is by giving zero, exactly mathematically zero emphasis to everybody else."
The implication is stark: under a dollar-a-day framing, the second decile of Bangladeshi income earners count for exactly as much in poverty calculations as the median Dane – zero. This equivalence, Pritchett argues, is not a technical quirk but a political feature that has shaped the scale and direction of development finance for decades.
Gresham's Law in development economics
Part of the explanation for how the dollar-a-day line came to dominate lies in what Pritchett describes as a version of Gresham's Law: bad economics drove out better economics because it was easier to understand. The distributional approaches that preceded the dollar-a-day measure – including the World Bank's own influential work on redistribution with growth in the 1970s – were more sophisticated but harder to communicate.
"You just draw this line: you're poor, you're not poor. This gives us a number of poor, this intuitively easily capturable thing that people felt was going to give more prioritisation to poverty, but it wasn't."
The result was that economists who had always cared about distribution found themselves working within a framework that flattened those concerns into a single headline count.
Proposing a global upper bound
Pritchett's response is not to abandon poverty measurement but to supplement existing lines with a global upper bound – a threshold above which no one could reasonably be considered poor by international standards. The conceptual logic mirrors the lower bound: just as the $2.15 line identifies those who are unambiguously poor, the upper bound identifies those who are unambiguously not poor, and frames everyone in between as existing on a spectrum that development policy should address.
"Let's say, what's the line where, honest to God, if you're above that, you're not poor by any reasonable standard."
To estimate the upper bound, the authors use four distinct empirical measures: the marginal utility of income (drawing on established parameters from the literature), household food expenditure share, a national-level index of access to basic services, and household-level asset ownership data from demographic and health surveys. Across these measures and across countries, the estimates cluster consistently between $20 and $40 a day. The figure of $21.50 is chosen because it is exactly ten times the current lower bound of $2.15 – a focal point that mirrors the original rationale for using $1 a day.
What 99% of Pakistan being poor actually means
Applying the $21.50 line produces numbers that may initially seem startling. In Pakistan, by this measure, roughly 99% of the population falls below the upper bound. In Denmark, the figure is around 2–3%. The episode is direct about these implications: this does not mean that nearly every Pakistani is in desperate extreme poverty, but that their material conditions do not meet a globally defensible standard of non-poverty.
"We are saying that, yeah, Denmark, praise be, very few people are poor, but if we adopt that standard for Danes and apply it to Pakistanis, the data tell us nearly every Pakistani is in a form of material conditions that doesn't meet a global standard of being not poor."
The point is not to conflate different degrees of deprivation, but to ensure that the near-poor and the moderately poor are not simply written out of the global development agenda.
Implications for institutions
The policy implications are substantial. If the vast majority of people in lower-middle-income countries are considered poor by a globally legitimate measure, the case for narrow transfer programmes targeted only at the extreme poor becomes much harder to sustain. Pritchett argues that this reframing should push development institutions back towards supporting broad-based productivity growth and inclusive economic development – concerns that were central to development economics long before the dollar-a-day line arrived.
Reference
Pritchett, L, and M Viarengo (2026), "Raising the bar: An inclusive global poverty line," Journal of Development Economics, 182: 103803.