Navel Gazing 101: Why the World Bank’s Poverty Estimates Miss the Point

There is something Orwellian about last week’s World Bank announcement of a new poverty line, and the Bank’s entire effort to categorize the poor, that I found moderately disturbing. This top-down attempt to box the problem and then convince ourselves that, because of some statistical shenanigans, there are now more (or fewer) people living in poverty is the kind of pointless navel gazing that I want us to avoid getting trapped into at Acumen Fund.

We have had internal discussions about this, which inevitably end with the realization that we will know poverty when we see it. What’s more, we need an honest check against moving too far up market - thereby neglecting our charitable intent and our aim of trying to serve the poor, who we define in terms of lack of income, lack of access, lack of dignity and lack of a chance to take control of one’s own destiny.

It certainly should be someone’s job to think about the distribution of wealth, the trends in economic development and the amount (and distribution) of human suffering, but I would take the effort more seriously if it were done by an organization that holds itself accountable to evaluating its programs for their ability to systematically alleviate poverty.

Just look at China, which seems to have done a pretty good job of ending poverty on its own, but in the process has endangered the entire planet’s environmental sustainability. I’m just not sure the World Bank is the right organization to think about these trends. If they are, then this kind of pronouncement would be like NASA suddenly saying that what we thought was the moon is actually really a meteor (wait, maybe they just did that with Pluto).

But I digress. Think about it: are the 500 million people who are now “officially” poor any worse off than they have been for the past 25 years? We know they face incredibly challenging odds finding a sustainable livelihood, giving their children a chance to move up the economic ladder, and enjoying the universals of life by celebrating birth, love, marriage, fun, music, laughter, old age, wisdom, etc.

Second, the people who make $1.26 a day are in pretty much the same exact boat, so what difference does being above the poverty threshold actually matter? Psychic income? Frankly, unless you are a country mile north of that $1.25 a day line, life is going to be pretty tough.

What is more interesting to me is the effort to find those investments that systematically drive health or welfare improvements among the poor better than anything else—the marginal investment in intervention, job creation, service delivery that really moves the needle, be it charitable, private-market or policy based. This would be cool if we could actually look at how poverty trends in certain geographies vis a vis these kinds of interventions.

What would be even more amazing is if these feedback loops on results linked into accountability, so that unless you make progress on poverty, you lose access to international resources. We have commented on the fact that there is so much wealth in Central America yet so much persistent poverty that the countries themselves have the potential to make progress on their own, and we might be able to help them do that. What if held them accountable as a global community to do just that in a way that didn’t exacerbate human suffering but accelerated the fundamental restructuring that is needed? What if we had poverty scorecards by city, state, region, nation, and that if you came from a place that had resources but had done a systematically job mismanaging them letting some people get rich while millions suffered in poverty (places like Pakistan or El Salvador or New Jersey), you lost a seat at the UN, travel was restricted, or luxury goods were taxed through the roof via import duties? What if Carlos Slim weren’t invited to Davos until he started to show real results in Chiapas?

Data out of context is noise. Data that inform how and why we act and what we can do better in the future are far more interesting to me. All this tells me is that the World Bank needs some new statisticians. That, and a poor person’s daily wages - plus $0.75 - can get you a ride on the New York City subway.