What Would It Cost to End Extreme Poverty?

Key Findings

• Ending approximately all extreme poverty would cost around 0.3% of global GDP. These new estimates  capture how much it would cost to directly transfer enough income to each household to bring almost all of them above the $2.15/day poverty line.
• Costs in context. This figure is around 50% more than was (until recently) spent on foreign aid, but around 1/7 as much as the world spends each year on alcoholic beverages.
• Old data, new methods. By applying state-of-the-art statistical learning methods to the kinds of data governments already collect, the study is able to move beyond hypotheticals and provide benchmarks that can guide real-world decisions. The approach also demonstrates how artificial intelligence can be harnessed to address pressing social issues
• Smarter targeting saves billions. A universal basic income (UBI) set at the extreme poverty line would cost about five times the cost of the data-driven approach.  In most countries, data-driven targeting can thus reduce poverty by the same amount as UBI at a fraction of the cost.

“The numbers tell us it isn’t crazy to set our sights on a big, ambitious goal,” said Paul Niehaus, professor of Economics at UC San Diego and co-author of the study. “That’s partly because extreme poverty has already fallen so much in recent decades, alongside economic growth, but also because advances in data science have made it possible to design shovel-ready policies that get the most help to the poorest people.”