Counting the World's Poor: Global Poverty Lines and Multidimensional Poverty

How the World Bank's international poverty line compares poverty across countries, and why many economists also measure poverty through health, schooling and living conditions.

Development economics starts with a simple-sounding question: how many people in the world are poor, and where are they? Answering it requires a single yardstick that works in Nairobi, Dhaka and Lima alike. The best-known yardstick is the international poverty line, an income or spending threshold used to count people living in extreme poverty. A second approach, multidimensional poverty, asks not just how much money a family has, but whether it lacks the basics of a decent life.

One line for the whole world

The World Bank sets the international poverty line by looking at the national poverty lines of some of the poorest countries and finding a typical value among them. For years the line was about 1 dollar a day, later 1.90 dollars, then 2.15 dollars. In 2025, using newer price data, the World Bank raised it to roughly 3 dollars a day per person.

That figure is not measured at market exchange rates. It uses purchasing power parity, or PPP, which adjusts for the fact that the same money buys far more rice, rent or bus fare in some countries than in others. A PPP dollar is meant to buy the same basket of goods everywhere. Without that adjustment, comparisons across countries would badly misstate how people actually live.

What the line has shown

By this measure, the share of the world’s population in extreme poverty fell dramatically over the past few decades, from well over a third of humanity around 1990 to roughly a tenth in recent years. Much of that decline happened in China, India and other parts of Asia. Progress slowed sharply around the COVID-19 pandemic, and extreme poverty is now increasingly concentrated in sub-Saharan Africa and in countries affected by conflict.

The World Bank also publishes higher lines, used for middle-income countries, because a person just above 3 dollars a day is hardly comfortable.

Two households with the same income

Imagine two families, each living on about 4 dollars per person per day in PPP terms, so neither counts as extremely poor under the income line. The first lives near a clinic, has clean piped water and sends every child to school. The second lives in a village with no electricity, cooks over an open wood fire and has a child who left school after grade three. An income measure treats these families as equally well off. A multidimensional measure would flag the second family as deprived in several ways at once, revealing a hardship the income number hides.

Measuring poverty in more than one dimension

In 2010 researchers at the Oxford Poverty and Human Development Initiative, working with the United Nations Development Programme, introduced the global Multidimensional Poverty Index, or MPI. It looks at ten indicators grouped into three dimensions: health, including nutrition and child mortality; education, including years of schooling and school attendance; and living standards, including cooking fuel, sanitation, drinking water, electricity, housing and assets.

A person counts as multidimensionally poor if they are deprived in at least one third of these weighted indicators. The index then combines two things: how many people are poor, and how many deprivations each poor person faces on average. This means a country can improve its score both by lifting people out of poverty and by reducing the depth of hardship among those who remain.

The MPI draws on ideas from economist Amartya Sen, who argued that poverty is fundamentally about lacking the freedom to live a life one values, not just lacking cash.

Why both measures matter

Income lines are simple, easy to track over time and directly comparable. Multidimensional measures reveal which specific problems to fix: a region short on schools needs something different from one short on clean water. Many governments, including India’s, now publish multidimensional poverty estimates alongside income-based ones.

Converting the poverty line at market exchange rates

A common error is to take 3 dollars a day, convert it into rupees or shillings at today's market exchange rate, and treat that as the local poverty line. The international line is measured in purchasing power parity dollars, so the correct local amount reflects what 3 dollars would buy in the United States, translated into local prices. Using market exchange rates usually understates what the line is worth in poorer countries.

Key takeaways

The international poverty line, now roughly 3 dollars a day, is used to count extreme poverty worldwide.
It is measured in purchasing power parity dollars to reflect real differences in local prices.
Extreme poverty fell sharply after 1990 but is increasingly concentrated in sub-Saharan Africa and conflict-affected countries.
The Multidimensional Poverty Index measures deprivations in health, education and living standards.
Income and multidimensional measures complement each other, each revealing things the other misses.