# How much would it take to end global extreme poverty?

E.g., according to this page, Jeffrey Sachs estimated that it would take $175bn/year for 20 years to do so. What are some other estimates? • I find that unfortunately these estimations are quite meaningless because they assume a lot of conditions are static. For example they assume the same government type, the same birth rate, no climate catastrophe etc. While fighting poverty is definitely a worthwhile goal putting an exact pricetag on it 20 years ahead of time is just a guessing game. – Giskard Sep 17 '15 at 8:12 • @denesp: True, but to varying degrees, the same can be said for estimates in any other context. Nonetheless such estimates can at the very least give me a handle on what the rough order of magnitude is. For example, with Sachs's estimate, I know the figure is probably > \$175m a year and probably < \$175 tr a year. – Kenny LJ Sep 18 '15 at 1:19 • Seeing as the only answer this question attracted raised good points but what still unable to provide any kind of numerical estimate I am voting to close this question as primarily opinion based. – Giskard Mar 5 '16 at 20:49 • How about constructing a partial equilibrium answer as follows: Define the (possibly country-specific) poverty line as suggested by various researchers. From income distribution data you can get the amount of money each country would need to eliminate poverty. Aggregate these numbers across countries. This is the amount of money needed for this year only, without taking into account general equilibrium or incentive effects.This answer would make a lot of assumptions but it would not be primarily opinion based. – HRSE Mar 8 '16 at 8:54 • @HRSE I find that such an answer is feasible but unlikely. I will be happy if you prove me wrong by collecting the data and posting the answer. Unfortunately I think most people will not go through the trouble and the answers that do get posted will be flimsy in some way. – Giskard Mar 9 '16 at 0:06 ## 2 Answers The Economist (Oct 8th, 2016, online, PDF) attempts to answer this question. It defines the global poverty gap as the amount we'd have to transfer to the world's extreme poor (defined as those living below$\$1.90$ a day, at 2011 PPP), in order to lift them to the $\$1.90$a day threshold. The evolution of this global poverty gap from 1990-2013 is graphed below. As should be evident, at the current rate of decline in global extreme poverty, the world is on track to hit the World Bank's goal of completely eliminating extreme poverty by 2030. Nonetheless, even if there were no further progress and global extreme poverty stayed frozen at 2013 levels, ## a transfer of US\$78b a year would suffice to completely eliminate extreme poverty.

The Economist adds an important caveat:

In reality, of course, money cannot be directed so precisely to the poor, nor transferred cost-free. In some countries, the infusion of money might also push up prices and currencies, making the endeavour more expensive. Nonetheless, this thought experiment illuminates the diminishing size of the problem. The world can afford to end poverty. Indeed, it might end poverty before it figures out how to measure it accurately.



P.S. Note though that the reduction in global extreme poverty has been largely due not to transfers or aid of the sort envisioned by Jeffrey Sachs, but to economic progress, most notably in China.

• Good answer. I think it's worth emphasising the point that "the infusion of money might also push up prices and currencies, making the endeavor more expensive". I think the economist could have been braver and put 'will' in place of 'might' and changed 'more expensive' to 'significantly more expensive'. – Jamzy Oct 18 '16 at 4:43

No amount of money can save the poor people from having to pay for overpriced commodities. Give 100 billions of \$US to each poor person today and the next day their corrupt politicians will increase the prices of the food a billion times (with the help of their family-business monopolies), driving the majority poor again. The poor countries lack real free markets and then only competition regulators and anti-corruption policies and practices can solve that problem. Speculation of prices drives the people poor and even into starvation. link1 - link2 - link3

• No amount of money can save the poor workers from being paid miserable wages. But government regulations can (by implementing decent minimum wages).

• The unemployed can be lifted out of poverty once the governments start to collect taxes properly and give a proper unemployment help to the unemployed. If the charities will give a large but limited amount of money to those unemployed they can only lift them out of poverty for a finite amount of time - until they (the unemployed) spend all that money - and after that they are back into poverty.

• If a poor country has unsustainable level of unemployment, then the government can make a land reform (like for example in Taiwan, 1950's), and then rent land (for very cheap) to those unemployed who desire to become farmers. The land gives them a job, so there you have them - jobs. No amount of money can do that. Give a lot of money to the poor today and tomorrow the price of land will explode, staying out of the reach for the many. So the money can't solve the poverty problem, but the government's actions can.

Also keep in mind that the way poverty is measured can be quite deceiving. A farmer with a full stomach who sells products for less than one dollar a day is considered to live in extreme poverty. But if the same person leaves the farm and works in the city for a corporation for five dollars a day and starves (no money left after paying rent, water and electricity) then he is considered to be lifted from poverty and on moving steadily on their way to a prosperous life - by the the economists certified by the top-level universities and working for top-level corporations. Heard about "Africa raising?" - e.g. Ethiopia. As a result, while the UN bodies provide triumphant news that extreme poverty is decreasing, the inequality is actually increasing - link2 - link3

The bottom line is: instead of throwing with money to the poor and watching them being sucked up quickly by their corrupt politicians, we should better pressure those corrupt governments in order to implement real competition, free markets and to reduce corruption. Freezing the assets of those corrupt politicians (e.g. real estate properties in London and Monaco and bank accounts in Switzerland) might be a very good start for pressuring them - this is my own opinion but it is supported by the reality of the recent EU and US freeze of Russian elite assets. link1 - link2

So the key for lifting the poor from misery stands in increasing the quality of institutions, not in throwing money at corrupt governments. And the quality of institutions is inversely proportional with corruption.

• You rise good points. However, it seems like an opinion based answer, rather than being empirically grounded (if it is so, please, insert references). Thus, apparently, it does not add to the question--it is irrelevant whether we share or not the content of your answer. Further, it does not target the point of the question: "What are some other estimates? [on the amount of money to be delivered to reduce poverty]" and not "How can we reduce poverty?" This is just my opinion on what a better answer could be, do not take it personally. – Fuca26 Mar 8 '16 at 8:24
• Anti-competitive practices are driving the people poor, by forcing them to spend too much for basic necessities.Those anti-free market practices are tolerated by corrupt governments. These are basic, well known facts. But I will try to add some more links to support those claims. I've already provided one such link though. I think it's relevant to share my answer because that's the reality - money can't save the people from poverty but anti-corruption and anti-monopolies actions can – Joe Jobs Mar 8 '16 at 19:48
• FYI, this answer is a bit of a wall of text. I think it would be better received if it was formatted a bit better. i.e bullet points, bold text, italics for quotes and hyperlinks covering the source, not the text. The answer itself isn't bad at all, although it does challenge some priors for sure. – Jamzy Mar 9 '16 at 22:57
• Thank a lot, I keep trying to improve it, I'll do my best. – Joe Jobs Mar 10 '16 at 2:58