• About UGM
  • SIMASTER
  • SINTESIS
  • Public Information
  • SDGs
  • English
    • Bahasa Indonesia
    • English
Universitas Gadjah Mada Universitas Gadjah Mada
Faculty of Economics and Business
  •  About Us
    • Overview
    • History of The Establishment
    • Mission & Vission
    • School Values
    • School Leadership
    • Senate Leadership
    • Department Leadership
    • Study Program Leadership
    • Unit Leadership
    • Faculty Advisory Board
    • Annual Report
    • Campus Facilities
    • Visual Identity
    • News Room
    • The 70th Anniversary
  • Academic Programs
    • Undergraduate Program
    • Master Program
    • Doctoral Program
    • Profession Program
    • Short Academic Programs
    • Professional Programs & Certification
    • International Undergraduate Program
    • International Doctorate in Business (IDB)
    • Academic Calendar
    • Rooms and Events
  • Faculty & Research
    • School Memberships
    • School Accreditation
    • International Networks
    • Faculty Members
    • Visiting Professor & Research Fellows
    • Professional Staffs
    • Publications
    • Published Journals
    • Working Papers
    • Fields of Study
    • Supporting Units
    • International Conference Partnership
    • Call for Papers
    • Community Service
    • Faculty Library
  • Admission
  • Home
  • Faculty Insight

Beyond Statistics: Establishing a Poverty Line That Reflects True Hardship

  • Faculty Insight
  • 8 May 2025, 11.27
  • By : shofihawa
Wisnu Setiadi Nugroho

By: Wisnu Setiadi Nugroho

Department of Economics, FEB UGM

Head of  Equitable Transformation for Alleviating Poverty and Inequality Working Group (EQUITAS)

As Indonesia progresses toward upper-middle-income status, one critical metric remains stuck in the past: our poverty line. For over two decades, Indonesia has relied on a threshold set by the Central Statistics Agency (BPS), which calculates the minimum spending needed to meet basic calorie requirements and essential non-food needs. This approach, unchanged since 1998, provides consistency for statistical tracking. But the question is no longer just how many calories a person consumes, but whether our poverty line truly captures what it means to live a decent life.

The BPS Poverty Line: A Narrow Lens

BPS uses the Cost of Basic Needs (CBN) method, focusing heavily on caloric sufficiency. It estimates the minimum monthly expenditure to meet calorie needs and essential non-food goods. As of September 2024, the poverty line stood at IDR 595,242 per capita, comprising IDR 443,433 for food (74.5%) and IDR 151,809 (25.5%) for non-food items. Under this measure, 8.57% of Indonesians are classified as poor.

In practice, this means someone mainly eating rice, oil, and instant noodles could be deemed “non-poor,” despite lacking dietary diversity or essential nutrients. While the CBN offers a consistent statistical benchmark, it is increasingly seen as too narrow. It overlooks broader welfare aspects, such as nutritional quality, access to healthcare, and basic living standards. It risks masking vulnerabilities and fails to reflect the daily hardship of millions who technically escape poverty but remain exposed to poor health, limited opportunities, and social exclusion.

The World Bank Line: Globally Comparable, Locally Misunderstood

The World Bank’s international poverty line—US$2.15/day (in 2017 PPP terms)—is widely used for global comparisons. However, it too has limitations. Many mistakenly interpret it as reflecting local prices when it actually uses purchasing power parity (PPP), which adjusts for price level differences across countries. According to the World Bank’s 2024 estimates, 1% of Indonesians live below the US$2.15/day line. Using a PPP conversion rate of IDR 5,400 per US$1 translates to around IDR 11,600 per day. When applying the lower-middle-income line (US$3.65/day), the poverty rate rises to 11.4%. Most strikingly, under the upper-middle-income line (US$6.85/day) — roughly IDR 37,000/day — 50.1% of Indonesians fall below the threshold. This wide variation highlights how much poverty estimates depend on the standard used.

Moreover, the global PPP basket is designed to reflect minimum living standards across countries. But what counts as “basic” in Jakarta may differ significantly from Kampala or Kathmandu. A staple food in one country may be a luxury in another. Costs for items like protein, fruit, or fuel vary widely. This raises an important point: while international lines are useful for comparisons, they can be misleading if used as the basis for local poverty assessments. Indonesia needs a standard that reflects its realities.

A Line That Matches Our Aspirations

There is growing recognition that poverty lines should reflect not just survival, but dignity and well-being. As Indonesia advances economically, several scholars argue that our poverty measurement must evolve accordingly.

Arief Anshory Yusuf (2024) points out that Indonesia’s official poverty threshold remains comparable to that of low-income countries despite our classification as upper-middle income. This signals a disconnect between our economic achievements and how we measure hardship. He suggests raising the threshold to align with the actual cost of living and social expectations. Kristi Mahrt (2024) from the International Food Policy Research Institute (IFPRI) offers a compelling alternative: a nutrition-sensitive poverty line. Drawing from the Guidelines for Balanced Nutrition (Minister of Health Regulation No. 41/2014), she proposes a line that ensures adequate intake across all major food groups — calories and proteins, vegetables, fruits, and healthy fats.

This approach would raise the per capita daily poverty threshold from IDR 20,000 to about IDR 30,000–32,000. The cost increase reflects the reality that animal-source foods are twice as expensive, and fruits can cost up to nine times more than basic staples. Yet it also offers a more accurate picture of what it takes to avoid stunting, wasting, and hidden hunger — all persistent problems in Indonesia.

Toward a More Meaningful Measure

Some may argue that raising the poverty line would simply inflate poverty figures. But this concern misses the point. The goal of poverty measurement is not to produce flattering statistics but to reflect reality. A higher line does not create more poor people — it acknowledges the depth of hardship that current metrics overlook.

Updating the poverty line does not require discarding the existing CBN method. It can still be used for continuity and historical comparisons. However, it should be complemented by more comprehensive measures that factor in nutrition, health, and other dimensions of well-being. Just as we track both GDP and GNI, we can track calorie-based and nutrition-sensitive poverty rates in parallel. Ultimately, updating our poverty line is not just a technical issue but a moral and policy imperative. To ensure no one is left behind, our measurement tools must reflect the real cost of living, not just the cost of surviving.

Indonesia has made significant progress in reducing poverty. But to sustain that momentum — and meet our goals for human development, equity, and inclusive growth — we must align our definitions and data with the daily realities Indonesians face. Only then can we claim to be building a society where everyone has a chance not just to survive, but to thrive.

*As published in The Jakarta Post (May 5, 2025) and Tempo.co (May 3, 2025)

Views: 640

Related Posts

Apia Dewi Agustin

The Story of Apia, PMDSU Scholarship Recipient and Best Graduate of the Master of Science in Accounting FEB UGM

Graduation Friday, 25 July 2025

Do you still remember Apia Dewi Agustin? Her name once captured the public’s attention with her inspiring story. This young woman from a remote village in Magetan Regency, East Java, successfully pursued her undergraduate degree and then continued her Master’s and Doctoral studies at the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), free of charge, thanks to her academic achievements.

Now, Apia has once again made her alma mater proud.

Primastuti Indah Suryani

Optimizing Social Media to Boost MSME Visibility

News Friday, 25 July 2025

Building a brand and reaching consumers no longer rely solely on conventional promotions. Social media has become a primary channel for shaping a business’s image.

Field Trip GSW 2025

GSW 2025 Invites International Students to Explore Industry and Art in Yogyakarta

News Friday, 25 July 2025

The clinking sound of metal echoes through a silver craft workshop in Kotagede, Yogyakarta. Skilled hands carefully hammer sheets of silver on a steel anvil.

Andar Danova L Goeltom

Green Jobs and Green Curriculum, the Key to Indonesia’s Tourism Future

News Thursday, 24 July 2025

Significant changes are taking place in the global tourism industry. Today’s travellers, especially younger generations and international tourists, are increasingly concerned about the environmental impact of their travel activities.

Latest News

  • The Story of Apia, PMDSU Scholarship Recipient and Best Graduate of the Master of Science in Accounting FEB UGM
    July 25, 2025
  • Optimizing Social Media to Boost MSME Visibility
    July 25, 2025
  • GSW 2025 Invites International Students to Explore Industry and Art in Yogyakarta
    July 25, 2025
  • Green Jobs and Green Curriculum, the Key to Indonesia’s Tourism Future
    July 24, 2025
  • Unemployment Rate Declines, FEB UGM Lecturer Says Decent Work Remains a Challenge
    July 24, 2025

Related Article

  • The Story of Apia, PMDSU Scholarship Recipient and Best Graduate of the Master of Science in Accounting FEB UGM
    July 25, 2025
  • Optimizing Social Media to Boost MSME Visibility
    July 25, 2025
  • GSW 2025 Invites International Students to Explore Industry and Art in Yogyakarta
    July 25, 2025
  • Green Jobs and Green Curriculum, the Key to Indonesia’s Tourism Future
    July 24, 2025
  • Unemployment Rate Declines, FEB UGM Lecturer Says Decent Work Remains a Challenge
    July 24, 2025
Universitas Gadjah Mada

Universitas Gadjah Mada
Faculty of Economics and Business

Jln. Sosio Humaniora No.1, Bulaksumur, Yogyakarta, Indonesia 55281

Map & Direction
More Contact Information

Department

  • Accounting
  • Economics
  • Management

Faculty Directory

  • Public Information
  • Room Management
  • Asset Management
  • Cemetery Management

Alumni

  • Alumni Community
  • Alumni Services
  • Tracer Study
  • Jobs & Internships
  • Scholarships

Social Media

© 2025 Faculty of Economics and Business UGM

DisclaimerSite Map

💬 Need help?
1
FEB UGM Official WhatsApp
Hello 👋
Can we help you?
Open chat