Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty

Abstract

Purchasing power parity exchange rates (PPPs) are used to estimate the international poverty line (IPL) in a common currency and account for relative price differences across countries when measuring global poverty. This paper assesses the impact of the 2017 PPPs on the nominal value of the IPL and global poverty. The analysis indicates that updating the $1.90 IPL in 2011 PPP dollars to 2017 PPP dollars results in an IPL of approximately $2.15—a finding that is robust to various methods and assumptions. Based on an updated IPL of $2.15, the global extreme poverty rate in 2017 falls from the previously estimated 9.3 to 9.1 percent, reducing the count of people who are poor by 15 million. This is a modest change compared with previous updates of PPP data. The paper also assesses the methodological stability between the 2011 and 2017 PPPs, scrutinizes large changes at the country level, and analyzes higher poverty lines with the 2017 PPPs.