On the exact definition and understanding of "purchasing power parity" it depends what it means when the World Bank defines
the “extremely poor” people of the world as those who are currently living on no more than $1 per day per person, measured at the purchasing power parity (PPP) exchange rate
as cited e.g. in Duflo/Banerjee's The Economic Lives of the Poor (2006).
According to the Wikipedia article on purchasing power parity
Furthermore it is stated:
The goods that a currency has the "power" to purchase are a basket of goods of different types.
So PPP depends on a basket of goods, and it seems to be assumed that there is one such basket. But obviously there is none such unique basket: In different countries and in different socioeconomic strata there are very different "typical" baskets of goods - so how to compare these, across countries and strata?
In other words (and trying to be specific): What exactly does it mean (according to the official definition) when it is for example said that an Indian farmer (let his name be Kalu) in the state of Rajasthan who
- exhibits typical consumer behaviour (= has a typical basket of goods, including spendings on religious festivals)
- is partially self-supplying
- does a second job as a tourist camel guide
- does a third job as a quarryman
- has a monthly income of 10,000 rupies (averaged over a year)
lives on $X per day (measured at PPP exchange rate)?
But first of all:
How exactly would I calculate X - given the information above + the size/structure of his household?
