Not Yet Time to Declare Victory Over MDG 1

March 21, 2012
by Jesse Marsden, Research & Operations Manager, Microcredit Summit Campaign

The February 29 Reuters article appearing in the Huffington Post World, “UN Reducing Extreme Poverty Goal Met, World Bank Says”, announces a seemingly landmark victory in the struggle to reduce extreme poverty globally. It claims that Millennium Development Goal (MDG) 1, to halve the proportion of people whose income is less than $1.25 a day by 2015 (to be described as “very poor”), has been achieved.
The Microcredit Summit Campaign is encouraged by the news that “preliminary data showed developing countries as a group reached the goal”, but we retain a certain level of caution about the claims made in the article—by the author and by Martin Ravallion, director of the World Bank’s research group and lead author of the report cited in the article. We come to this with a sense of careful optimism after reviewing some background documents, in particular, a briefing note from the World Bank on this topic. This briefing note presents a more sober approach, and there are important, key points to consider. 

Change has not been even across the regions presented.The briefing note presents the overall progress toward MDG 1, but it also delves into the uneven progress of the regions. This self-reflection is both admirable and useful to those looking to focus future efforts. The briefing note attempts to make it clear to the reader that China’s success is a significant contribution to the supposed accomplishment of the goal.

For example, according to the table on page 5 of the briefing note titled  “Poverty measures for $1 a day, $1.25 a day, and $2 a day, by region 1981-2008”, outside of China, the proportion of the population living on less than $1.25 a day decreases from 37.2% in 1990 to 25.2% in 2008—a 12% change. Obviously, China’s amazing drop of 47% between 1990 and 2008 is not characteristic for all regions. This table shows that, when excluding China, the aggregate change for the developing world is closer to a reduction of one third than to one half. In fact, South Asia also hovers around a reduction of one third and Sub-Saharan Africa is a reduction of less than one sixth.

This does not negate the fact, however, that other regions show strong results. East Asia and Pacific, Eastern Europe and Central Asia, and the Middle East and North Africa all show a halving of their poverty levels, and Latin American and the Caribbean are just shy of the goal.

· The aggregated results show an important progression, but attention must be given to the fact that dramatic progress in one region is masking lower progress rates in other regions, especially sub-Saharan Africa which has seen the least progress.

Emphasizing 1981 figures despite less reliable data makes progress look more impressive.Despite the authors having conceded the weakness of data from the 1980s and despite the purpose of the Briefing Note being to report the accomplishment a Millennium Development Goal whose start date is 1990, the document’s narrative portions consistently deemphasize 1990 data and promote instead progress since 1981. The authors are careful not to present their conclusions as based on  progress as measured from 1981 onward, but by emphasizing 1981 in lieu of 1990 benchmarks serves to inflate the reader’s impression of the overall evidence.

· There is no denying that progress is being made, and that is tremendous news. But given the significance of the 1990 date, the World Bank should give greater emphasis to the 1990 data.

There is an important difference between percentage of a population and an absolute number.MGD 1 is tied to reducing the portion of people living on less than $1.25 a day, and for that reason, the World Bank is quite right to focus on the percentage more than the raw number of people living below this mark. However it is still important to not forget that there are actual numbers of persons behind the percentages.
The briefing note states that the 1.29 billion living on less than $1.25 a day in 2008 represented 22% of the 5.86 billion people in the developing world.  In 1981, the 1.94 billion people living on less than $1.25 a day was 53% of about 3.7 billion people. So, certainly the portion of very poor people in the developing world has decreased by half, but thenumber of very poor has decreased by only about 33%.  This could point to the success of efforts to prevent persons falling below the $1.25 a day, but also reminds us that many people in extreme poverty will not be sharing in the celebration of MDG 1.

The Millennium Development Goal 1 has three parts – what about the other two?Martin Ravallion’s quote in the Reuters article is an overreach. He says, “We are now confident that the developing world as a whole has reached the first of the Millennium Development Goals.”

It would be better to say that the preliminary data from a much smaller sample size than is used in the global update suggests that the developing world has nearly reached the first part of the first MDG. Moreover, cutting extreme poverty in half as part A of MDG 1, assuming it can be corroborated is a major achievement, its accomplishment should not be cause for us to dispense with parts B and C:

Target 1.B: Achieve full and productive employment and decent work for all, including women and young people

Target 1.C: Halve, between 1990 and 2015, the proportion of people who suffer from hunger

· Though the World Bank’s findings are tremendous news, we should not forget that MDG 1 is more than part A alone and there is much progress yet to be made on parts B and C.

Cutting extreme poverty in half is not the end.The briefing note makes several emphatic appeals for not losing focus and devotes a section to recognizing the reality that this may be “[g]ood news, but a great many people remain poor and vulnerable in all regions.” Later, they note that given the current rate of the upward movement of the very poor, there will still be 1 billion people living below $1.25 a day in 2015.
Moreover, while the $1.25 a day mark is a good place to start, crossing that threshold does not end extreme poverty. “Do you feel any older?” is tongue-in-cheek question asked on many birthdays, but just as one day older might not feel very different to, so too, $1.26 might feel little different from $1.25. The briefing note also expresses concern about the poor “bunching up” between the $1.25 and $2 a day thresholds. We should ask why progress out of poverty becomes stalled and how we can design programs that ensure the continued progression out of poverty for the very poor.

· Between the remaining half of the poor, potentially numbering 1 billion persons, and the tendency to stall just above the “extreme” poverty indicator, there is still cause for concern about achieving a real and sustainable end of extreme poverty.

The Campaign is of course delighted to see that, as Ravallion notes, “This is the first time we have seen falling numbers of poor in all six regions, including sub-Saharan Africa.” However, given the somewhat sensational title of the article from Reuters, we would be sure to juxtapose the quote from Jamie Saavedra of the World Bank’s Poverty Reduction and Equity Group who said that despite the progress, “[h]aving 22 percent of people in developing countries still living on less than $1.25 a day and 43 percent with less than $2 a day is intolerable.”

A major target is within reach as the percentage of people living on less than $1.25 a day is “slightly more than half its value in 1990.”  Yet, there is much work still to be done—and the authors of the briefing note, despite their claims, point this out. So, though the race is not yet finished, we should take this news as evidence that it can be – now let us not lose focus at the end.

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