[p2p-research] Rethinking World Income Distribution: Not So Bad?

[Ryan]

Is global poverty overstated?

Sent to you by Ryan via Google Reader: Rethinking World Income
Distribution: Not So Bad? via Paul Kedrosky's Infectious Greed by pk on
10/25/09

Some controversial and potentially important findings in a new paper on
a global income distribution changes over the last 40 years:

Parametric Estimations of the World Distribution of Income
Maxim Pinkovskiy, Xavier Sala-i-Martin

We use a parametric method to estimate the income distribution for 191
countries between 1970 and 2006. We estimate the World Distribution of
Income and estimate poverty rates, poverty counts and various measures
of income inequality and welfare. Using the official $1/day line, we
estimate that world poverty rates have fallen by 80% from 0.268 in 1970
to 0.054 in 2006. The corresponding total number of poor has fallen
from 403 million in 1970 to 152 million in 2006. Our estimates of the
global poverty count in 2006 are much smaller than found by other
researchers. We also find similar reductions in poverty if we use other
poverty lines. We find that various measures of global inequality have
declined substantially and measures of global welfare increased by
somewhere between 128% and 145%. We analyze poverty in various regions.
Finally, we show that our results are robust to a battery of
sensitivity tests involving functional forms, data sources for the
largest countries, methods of interpolating and extrapolating missing
data, and dealing with survey misreporting. [Emphasis mine]



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