What Would it Cost to End Extreme Poverty?

Abstract

We study poverty minimization via direct transfers, framing this as a statistical learning problem while retaining the information constraints faced by real-world programs. Using nationally representative household consumption surveys from 34 countries that together account for 76% of the world's poor, we estimate that reducing the poverty rate to 1% (from a baseline of 13%) would cost $211 B nominal per year. This is 4.0 times the corresponding reduction in the aggregate poverty gap, but only 19% of the cost of universal basic income. Extrapolated globally, the results imply a cost of 0.28% of global GDP to (approximately) end extreme poverty.