The World Bank has been estimating global income poverty figures since 1990. The latest round of estimation, carried out in October 1999, uses new survey data and price information to obtain comparable figures for 1987, 1990, 1993, 1996, and 1998 (the figures for 1998 are preliminary estimates). The methodology followed is the same used in past estimates (see World Development Report 1990, World Bank 1990; Poverty Reduction and the World Bank, World Bank 1996; and Ravallion and Chen 1996).

Consumption/income levels. Poverty estimates are based on consumption or income data collected through household surveys. Data for 96 countries, corresponding to 88 percent of the world’s population, are now available, as compared to data for only 22 in 1990. Of particular note is the fact that the share of population covered in Africa increased from 66 to 73 percent as a result of extensive efforts to improve household data in the region. Where survey data on incomes but not on consumption were available, an estimate of consumption was obtained by multiplying all incomes for the share of aggregate private consumption in national income based on National Accounts data. This procedure, unchanged from past exercises, scales back income to obtain consumption but leaves the distribution unchanged.

Prices. To compare consumption levels across countries, estimates of price levels are needed. Purchasing Power Parity (PPP) estimates for 1993 produced by the World Bank were used. These estimates are based on new price data generated by the International Comparisons Project (ICP), which now covers 110 countries, as compared to 64 in 1985, and a more comprehensive set of commodities. In the past, Purchasing Power Parities from the Penn World Tables produced by Summers and Heston at the University of Pennsylvania were used. However, the Penn World Table updated to 1993 has not been finalized yet, so 1993 PPP estimates produced by the World Bank were used. The Bank has been working closely with the Penn team to agree on a consistent methodology, especially in preparation for the transfer of the Penn project to the Bank in the coming year. The 1993 PPPs used here are the same as those used for the 1999/2000 World Development Report; they are slightly different from those used for the 1999 World Development Indicators and included in the 1999 WDI CD-ROM because of the inclusion of new price data from Latin America that became available in July 1999.

Poverty lines. The poverty line, which had been set at $1 per day in 1985 PPP terms, had to be recalculated in 1993 PPP terms. This was done by updating the calculations made in 1990 using the new PPPs. In 1990, national poverty lines were available for 33 countries for the late 1980s; these lines were converted into 1985 PPP prices, and the $1 per day line was chosen because it was the most typical line among the low income countries for which poverty lines were available. This year, the same lines were converted in 1993 PPP prices, and the new line was obtained as the average of the ten lowest poverty lines. The line obtained is $1.08 per day in 1993 PPP terms (referred to as "$1 per day" in the text). This methodology maintains the purchasing power of the line constant while changing the reference prices. The upper poverty line was calculated by doubling the amount of the lower poverty line, as in 1990.