Wednesday, December 26, 2012

Is This Progress?

The graph above shows the number of people living on less than $2.00 per day, in apples to apples PPP dollars (see below for details), in 1820 and 2005. There are more than 250% more people today living at this very low level of income than almost 200 years ago.

Is that progress?

The details:

The figure of 2.6 billion people worldwide living at less than $2.00 per day in 2005 comes from a 2008 World Bank paper by Chen and Ravallion (here in PDF) and specifically their Table 5. The $2.00 are expressed in 2005 international dollars (i.e., PPP adjusted).

The figure for 1820 comes from the Maddison global GDP dataset, and actually works out to $1.82 in 1990 international dollars (i.e., PPP adjusted values, which will be closer to $2.00 in 2005 dollars). Maddison estimated total global population in 1820 to be 1.04 billion, so the maximum number of people living at less than $2.00 is 1 billion. The actual value is no doubt less than this, but by how much is not known.

Thus, my conclusion that the number of people living on less that $2.00 per day has increased by 250% over almost 200 years is conservative -- it could easily be 300% or 400%.

Some more details: From 1820 to 2005 global population increased by 620% and per capita GDP increased by 1,045% (again, PPP-adjusted dollars, both figures from the Maddison dataset).

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