Global extreme poverty rates for children, adults and the elderly

Abstract

Chen and Ravallion’s estimates of global extreme poverty rates are well known. This note, by considering how these rates vary by age group, reaches two important and policy relevant conclusions and emphasizes a central avenue for future research. The first is that child extreme poverty rates are 50% higher than adult ones and almost twice those of the elderly. This result depends on assuming that all individuals in a household have the same resource needs and no economies of scale exist, as in the World Bank standard approach. Conversely, if conservative estimates of economies of scale and individual discount factors are adopted, global extreme poverty rates and the child–adult gap are much smaller than the Chen and Ravallion estimates. These findings highlight the policy importance of research efforts towards understanding how needs vary within a household and with its size.