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Thursday, November 30, 2006

bet u didnt know this trick

The most recent World Bank estimates for India are based on household surveys carried out in 1999-2000. It was found that almost 80% of purported superpower India's population was surviving on less than $2.15 a day (in PPP terms). That is, about 800 million people were living on $0.40 a day or less. Nearly 35% (350 million) were found to be living on $0.20 a day or less. Even if the proportion of poor people has fallen somewhat during the past 5-6 years, the absolute numbers would not look too different today.


To make purchasing power across countries comparable, economists developed what is known as the PPP (purchasing power parity) index. Taking into account the lower cost of living in impoverished countries, a conversion factor is now applied to market exchange rates to calculate what is minimally necessary to survive there.

Using widely quoted World Bank numbers on GDP, this conversion factor for a country like India (2005) can be computed to be approximately 5.3. This means that $1.08 a day in India should effectively imply a purchasing power of about 20 cents a day to an American--or indeed anyone--unacquainted with the nuances of PPP calculations. However, given how the numbers are quoted everywhere, the dominant impression that is conveyed is that the poor are living on less than $1 or $2 a day when, in fact, it would be enormously more accurate, as far as everyday English is concerned, to say that the poor are living on less than $0.20 or $0.40 a day.

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1 comment:

Guru-tech said...

No direction Home - Bob Dylan
Directed by Martin Scorsese
A non miss film for Dylan fans!!

Cheers!!

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