What Percent of the World is in Poverty?

Is poverty growing or shrinking around the world?  The World Bank a few months ago released new data to answer this question.  The picture from the new data is very heartening.  The number of poor people around the globe is rapidly shrinking.

The best world poverty figures come from the PovcalNet program at the World Bank.    The graph below shows the latest PovcalNet figures.  The graph tracks the percentage of the world’s population in poverty using three different income levels.

The dashed line on the bottom of the graph is the easiest hurdle to hit.  It tracks the percentage of the world spending less than $1.90 per day.  The bottom dashed line shows that in 1981 over forty percent of the world existed on less than a $1.90 per day.  However, by 2013 the percentage of the world that existed on this amount  or less had fallen by a factor of four to slightly more than ten percent.  The middle dotted line boosts the level up to $3.20 per day, while the solid line is a much higher $5.50 per day.

All three lines show a dramatic fall in the percent of people in poverty.  This fall is not caused by inflation, or rising prices, since the World Bank adjusted all data to account for this issue.  All data in the graph are in constant 2011 prices.

The fall is also not caused by a shrinking population.  Instead, the world’s population from the early 1980s to present has grown tremendously.  Back in the 1980s the world’s population was about 4.5 billion people while today it is close to 7.5 billion.  Even with the tremendous growth in population the absolute number of people in extreme poverty has fallen.  In 1981 the world had 1.9 billion people under the $1.90 per day poverty line.  In 2013 there were just 780 million under this cutoff.

Early world poverty figures were criticized because they used estimated world poverty based on a small number of  countries.  The World Bank’s first estimate included 22 poor countries.  However, the latest figures come from two million randomly sampled households in 164 different countries, making this criticism no longer valid.

The takeaway from the revised data is clear.  We are bombarded constantly with negative news stories.  These stories make me feel terrible and make me feel the future of our world is bleak.  However, when I look at the long term data, I see a very different picture.  The real news story is one of hope and steady improvement.  The number of people in extreme poverty is falling dramatically over time.  It’s unfortunate that good news items, like this one, don’t capture people’s attention as much as death, war and mayhem.

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *