Extreme poverty: how far have we come, how far do we still ...

Extreme poverty is defined by the UN as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low? It is not ... InthenewsExploredataforcontextofthewarinUkraineDespitemakingimmenseprogressagainstextremepoverty,itisstilltherealityforeverytenthpersonintheworld.byMaxRoserNovember22,2021 Summary Twocenturiesagothemajorityoftheworldpopulationwasextremelypoor.Backthenitwaswidelybelievedthatwidespreadpovertywasinevitable.Butthisturnedouttobewrong.Economicgrowthispossibleandpovertycandecline.Theworldhasmadeimmenseprogressagainstextremepoverty. Butevenaftertwocenturiesofprogress,extremepovertyisstilltherealityforeverytenthpersonintheworld.Thisiswhatthe‘internationalpovertyline’highlights–thismetricplaysanimportant(andsuccessful)roleinfocusingtheworld’sattentionontheseverypoorestpeopleintheworld. Thepoorestpeopletodayliveincountrieswhichhaveachievednogrowth.Thisstagnationoftheworld’spooresteconomiesisoneofthelargestproblemsofourtime.Unlessthischangesmillionsofpeoplewillcontinuetoliveinextremepoverty. Therearepoorpeopleineverycountry,peoplewholiveinpoorhousingandwhostruggletoaffordbasicgoodsandserviceslikeheating,transport,andhealthyfoodforthemselvesandtheirfamily. Thedefinitionofpovertydiffersfromcountrytocountry,butinhigh-incomecountries,likethoseshowninthecharthere,thepovertylineisaround$30perday.1  Evenintheworld’srichestcountriesasubstantialshareofpeople–betweenevery10thandevery5thperson–livesbelowthispovertyline. Inthismaps,andinallinternationalpovertystatisticsonOurWorldinData,thedataisadjustedforinflationandcross-country-differencesinthepricelevel.Inthefold-out-boxbelowyoufindamoredetailedexplanationofhowpovertyismeasuredandhowthesestatisticsaccountforthedifferencesinpricelevelacrosscountries. Clicktoopeninteractiveversion Basicsofglobalpovertymeasurement Throughoutthisarticle–andinglobalincomeandexpendituredatagenerally–thestatisticianswhoproducethesefiguresarecarefultomakethesenumbersascomparableaspossible.   Non-monetarysourcesofincomearetakenintoaccount:Manypoorpeopletodayandinthepastrelyonsubsistencefarminganddonothaveamonetaryincome.Totakethisintoaccountandmakeafaircomparisonoftheirlivingstandards,thestatisticiansthatproducethesefiguresestimatethemonetaryvalueoftheirhomeproductionandaddittotheirincome/expenditure. Dataismeasuredininternational-$,whichmeansthatdifferencesinpurchasingpowerandinflationaretakenintoaccount:Thedataisexpressedininternationaldollars.Thisisahypotheticalcurrencythatresultsfromthepriceadjustmentsacrosstimeandplace.2 AninternationaldollarisdefinedashavingthesamepurchasingpowerasoneUS-$intheUS.Thismeansnomatterwhereintheworldapersonislivingonint.-$30,theycanbuythegoodsandservicesthatcost$30intheUS.Noneoftheseadjustmentsareevergoingtobeperfect,butinaworldwherepricedifferencesarelargeitisimportanttoattempttoaccountforthesedifferencesaswellaspossible,andthisiswhattheseadjustmentsdo.3 ThroughoutthistextI’malwaysadjustingincomesforpricechangesovertimeandpricedifferencesbetweencountriesinthisway.Alldollarvaluesdiscussedherearepresentedinint.-$;theUNdoesthesameforthe$1.90povertyline.SometimesIleaveout‘international’asitisawkwardtorepeatitallthetime;buteverytimeImentionany$amountinthistextI’mreferringtointernational-$andnotUS-$.4 Globaldataisamixofincomeandexpendituredata:Thereisnoglobalsurveyofincomes:researchersneedtorelyontheavailablenationalsurveys.Suchsurveysaredesignedwithcross-countrycomparabilityinmind,butbecausetheyreflectthecircumstancesandprioritiesofindividualcountriestherearesomeimportantdifferencesacrosscountries.Inmosthigh-incomecountriesthesurveyscapturepeople’sincomes,whileinpoorercountriesthesesurveystendtocapturepeople’sconsumption.Thetwoconceptsarecloselyrelated:theincomeofahouseholdequalstheirconsumptionplusanysaving(orminusanyborrowing).Whenspeakingaboutthesestatisticsitwouldthereforebeaccuratetospeakabout‘theincomeofpeopleinrichercountriesandthemonetaryvalueofconsumptioninpoorercountries’.Butsinceit’dbeabitmuchtorepeatthiseverytimeresearcherssimplyspeakof‘livingstandards’or‘income’instead.Idothesameinthistext. Wecanapplythis$30-a-day-poverty-linetotheglobalincomedistributiontoseetheshareinpovertyasjudgedbythedefinitionofpovertyinhigh-incomecountries.5Thelatestglobaldatatellsusthatthehugemajority–85%oftheworldpopulation–liveonlessthan$30perday.Thatmeans6.5billionpeople. Whyisanextremelylowpovertylinenecessary?ExtremepovertyisdefinedbytheUNaslivingonlessthan$1.90aday.Whydoweneedapovertylinethatissoextremelylow?Itisnotenoughtomeasureglobalpovertysolelybyahigherpovertylinebecausealargenumberofpeopleliveonverylowincomes.Ifwe’donlyrelyonthepovertylinefromhigh-incomecountrieswewouldhidetheverystarkdifferencesbetweenpeoplewithverydifferentlivingstandards.Whethersomeonewaslivingonalmost$30adayoron30-timeslesswouldnotmatter–theywouldallbeconsidered‘poor’.Addingmorepovertylinesdrawsattentiontothelargeincomedifferencesbetweenpeopleandhighlightshowmanyliveonextremelylowincomes.6 The$1.90povertyline,setbytheUN,showsthatgloballyclosetooneintenpeopleliveinextremepoverty.7Inallthesestatisticstheresearchersarenotonlytakingpeople’smonetaryincomeintoaccount,butalsotheirnon-monetaryincomeandhomeproduction.Onereasonwhythisisimportantisbecausemanypoorpeoplearesmallscalefarmerswhoproducetheirownfood.8Thefactthattherearesomanyextremelypoorpeopleintheworldmakesitnecessarytohavesuchalowpovertyline.Withoutanextremelylowpovertyline,wewouldnotbeabletoseethatalargeshareoftheworldlivesinsuchdeeppoverty. TheUN’sglobalpovertylineisvaluablebecauseithasbeensuccessfulindrawingattentiontotheterribledepthsofextremepovertyofthepoorestpeopleintheworld.9InarelatedessayIfocusonglobalpovertyasdefinedbyahigherpovertyline.InthistexthereI’mfocusingontheverypoorestintheworldandwanttolookatwhatneedstohappentoendextremepoverty.Thebiglessonofthelast200years:Economicgrowthispossible,povertyisnotinevitableWhatneedsexplanationisnotpoverty,butprosperity.Deeppovertywastheconditionthatthemajorityofhumanityhasalwayslivedin.Inthepre-moderndayshungerwaswidespreadandeverysecondchilddiednomatterwhereintheworlditwasborn. HistorianMichailMoatsoshasrecentlyproducedanewglobaldatasetthatgoesbacktwocenturies.Thechartshowshisdata.Accordingtohisresearchthree-quartersoftheworldlivedinextremepovertyin1820.Thismeansthey“couldnotaffordatinyspacetolive,someminimumheatingcapacity,andfoodthatwouldnotinducemalnutrition.”10Thechartlookssimple,butitwouldbeamistaketothinkthatitwassimpletoproducethisdata.UnderlyingitisawealthofcarefulhistoricalresearchthatMoatsosmadeuseof.Historiansgathereddataforpeoplearoundtheworldovertwocenturiestoreconstructhowmanyofthemwereabletoaffordasetofverybasicgoodsandservicesandaggregatedthisdetailedinformationintothisfinalpicture.Youfindmoreinformationonthemethodologyatthefootnote.11 Clicktoopeninteractiveversion EconomicgrowthmadeitpossibletoleavepovertybehindEconomicgrowthmadeitpossibletoleavethewidespreadextremepovertyofthepastbehind.Itmadethedifferencebetweenasocietyinwhichthemajoritywerelackingeventhemostbasicgoodsandservices–food,decenthousingandclothes,healthcare,publicinfrastructureandtransport–andasocietyinwhichtheseproductsarewidelyavailable.Growthmeansthatasocietyproducesanincreasingquantityandqualityofeconomicgoodsandservices.Thekeytoeconomicgrowthisthedevelopmentoftechnologythatmakesitpossibletoincreaseproductivitybywhichthesegoodsandservicesareproduced. Becausethetotalproductioninaneconomyequalsthetotalincomeinthatcountry–aseveryone’sspendingissomeoneelse’sincome–incomesgrowatthesamerateasproductionincreases. The9chartsshowthedatafordifferentregionsintheworld.Onthex-axisofeachchartyoufindtheaverageincome(GDPpercapita)andonthey-axisyouseethesharelivinginextremepoverty.Thestartingpointofeachtrajectoryshowsthedatafor1820andittellsusthattwocenturiesagothemajorityofpeoplelivedinextremepoverty,nomatterwhereintheworldtheywereathome.12Sincethenallworldregionsachievedgrowth–theproductionofgoodsandservicesincreased–andthesharelivinginpovertydeclined.[Inmypost‘WhatisEconomicGrowth?’youfindmuchmoreonwhateconomicgrowthisandhowitispossible.]MostextremelypoorpeopletodayarelivinginAfricaHowfardowestillhavetogo? ThepreviouschartshowedthatSub-SaharanAfricaisthepoorestregion.Almost40%ofthepopulationlivesinextremepoverty. NotallAfricancountriesarestruggling,infactmostAfricancountrieshaveachievedgoodgrowthaftertheendoftheoppressivecolonialregimesthathinderedthegrowthofAfricaneconomies.Butinanumberofcountriesthesituationisparticularlybad.Thesecountriesremainaspoorastheywereinthepast.Sincetheeconomyisstagnant,povertyistoo.Inthesmallchartyouseethedailymeanincomeinthreeofthepoorestcountriestoday.Forfourdecadestheydidnotachieveeconomicgrowth.13  Toseetheconsequencesofthislet’sfirstfocusononecountrythatachievedlargegrowthandthencontrastitwithacountrythatdidnot. AcountrythatachievedlargegrowthistheUK:theorangedistributionontheleftshowsincomesintheUKtwocenturiesago;themajoritylivedinextremepoverty.Thegreendistributionshowshowthedistributionofincomeshaschangedsincethen.Twocenturiesofeconomicgrowthliftedthemajorityofpeopleoutofthedeeppovertyofthepast.14 ThenextchartshowstheincomedistributionoftheUKin2019ingreen–justasinthepreviouschart–andinredtheincomedistributionofMadagascar,acountrythatdidnotachievegrowth.ThemajorityofpeopleinMadagascarstillliveinextremepoverty.Verysimilartotheglobalsituationtwocenturiesago,three-quartersofMadagascar’spopulationarelivinginextremepoverty. Notjusteconomicgrowth,butalsothedistributionofthatgrowthmatters.Iftheinequalityofincomesincreases,thepoorestcanbeleftbehind.Butwithouteconomicgrowththereisnochanceatalltoleavepovertybehind.ThedatafromMadagascarmakesclearthatareductionofinequalitycannotendextremepovertyinapoorcountry.IfinequalityinMadagascarwouldbeentirelyeradicatedtheneveryonewouldliveontheaverageincome.InMadagascarthisis$1.60aday.Forpoorcountries,theonlywaytoendpovertyisanincreaseofincomes–andthatmeanseconomicgrowth.Themajorityoftheworldismakinggoodprogressagainstpoverty,butnotall:someoftheverypooresteconomiesarestagnatingThehistoryofextremepovertyisatthesametimeoneofhumanity’sgreatestachievementsandfailures.Themajorityoftheworldleftextremepovertybehind.Tomethisranksamongthemostimpressiveandmostimportantachievementsinhumanity’shistory.But,aswe’veseen,thefightagainstextremepovertyisfarfromover.Aboutoneintenpeoplestillliveinextremepovertyrightnow. Theworrywithextremepovertytodayisthatsomeoftheworld’spoorestcountriesarenotgrowing.Unlessthischangeshundredsofmillionsofpeoplewillcontinuetoliveinextremepoverty.Cruciallythiswastruebeforethepandemichit–evenbeforeCOVID,researchersexpectedthathalfabillionpeoplewouldremaininextremepovertyby2030(asIdocumentedinthepostlinkedattheend).Theglobalrecessionthatfollowedthepandemicexacerbatedthisfurther.WhenitcomestotheconsequencesofclimatechangethisiswhatIammostworriedabout.Richerpeoplewillbeabletoadaptinmanyways.Itistheextremelypoorpopulationthatwillbehardesthit.Theeconomicstagnationofsomeoftheworld’spoorestcountriesisnotaswidelyknownasitshouldbe.Ithinkitdeservesmoreattention.Ifthestagnationoftheverypooresteconomiespersistswewillseeagrowingdivideatthelowestendoftheglobalincomedistribution.Whilethelivingstandardsofthemajorityoftheworldarerising,someoftheworld’sverypoorestpeopleremaininextremepoverty.Whetherornotthepoorestcountriesachievegrowthisamongthemostimportantquestionsforthecomingyears.Itwilldecidewhetherhumanitywinsitslongfightagainstextremepovertyornot.ContinuereadingonOurWorldinData:TheUNgoalistoendextremepovertyby2030,inthispostIhavedocumentedthattheworldisnotontracktoachievethisgoal. 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