Global poverty measurement when relative income matters

Abstract It is becoming well-recognized that relative measures are required for a complete picture of the extent of global poverty and its evolution. The standard assumption is that the national mean or median is the relevant comparison income for setting relative poverty lines. That assumption is questionable. The paper proposes a theoretical model of relative comparisons, which can be downward or upward in the distribution of income. On calibrating the approach to a new data-set on national poverty lines, the Gini-adjusted national mean emerges as the relevant comparison income. Calculations are provided of the implied global poverty measures since 1990. Both non-welfarist (capabilities-based) and welfarist interpretations are provided. Declining poverty incidence is indicated, but at a slower rate than the corresponding absolute measures suggest.