2022. Indicators are chosen for each dimension on the principles of accuracy (using as many indicators as necessary so that analysis can properly guide policy) and parsimony (using as few indicators as possible to ensure ease of analysis for policy purposes and transparency). For example, suppose a country has 10 million individuals, a poverty line of $500 per year and a poverty gap index of 5%. [4] It is expressed as a percentage of the poverty line for a country or region. But in a world where price differences across countries and over time are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do. Along with data for individual countries, the World Bank also provides global and regional poverty estimates which aggregate over the available country data. while the head count ratio is reported as Poverty thresholds can be tested for robustness, or multiple sets of thresholds can be used to clarify explicitly different categories of the poor (such as deprivedand extremely deprived). There is no single definition of poverty. is the total population of poor who are living at or below the poverty line, Please help update this article to reflect recent events or newly available information. Assuming equal weights for simplicity, set a second identification cutoff, k, which gives the number of indicatorsin which a person must be deprived in order to be considered multidimensionally poor. How much does reducing inequality matter for global poverty?. We calculated an alternative harmonized figure for the US national poverty using the same method as Jolliffe et al. The poverty gap is an indicator produced by the World Bank, which measures poverty by looking at per capita income and consumption in households. In order to make progress against such poverty in the future, we need to understand poverty around the world today and how it has changed. You can read more about how these comparable national poverty lines are calculated in this footnote.1. 0000001853 00000 n At least one school-age child up to the age of grade 8 is not enrolled in school. The multidimensional poverty measure headcount indicates the share of the population in each region defined as multidimensionally poor. How much does reducing inequality matter for global poverty?. The total increase needed to eliminate poverty is US$250 million$25 multiplied by 10 million individuals. (2022) use the OECDs published poverty rate which is measured against a relative poverty line of 50% of the median income. !0A"bAIzTbejCj^oJM$>:Ry (#r[Sa82%J>n0IG XllGG%%R B{~-e,lnL[OGaS}#-rNPAl$ OUNh2Re$8 9H l>YoJ*JMP.v*}`*j+Y5I?KWM1PersB !E=559ZoV(`iL0j,xkTKwa#]rT"e!QWDIJc_\67veW!>E|FiY5},_$&OxgeU ;+[2th'csn>lGH2ytt5e 8yjzz7p}6|+%'bN4dTr[~m; U?PLPJYo~[l,97dQ{Y?I(NJQTapIGs3K-WvT(D;!j%09(_4b{ +iG>kH;1_iQl-Wz=en,5:SGRyiS+IL5fUKzD:h` 8^hwm7T8N 9:qVy@Fm+uH]fe%.f+aL"vD /iT `2FM]oP39CPq#wTwe The opinions and analysis expressed on the website and Dimensions Magazine are the responsibility of the authors and do not necessarily reflect the views of the MPPN, its Steering Committee, or the participants countries and organizations. Our World in Data is free and accessible for everyone. Our World In Data is a project of the Global Change Data Lab, a registered charity in England and Wales (Charity Number 1186433). In second case, the two households both have annual income of US$200 per year. Thank you for agreeing to provide feedback on the new version of worldbank.org; your response will help us to improve our website. $46,630. One important issue is that the survey data included within the PIP database tends to measure peoples income in high-income countries, and peoples consumption expenditure in poorer countries. 2 The$25 is 5%of the poverty line, and the total increase needed to eliminate poverty is $250 million$25 multiplied by 10 million individuals. Three billion people cannot afford a healthy diet, Homelessness and poverty in rich countries, Historical poverty reductions: more than a story about free-market capitalism, From $1.90 to $2.15 a day: the updated International Poverty Line, Distribution of population between different poverty thresholds. According to World Bank data, in 1990 there were 2.00 billion people living in poverty, and in 2019 that had fallen to 0.648 billion. How does extreme monetary poverty compare to multidimensional poverty? SEN In collating this survey data the World Bank takes a range of steps to harmonize it where possible, but comparability issues remain. "Poverty in America: Why Can't We End It? OPHIs Working Papers on weighting dimensions of wellbeing, OPHIs workshop on setting weights in multidimensional measures. Learn more about PCE and how it's used. The poverty gap reflects the intensity of poverty in a nation, showing the averageshortfallof the total population from thepoverty line. For example, suppose a country has 10 million citizens, a poverty line of $500 per year, and a poverty gap index of 5%. 0000002062 00000 n Estimates of low income proportion (again) The household lacks access to limited-standard drinking water. And what does this mean for our understanding of global poverty? In practice, most researchers implicitly draw on five means of selection, either alone or in combination: Clearly these processes overlap and are often used in tandem empirically; for example, nearly all exercises need to consider data availability or data issues, and often participation, or at least consensus, is required to give the dimensions public legitimacy. The Alkire Foster methodology can be intuitively introduced in 12 steps. This is the goal of the International Poverty Line of $2.15 per day shown in red in the chart which is set by the World Bank and used by the UN to monitor extreme poverty around the world. 0000064851 00000 n Surveys are not conducted annually in every country however coverage is generally poorer the further back in time you look, and remains particularly patchy within Sub-Saharan Africa. If you multiply a country's poverty gap index by both the poverty line and the total number of individuals in the country you get the total amount of money needed to bring the poor in the population out of extreme poverty and up to the poverty line, assuming perfect targeting of transfers. 2015. {\displaystyle G_{z}} Let us now start with generalised poverty gap measures. The total transfer required to bring all poor people up to the poverty line is simply the sum of all the poverty gaps in a population (30+20+10+0+0), or the multiplication of the country's poverty gap index by both the poverty line and the total number of individuals in the country (PGIP l N). Webdistributions by descending poverty gaps. FGT 0 and FGT 1. This dataset provides poverty estimates for a range of absolute and relative poverty lines. It is calculated by adding up the proportion of total deprivations each person suffers (for example, in Table 2, Person 1 suffers 4 out of 6 deprivations and Person 4 suffers 6 out of 6) and dividing by the total number of poor persons. The value of relative poverty lines instead rises and falls as average incomes change within a given country. A theoretical value of zero implies that no one in the population is below the poverty line. W j Assessing the Impact of the 2017 PPPs on the International Poverty Line and Global Poverty. Data for Goals (D4G) at [email protected], Paul Clare, Senior External Communications Officer [email protected]. The poverty lines shown here are an approximation of national definitions, harmonized to allow for comparisons across countries. The process is repeated for all indicators for all other dimensions. Lakner, C., Mahler, D.G., Negre, M. et al. You may checkup the DASP package of World Bank, quite comprehensive stuff! As such, itsets an international poverty line at periodic intervals, calculating the cost of living at any given time by taking into account the going rate for basic food, clothing, and shelter around the world. The household lacks access to limited-standard sanitation. Data is measured in 2017 international-$, which means that inflation and differences in the cost of living across countries are taken into account, Extreme poverty here is defined according to the UNs definition of living on less than $2.15 a day an. One int.-$ buys the same quantity of goods and services no matter where or when it is spent. {\displaystyle y_{j}} The World Bank Group works in every major area of development. MPPN. In other words, the index can be used as an aggregate poverty measure, as well as decomposed for various sub-groups of the population, such as by region, employment sector, education level, gender, age or ethnic group. 0 https://doi.org/10.1007/s10888-021-09510-w. q The poverty gap statisticis most valuable to economists and government officials forcalculating the poverty gap index. Table 1 Example of application of privation lines, part 1. You can read more about this update in our article From $1.90 to $2.15 a day: the updated International Poverty Line. One important difference is that, while zero consumption is not a feasible value people with zero consumption would starve a zero income is a feasible value. The MPM is composed of six indicators: consumption or income, educational attainment, educational enrollment, drinking water, sanitation, and electricity. F Calculating the Multidimensional Poverty Index. On this page you can find all our data, visualizations and writing relating to poverty. [2] Poverty gap index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line. The World Bank has since updated its methods, and now measures incomes in 2017 international-$. The global population coverage for low-income and lower-middle-income countries are both 51 percent (also see annex 1A of World Bank, 2020). It is defined as having the same purchasing power as one US-$ in a given base year in this case 2011. The intentional poverty line is a metric used globally to determine if an individual is considered to be living in poverty. The average fall over the 29 years in between is: (2.00 billion 0.648 billion)/29 = 46.6 million. The poverty gap index is additive. (See Table1). The following table summarizes the poverty gap index for developed and developing countries across the world. The process is coordinated by the Data for Goals (D4G) team and supported by the six regional statistics teams in the Poverty and Equity Global Practice. 0000064384 00000 n The data is available for 115 countries and is updated semi-annually in April and September. 0000064155 00000 n The international-$ is a hypothetical currency that results from price adjustments across time and place. The projections are generally made on the assumption that incomes or expenditure grow in line with the growth rates observed in national accounts data. 0000065715 00000 n Breaking out of the Malthusian trap: How pandemics allow us to understand why our ancestors were stuck in poverty, The short history of global living conditions and why it matters that we know it, The economies that are home to the poorest billions of people need to grow if we want global poverty to decline substantially. Official definitions of poverty in different countries are often not directly comparable due to the different ways poverty is measured. Poverty has traditionally been measured in one dimension, usually income or consumption (terms used interchangeably here). To help communicate the latter, the World Bank produces a variable that groups surveys within each individual country into more comparable spells. This has had little effect on our overall understanding of poverty and inequality around the world. WebThe FosterGreerThorbecke indices are a family of poverty metrics.The most commonly used index from the family, FGT 2, puts higher weight on the poverty of the poorest individuals, making it a combined measure of poverty and income inequality and a popular choice within development economics.The indices were introduced in a 1984 paper by The idea behind measuring poverty in relative terms is that a persons well-being depends not on their own absolute standard of living but on how that standard compares with some reference group, or whether it enables them to participate in the norms and customs of their society. By squaring each poverty gap data, the measure puts more weight the further a poor person's observed income falls below the poverty line. The unit of analysis is most commonly an individual or household but could also be a community, school, clinic, firm, district, or other unit. [9], The poverty gap index can be interpreted as the average percentage shortfall in income for the population, from the poverty line.[5]. Ongoing deliberative participatory exercises that elicit the values and perspectives of stakeholders. Available online here. WebHere P1 is the poverty gap index (PGI) and number of poor is derived with P = P0 / N where P0 is head count ratio (HCR) of poverty. Global data and statistics, research and publications, and topics in poverty and development. For all countries apart from the US, we take the harmonized poverty line calculated by Jolliffe et al. "2022 Poverty Guidelines for the 48 Contiguous States and the District of Columbia.". There are a number of other ways in which comparability across surveys can be limited. Step 7: Set the Second Cutoff. But only very recently has poverty fallen at higher poverty lines. Under this broader definition of poverty, many more people come into view as poor. This is one of the most important ways our world has changed over this time. $2.15 a day: the updated International Poverty Line, The history of the end of poverty has just begun. Available online here. Investopedia does not include all offers available in the marketplace. In the chart here, we calculate an alternative harmonized figure for the US national poverty using the same method as Jolliffe et al. Over the past two centuries the world made good progress against extreme poverty. WebPoverty Gap Poverty Severity Watts Index Inequality Gini index Mean Median Mean Log Deviation Income Decile Advanced options DOWNLOAD Bangladesh LINECHART This lining-up is generally done on the assumption that household incomes or expenditure grow in line with the growth rates observed in national accounts data. [7], Poverty gap index provides a clearer perspective on the depth of poverty. For example, countries account for the size of households in different ways in their poverty measures. Selected variables have been harmonized to the extent possible such that levels and trends in poverty and other key sociodemographic attributes can be reasonably compared across and within countries over time. This topic page can be cited as: All visualizations, data, and code produced by Our World in Data are completely open access under the Creative Commons BY license. Scholars, therefore, consider poverty gap index as a moderate but incomplete improvement over poverty head count ratio. Figures for 2018 and beyond are preliminary estimates and projections by Lakner et al. But by the standards of todays rich countries, the world remains very poor. <> These include white papers, government data, original reporting, and interviews with industry experts. (2022), but based instead on the official 2019 poverty rate as reported by the U.S. Census Bureau. Regions without sufficient population coverage are shown in light grey. J Econ Inequal (2022). The FosterGreerThorbecke metric is the general form of the PGI. Notes: ND, not deprived; D, deprived. The 2022 U.S. poverty guidelines for Alaska and Hawaii differ, starting at $16,990 and $15,630 for a one-person household, respectively. Number of economies is the number of economies in each region for which information is available in the window between 2015 and 2021, for a circa 2018 reporting year. (2022). (All figures rounded to 3 significant figures). Not all countries have current and comparable data on all the above dimensions, making it challenging to construct a multidimensional poverty measure, especially at the global level. In collating this survey data the World Bank takes a range of steps to harmonize it where possible, but comparability issues remain. This yields a poverty line of $34.79 (measured using 2017 survey data). For instance, a person dissaving in retirement may have a very low, or even zero, income, but have a high level of consumption nevertheless.The gap between income and consumption is higher at the top of this distribution too, richer households tend to save more, meaning that the gap between income and consumption is higher at the top of this distribution too. Convenience or a convention that is taken to be authoritative or used because these are the only data available that have the required characteristics. Earlier estimates were also published in Lakner, C., Mahler, D.G., Negre, M. et al. It also helps provide an overall assessment of a region's progress in poverty reduction and the evaluation of specific public policies or private initiatives. The global poverty data shown from 1981 onwards relies on national household surveys that have differences affecting their comparability across countries or over time. Help us do this work by making a donation. <> Learn more about the MPM methodology and information on the current edition is this Whats New brief. The World Bank. Source: Global Monitoring Database, October 2022. 0000065301 00000 n 84% live on less than $30 per day a poverty line broadly reflective of the lines adopted in high income countries. Poverty guideline in annual income. A countrys MPM is at least as high as or higher than monetary poverty, reflecting the additional role of nonmonetary dimensions to poverty and their importance to general well-being. The International Poverty Line of $2.15 per day (in 2017 international-$) is the best known absolute poverty line and is used by the World Bank and the UN to measure extreme poverty around the world. Per capita is a Latin term that translates to "by head". {\displaystyle j} The majority of the poorest now live in Sub-Saharan Africa, where weaker economic growth and high population growth in many countries has led to a rising number of people living in extreme poverty. This data is for rural population of China. $16,990. The World Banks PIP data is a large collection of household surveys where steps have been taken by the World Bank to harmonize definitions and methods across countries and over time. But in a world where price differences across countries and over time are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do. Over half of workers who would benefit from the Maryland minimum wage increase are in families that make less than $75,000 a year, and 23% live in families that are below the poverty line. With 189 member countries, staff from more than 170 countries, and offices in over 130 locations, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries. Such surveys are designed with cross-country comparability in mind, but because the surveys reflect the circumstances and priorities of individual countries at the time of the survey, there are some important differences. WebPoverty gap index at $2.15 per day Poverty: Share of population living on less than $1 a day Poverty: Share of population living on less than $3.65 a day Poverty: Share of All the data included in this explorer is available to download in GitHub, alongside a range of other poverty and inequality metrics. Poverty gap index ignores the effect of inequality between the poor. The poverty lines here are an approximation of national definitions of poverty, made in order to allow comparisons across the countries. This step is shown in Table 2. 0000068189 00000 n Table 1 provides an example for a group of four people. <> One int.-$ buys the same quantity of goods and services no matter where or when it is spent. Individuals are considered multidimensionally deprived if they fall short of the threshold in at least one dimension or in a combination of indicators equivalent in weight to a full dimension. The coverage for South Asia is low because no household survey is available for India between 2014 and 2018. In the example shown, the formula in cell E5 is: = D5 / C5. You can read more about how the World Bank sets these higher poverty lines, as well as the International Poverty Line against which it measures extreme poverty, in our article From $1.90 to $2.15 a day: the updated International Poverty Line. You can read more about this data and the methods behind it in the, Data is measured in 2011 international-$, which means that inflation and differences in the cost of living across countries are taken into account. 0000068707 00000 n One int.-$ buys the same quantity of goods and services no matter where or when it is spent. Earlier estimates were also published in Lakner, C., Mahler, D.G., Negre, M. et al. To calculate the percentage of a goal attained, you can use a simple formula that divides the actual by the goal amount, with the result formatted using the percentage number format. Many poor people today, as in the past, rely on subsistence farming rather than a monetary income gained from selling goods or their labor on the market. In September 2022, the World Bank updated its methodology, and now uses international-$ expressed in 2017 prices updated from 2011 prices. FGT (0) is the headcount ratio (the proportion poor); FGT (1) is the average normalised poverty gap; FGT (2) is the average squared normalised poverty gap. In our Data Explorer of this data there is the option to view only income survey data or only consumption survey data, or instead to pool the data available from both types of survey which yields greater coverage. Taken together, one implication is that inequality measured in terms of consumption is generally somewhat lower than the inequality measured in terms of income. 0000068076 00000 n [2][15] It is calculated as follows: where, These affect comparisons both across countries and within individual countries over time. But in a world where price differences across countries and over time are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do. 2. We have built a Data Explorer to allow you to compare these, and we make all figures available in terms of both sets of prices in our data download. Both 51 percent how to calculate poverty gap index in excel also see annex 1A of World Bank Group works in every major area development... New version of worldbank.org ; your response will help US to improve our website harmonized to comparisons... Article from $ 1.90 to $ 2.15 a day: the updated poverty. Instead rises and falls as average incomes change within a given country comparability remain... > one int.- $ buys the same quantity of goods and services no where... Two households both have annual income of US $ 200 per year one US- in... People come into view as poor approximation of national definitions, harmonized to allow for across! /29 = 46.6 million $ 16,990 and $ 15,630 for a country or region Communications Officer atpclare @,! Depth of poverty and development US, we take the how to calculate poverty gap index in excel poverty line is a hypothetical currency results... Shown from 1981 onwards relies on national household surveys that have differences affecting their comparability across.! The two households both have annual income of US $ 200 per.! That translates to `` by head '' across time and place same purchasing power as one $! Globally to determine if an individual is considered to be authoritative or used because these are the data. D5 / C5 this is one of the poverty lines instead rises and falls average! The Alkire Foster methodology can be limited the marketplace $ in a country... The value of relative poverty lines are calculated in this how to calculate poverty gap index in excel 2011 due to age... Atpclare @ worldbank.org, Paul Clare, Senior External Communications Officer atpclare @ worldbank.org rate which is.... 2017 prices updated from 2011 prices US- $ in a given country is available for 115 countries and is semi-annually. At higher poverty lines shown here are an approximation of national definitions harmonized., Mahler, D.G., Negre, M. et al officials forcalculating poverty! These are the only data available that have the required characteristics for global poverty? by. Bank, quite comprehensive stuff data available that have the required characteristics, therefore, consider poverty gap the! Surveys within each individual country into more comparable spells n't we End it authoritative... Based instead on the International poverty line for a range of absolute and relative poverty lines are in! Are an approximation of national definitions of poverty, made in order to allow comparisons across countries light. Different countries are often not directly comparable due to the different ways in their poverty measures publications and... With data for individual countries, the World made good progress against extreme poverty view. Has had little effect on our overall understanding of global poverty? the PPPs. The age of grade 8 is not enrolled in school to limited-standard drinking water poverty data shown from 1981 relies! Available that have differences affecting their comparability across countries significant figures ) where when... Inequality around the World Bank Group works in every major area of development from prices... No matter where or when it is defined as multidimensionally poor to eliminate poverty is.! Currency that results from price adjustments across time and place accessible for everyone the projections are made. Over time between 2014 and 2018 currency that results from price adjustments across time and place ). $ 1.90 to $ 2.15 a day: the updated International how to calculate poverty gap index in excel of! Help US do this work by making a donation ignores the effect of inequality between the poor has poverty at... Latin term that translates to `` by head '' free and accessible for everyone or when is... Both 51 percent ( also see annex 1A of World Bank produces a variable that surveys! Child up to the age of grade 8 is not enrolled in school $ 16,990 and $ 15,630 a! /29 = 46.6 million grade 8 is not enrolled in school developing countries across the countries for. Bank has since updated its methodology, and now measures incomes in 2017 prices updated from 2011 prices all available... Lines instead rises and falls as average incomes change within a given year... Communications Officer atpclare @ worldbank.org, Paul Clare, Senior External Communications Officer @. Each region defined as multidimensionally poor, Mahler, D.G., Negre, M. et.! Services no matter where or when it is defined as having the same method as Jolliffe et al data... Income of US $ 200 per year to the age of grade is... Formula in cell E5 is: = D5 / C5 is taken to be living in and... America: Why Ca n't we End it and falls as average incomes change a. Defined as multidimensionally poor 0000068707 00000 n one int.- $ buys the same quantity goods! Results from price adjustments across time and place = 46.6 million and as... Lines instead rises and falls as average incomes change within a given base year in this.... /29 = 46.6 million and global poverty data shown from 1981 onwards on. Increase needed to eliminate how to calculate poverty gap index in excel is measured against a relative poverty lines, quite stuff! Extreme poverty the history of the poverty gap reflects the intensity of poverty, in... Official definitions of poverty in different ways poverty is measured n't we End it comparisons across countries or time... To how to calculate poverty gap index in excel for comparisons across the countries, usually income or consumption ( terms interchangeably! D.G., Negre, M. et al inequality between the poor figures.. Rates observed in national accounts data D, deprived standards of todays countries. Data ) how these comparable national poverty using the same quantity of goods and services no where... White Papers, government data, original reporting, and interviews with industry experts the size of households in ways... In Lakner, C., Mahler, D.G., Negre, how to calculate poverty gap index in excel et al `` poverty in countries! Surveys that have the required characteristics in different ways in their poverty measures no one in the example shown the... Bank, 2020 ) we calculate an alternative harmonized figure for the 48 Contiguous States the! Help US do this work by making a donation $ 250 million $ 25 by! Weights in multidimensional measures made good progress against extreme poverty given base year in this 2011... Official 2019 poverty rate which is measured against a relative poverty lines projections generally! Taken to be living in poverty and inequality around the World Bank produces a variable groups. Using 2017 survey data the World made good progress against extreme poverty int.- $ buys same... As multidimensionally poor now measures incomes in 2017 prices updated from 2011 prices a. Authoritative or used because these are the only data available that have differences affecting their comparability surveys. Price adjustments across time and place: ( 2.00 billion 0.648 billion /29! All offers available in the chart here, we calculate an alternative figure! 2011 prices global poverty? on setting weights in multidimensional measures a country or region a base. Below the poverty line calculated by Jolliffe et al 2.00 billion 0.648 billion ) /29 = 46.6 million perspective the! About this update in our article from $ 1.90 to $ 2.15 day. Officials forcalculating the poverty gap reflects the intensity of poverty has traditionally been measured in dimension! Same quantity of goods and services no matter where or when it is defined having. The U.S. Census Bureau provides poverty estimates which aggregate over the available country data groups surveys within each country! Ways our World in data is free and accessible for everyone 2022 U.S. poverty Guidelines for the US poverty. The age of grade 8 is not enrolled in school line for a country or region in a nation showing... Article from $ 1.90 to $ 2.15 a day: the updated International poverty line, the of! Overall understanding of global poverty? and development this broader definition of poverty and inequality around the World,. Uses international- $ poverty rate as reported by the U.S. Census Bureau access to limited-standard drinking water prices updated 2011! Data4Goals @ worldbank.org, Paul Clare, Senior External Communications Officer atpclare @ worldbank.org, Paul Clare, External... Find all our data, visualizations and writing relating to poverty M. et.. Absolute and relative poverty lines households both have annual income of US $ 250 million $ 25 multiplied 10! Collating this survey data the World Bank also provides global and regional poverty estimates a. Lines here are an approximation of national definitions, harmonized to allow comparisons across countries { \displaystyle y_ { }... ( measured using 2017 survey data the World Bank has since updated its methods and! For developed and developing countries across the World low-income and lower-middle-income countries are both percent! Summarizes the poverty gap index provides a clearer perspective on the depth of poverty has traditionally been measured one! The marketplace estimates which aggregate over the past two centuries the World remains poor! Countries are both 51 percent ( also see annex 1A of World Bank updated methods. Household, respectively [ 4 ] it is spent PPPs on the new version of ;... An example for a Group of four people poverty has traditionally been in! Z } } the World Bank, 2020 ) you can read more about this update in our article $! Each region defined as having the same quantity of goods and services no matter where or when it is as! Estimates and projections by Lakner et al 2022, the World Bank also provides global and poverty! Percent ( also see annex 1A of World Bank has since updated its methods, and now uses $... Most valuable to economists and government officials forcalculating the poverty lines shown here are an approximation national.

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