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46246	Extreme poverty: how far have we come, how far do we still have to go?	extreme-poverty-in-brief	post	publish	<!-- wp:html --> <div class="blog-info"> <p>Our World in Data presents the data and research to make progress against the world’s largest problems.<br>This article draws on data and research discussed in our entry on <strong><a href="https://ourworldindata.org/extreme-poverty" target="_blank" rel="noopener">Global Extreme Poverty</a></strong>.</p> </div> <!-- /wp:html --> <!-- wp:owid/summary --> <!-- wp:paragraph --> <p>Two centuries ago the majority of the world population was extremely poor. Back then it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. Economic growth is possible and poverty can decline. The world has made immense progress against extreme poverty.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>But even after two centuries of progress, extreme poverty is still the reality for every tenth person in the world. This is what the ‘international poverty line’ highlights – this metric plays an important (and successful) role in focusing the world’s attention on these very poorest people in the world.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The poorest people today live in countries which have achieved no growth. This stagnation of the world’s poorest economies is one of the largest problems of our time. Unless this changes millions of people will continue to live in extreme poverty.</p> <!-- /wp:paragraph --> <!-- /wp:owid/summary --> <!-- wp-block-tombstone 53780 --> <!-- wp:owid/help --> <!-- wp:heading {"level":4} --> <h4>The World Bank has updated its poverty and inequality data</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.</p> <!-- /wp:paragraph --> <!-- wp:owid/prominent-link {"title":"","linkUrl":"https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line","className":"is-style-thin"} --> <!-- wp:paragraph --> <p>Read more about the World Bank's updated methodology</p> <!-- /wp:paragraph --> <!-- /wp:owid/prominent-link --> <!-- wp:owid/prominent-link {"title":"Explore the latest World Bank data on poverty and inequality","linkUrl":"https://ourworldindata.org/explorers/poverty-explorer","className":"is-style-thin"} --> <!-- wp:paragraph --> <p></p> <!-- /wp:paragraph --> <!-- /wp:owid/prominent-link --> <!-- /wp:owid/help --> <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The definition of poverty differs from country to country, but in high-income countries the poverty line <a href="https://ourworldindata.org/higher-poverty-global-line">is around $30 per day</a>.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Even in the world’s richest countries a substantial share of people – between every 10th and every 5th person – lives below this poverty line.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In this map, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country-differences in the price level. In the fold-out-box below you find a more detailed explanation of how poverty is measured and how these statistics account for the differences in price level across countries.</p> <!-- /wp:paragraph --> <!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/poverty-share-on-less-than-30-per-day-2011-ppp?country=IND~DNK~KOR~ESP~POL~NOR" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:owid/additional-information --> <!-- wp:heading {"level":3} --> <h3>Basics of global poverty measurement</h3> <!-- /wp:heading --> <!-- wp:columns {"className":"is-style-merge-left"} --> <div class="wp-block-columns is-style-merge-left"><!-- wp:column {"width":"25%"} --> <div class="wp-block-column" style="flex-basis:25%"><!-- wp:image --> <figure class="wp-block-image"><img alt=""/></figure> <!-- /wp:image --></div> <!-- /wp:column --> <!-- wp:column {"width":"75%"} --> <div class="wp-block-column" style="flex-basis:75%"><!-- wp:paragraph --> <p>Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible.  </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Non-monetary sources of income are taken into account:</strong> Many poor people today and in the past rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Data is measured in international-$, which means that differences in purchasing power and inflation are taken into account:</strong> The data is expressed in <em>international dollars</em>. This is a hypothetical currency that results from the price adjustments across time and place.{ref}This is possible by relying on the work of the<a href="https://www.worldbank.org/en/programs/icp"> International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref}  An international dollar is defined as having the same purchasing power as one US-$ <em>in the US</em>. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” <em>American Economic Journal: Macroeconomics</em> 2 (4): 1–35. A working paper version is available online<a href="https://www.nber.org/papers/w14499"> here</a>.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p><strong>Global data is a mix of income and expenditure data: </strong>There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people’s incomes, while in poorer countries these surveys tend to capture people’s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about ‘the income of people in richer countries and the monetary value of consumption in poorer countries’. But since it’d be a bit much to repeat this every time researchers simply speak of ‘living standards’ or ‘income’ instead. I do the same in this text.</p> <!-- /wp:paragraph --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- /wp:owid/additional-information --> <!-- wp:paragraph --> <p>We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account – a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 <em>in the US</em>.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The latest global data tells us that the huge majority – 85% of the world population – live on less than $30 per day. That means 6.5 billion people.</p> <!-- /wp:paragraph --> <!-- wp:columns {"className":"is-style-sticky-right"} --> <div class="wp-block-columns is-style-sticky-right"><!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":46249,"sizeSlug":"large","linkDestination":"none"} --> <figure class="wp-block-image size-large"><img src="https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-800x144.png" alt="" class="wp-image-46249"/></figure> <!-- /wp:image --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:heading {"level":4} --> <h4>Why is an extremely low poverty line necessary?</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Extreme poverty is defined <a href="https://www.un.org/sustainabledevelopment/poverty/">by the UN</a> as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low?</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on <em>very </em>low incomes. If we’d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter – they would all be considered ‘poor’.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country <a href="https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29">you can do so here</a>.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:columns {"className":"is-style-sticky-right"} --> <div class="wp-block-columns is-style-sticky-right"><!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":46250,"sizeSlug":"large","linkDestination":"none"} --> <figure class="wp-block-image size-large"><img src="https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-800x139.png" alt="" class="wp-image-46250"/></figure> <!-- /wp:image --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:paragraph --> <p>The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people’s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The UN’s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the <em>very</em> poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href="https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In a <a href="https://ourworldindata.org/history-of-poverty-has-just-begun">related essay</a> I focus on global poverty as defined by a higher poverty line. In this text here I’m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":3} --> <h3>The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable</h3> <!-- /wp:heading --> <!-- wp:paragraph --> <p>What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days <a href="https://ourworldindata.org/human-height">hunger was widespread</a> and <a href="https://ourworldindata.org/child-mortality-in-the-past">every second child died</a> no matter where in the world it was born. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they "could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.”{ref}Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href="https://doi.org/10.1787/3d96efc5-en"> https://doi.org/10.1787/3d96efc5-en</a>.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are:</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href="https://doi.org/10.1787/3d96efc5-en"> https://doi.org/10.1787/3d96efc5-en</a>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Jutta Bolt and Jan Luiten van Zanden (2021) – The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href="https://doi.org/10.1787/3d96efc5-en"> https://doi.org/10.1787/3d96efc5-en</a>. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The historical poverty research was done by economic historian <a href="https://www.uu.nl/medewerkers/mmoatsos">Michail Moatsos</a> and is based on the ‘cost of basic needs’-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The ‘cost of basic needs’-approach was recommended by the ‘World Bank Commission on Global Poverty’, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the ‘World Bank Commission on Global Poverty’ can be found<a href="https://openknowledge.worldbank.org/handle/10986/25141"> here</a>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Tony Atkinson – and after his death his colleagues – turned this report into a book that was published as Anthony B. Atkinson (2019) – Measuring Poverty around the World. You find more information on<a href="https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/"> Atkinson’s website</a>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The CBN-approach Moatsos’ work is based on was suggested by Allen in Robert Allen (2017) – Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,<a href="https://doi.org/10.1257/aer.20161080"> https://doi.org/10.1257/aer.20161080</a> </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Moatsos describes the methodology as follows: “In this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries’ poverty estimates on a global scale to account for countries that lack some of the relevant data.” In his publication – linked above – you find much more detail on all of the shown poverty data.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes “It took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.”{/ref}</p> <!-- /wp:paragraph --> <!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --> <!-- wp:heading {"level":4} --> <h4>Economic growth made it possible to leave poverty behind</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services – food, decent housing and clothes, healthcare, public infrastructure and transport – and a society in which these products are widely available.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Growth <a href="https://ourworldindata.org/what-is-economic-growth">means</a> that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Because the total production in an economy equals the total income in that country – as everyone’s spending is someone else’s income – incomes grow at the same rate as production increases. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US <a href="https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL">had already achieved some growth</a> in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example <a href="https://ourworldindata.org/breaking-the-malthusian-trap">my post on the Malthusian Trap</a> and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth – the production of goods and services increased – and the share living in poverty declined.<br></p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>[In my post <a href="https://ourworldindata.org/what-is-economic-growth">'What is Economic Growth?'</a> you find much more on what economic growth is and how it is possible.]</p> <!-- /wp:paragraph --> <!-- wp:image {"id":46247,"sizeSlug":"full","linkDestination":"none"} --> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision.png" alt="" class="wp-image-46247"/></figure> <!-- /wp:image --> <!-- wp:heading {"level":4} --> <h4>Most extremely poor people today are living in Africa</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>How far do we still have to go? </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes <a href="https://voxeu.org/article/colonialism-and-development-africa">that hindered the growth</a> of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail <a href="https://ourworldindata.org/grapher/change-of-gdp-per-capita-extremely-poor?time=2000..2020&country=MLI~NER~BDI~MDG~COG~COD~CAF~TGO~LBR~GNB~KIR~SLB~HTI~ZWE~GMB">in this chart for growth</a> and <a href="https://ourworldindata.org/explorers/poverty-explorer-2011-vs-2017-ppp?tab=chart&facet=none&Metric=Share+in+poverty&International-%24=2011+prices&Poverty+line=%241.90+per+day%3A+International+Poverty+Line&Household+survey+data+type=Show+data+from+both+income+and+expenditure+surveys&country=MOZ~NGA~KEN~BGD~BOL~OWID_WRL">this chart for poverty</a>.{/ref} </p> <!-- /wp:paragraph --> <!-- wp:columns {"className":"is-style-sticky-right"} --> <div class="wp-block-columns is-style-sticky-right"><!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"width":400,"height":234} --> <figure class="wp-block-image is-resized"><img src="https://lh6.googleusercontent.com/9tCBcCqd-X4NNbjqMOq4GOyBAP2DtAQ71VTfojdAV1BVaPIw7Yjk5gstGk5mfZ2xWpsVy2UDxGcHFLm3hibmGq5mx6XZvwQZWRCOMJX-PsxiFqI0H0BHX4GNoB3PhcpSUlo6dqUG" alt="" width="400" height="234"/></figure> <!-- /wp:image --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:paragraph --> <p>To see the consequences of this let’s first focus on one country that achieved large growth and then contrast it with a country that did not. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet – the predecessor to the World Bank's <em>Poverty and Inequality Platform</em> – Gapminder, and Michail Moatsos 2021.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:columns {"className":"is-style-sticky-right"} --> <div class="wp-block-columns is-style-sticky-right"><!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":46251,"sizeSlug":"full","linkDestination":"none"} --> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years.png" alt="" class="wp-image-46251"/></figure> <!-- /wp:image --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:paragraph --> <p>The next chart shows the income distribution of the UK in 2019 in green – just as in the previous chart – and in red the income distribution of Madagascar, a country <a href="https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?country=MDG~GBR">that did not</a> achieve growth.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The majority of people in Madagascar still live in extreme poverty. Very similar to the global situation two centuries ago, three-quarters of Madagascar’s population are living in extreme poverty.</p> <!-- /wp:paragraph --> <!-- wp:columns {"className":"is-style-sticky-right"} --> <div class="wp-block-columns is-style-sticky-right"><!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":46252,"sizeSlug":"full","linkDestination":"none"} --> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today.png" alt="" class="wp-image-46252"/></figure> <!-- /wp:image --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:paragraph --> <p>Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes – and that means economic growth.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>The history of extreme poverty is at the same time one of humanity’s greatest achievements and failures.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The majority of the world left extreme poverty behind. To me this ranks among the most impressive and most important achievements in humanity’s history.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>But, as we’ve seen, the fight against extreme poverty is far from over. About one in ten people still live in extreme poverty right now. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The worry with extreme poverty today is that some of the world’s poorest countries are not growing. Unless this changes hundreds of millions of people will continue to live in extreme poverty.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Crucially this was true before the pandemic hit – even before COVID, researchers expected that <a href="https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty">half a billion people</a> would remain in extreme poverty by 2030. The global recession that followed the pandemic <a href="https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty">exacerbated</a> this further.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>The economic stagnation of some of the world's poorest countries is not as widely known as it should be. I think it deserves more attention.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world’s very poorest people remain in extreme poverty.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p></p> <!-- /wp:paragraph -->	{ "id": "wp-46246", "slug": "extreme-poverty-in-brief", "content": { "toc": [], "body": [ { "type": "text", "value": [ { "text": "Our World in Data presents the data and research to make progress against the world\u2019s largest problems.", "spanType": "span-simple-text" }, { "spanType": "span-newline" }, { "text": "This article draws on data and research discussed in our entry on ", "spanType": "span-simple-text" }, { "children": [ { "url": "https://ourworldindata.org/extreme-poverty", "children": [ { "text": "Global Extreme Poverty", "spanType": "span-simple-text" } ], "spanType": "span-link" } ], "spanType": "span-bold" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "type": "text", "value": [ { "text": "Two centuries ago the majority of the world population was extremely poor. Back then it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. Economic growth is possible and poverty can decline. The world has made immense progress against extreme poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "But even after two centuries of progress, extreme poverty is still the reality for every tenth person in the world. This is what the \u2018international poverty line\u2019 highlights \u2013 this metric plays an important (and successful) role in focusing the world\u2019s attention on these very poorest people in the world.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The poorest people today live in countries which have achieved no growth. This stagnation of the world\u2019s poorest economies is one of the largest problems of our time. Unless this changes millions of people will continue to live in extreme poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "type": "callout", "title": "Summary", "parseErrors": [] }, { "text": [ { "text": "The World Bank has updated its poverty and inequality data", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "url": "https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line", "type": "prominent-link", "title": "", "description": "Read more about the World Bank's updated methodology", "parseErrors": [] }, { "url": "https://ourworldindata.org/explorers/poverty-explorer", "type": "prominent-link", "title": "Explore the latest World Bank data on poverty and inequality", "description": "", "parseErrors": [] }, { "type": "text", "value": [ { "text": "There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The definition of poverty differs from country to country, but in high-income countries the poverty line ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/higher-poverty-global-line", "children": [ { "text": "is around $30 per day", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the \u2018International Poverty Line\u2019 discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref}\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Even in the world\u2019s richest countries a substantial share of people \u2013 between every 10th and every 5th person \u2013 lives below this poverty line.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In this map, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country-differences in the price level. In the fold-out-box below you find a more detailed explanation of how poverty is measured and how these statistics account for the differences in price level across countries.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "url": "https://ourworldindata.org/grapher/poverty-share-on-less-than-30-per-day-2011-ppp?country=IND~DNK~KOR~ESP~POL~NOR", "type": "chart", "parseErrors": [] }, { "type": "gray-section", "items": [ { "text": [ { "text": "Additional information", "spanType": "span-simple-text" } ], "type": "heading", "level": 2, "parseErrors": [] }, { "type": "expandable-paragraph", "items": [ { "left": [ { "alt": "", "size": "wide", "type": "image", "filename": "", "parseErrors": [] } ], "type": "sticky-right", "right": [ { "type": "text", "value": [ { "text": "Throughout this article \u2013 and in global income and expenditure data generally \u2013 the statisticians who produce these figures are careful to make these numbers as comparable as possible.\u00a0\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Non-monetary sources of income are taken into account:", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " Many poor people today and in the past rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Data is measured in international-$, which means that differences in purchasing power and inflation are taken into account:", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": " The data is expressed in ", "spanType": "span-simple-text" }, { "children": [ { "text": "international dollars", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". This is a hypothetical currency that results from the price adjustments across time and place.{ref}This is possible by relying on the work of the", "spanType": "span-simple-text" }, { "url": "https://www.worldbank.org/en/programs/icp", "children": [ { "text": " International Comparison Project", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ", which monitors the prices of goods and services around the world.{/ref} \u00a0An international dollar is defined as having the same purchasing power as one US-$ ", "spanType": "span-simple-text" }, { "children": [ { "text": "in the US", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ". This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Deaton, A., and Heston, A. 2010. \u201cUnderstanding PPPs and PPP-Based National Accounts.\u201d ", "spanType": "span-simple-text" }, { "children": [ { "text": "American Economic Journal: Macroeconomics", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " 2 (4): 1\u201335. A working paper version is available online", "spanType": "span-simple-text" }, { "url": "https://www.nber.org/papers/w14499", "children": [ { "text": " here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "children": [ { "text": "Global data is a mix of income and expenditure data: ", "spanType": "span-simple-text" } ], "spanType": "span-bold" }, { "text": "There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people\u2019s incomes, while in poorer countries these surveys tend to capture people\u2019s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about \u2018the income of people in richer countries and the monetary value of consumption in poorer countries\u2019. But since it\u2019d be a bit much to repeat this every time researchers simply speak of \u2018living standards\u2019 or \u2018income\u2019 instead. I do the same in this text.", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "parseErrors": [] } ], "parseErrors": [] } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account \u2013 a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 ", "spanType": "span-simple-text" }, { "children": [ { "text": "in the US", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ".{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The latest global data tells us that the huge majority \u2013 85% of the world population \u2013 live on less than $30 per day. That means 6.5 billion people.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "Global-income-distribution-plus-30.png", "parseErrors": [] }, { "text": [ { "text": "Why is an extremely low poverty line necessary?", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Extreme poverty is defined ", "spanType": "span-simple-text" }, { "url": "https://www.un.org/sustainabledevelopment/poverty/", "children": [ { "text": "by the UN", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low?", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on ", "spanType": "span-simple-text" }, { "children": [ { "text": "very ", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": "low incomes. If we\u2019d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter \u2013 they would all be considered \u2018poor\u2019.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29", "children": [ { "text": "you can do so here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "Global-income-distribution-plus-multiple-poverty-lines.png", "parseErrors": [] }, { "type": "text", "value": [ { "text": "The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people\u2019s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The UN\u2019s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the ", "spanType": "span-simple-text" }, { "children": [ { "text": "very", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty", "children": [ { "text": "the very poorest", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In a ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/history-of-poverty-has-just-begun", "children": [ { "text": "related essay", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " I focus on global poverty as defined by a higher poverty line. In this text here I\u2019m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable", "spanType": "span-simple-text" } ], "type": "heading", "level": 2, "parseErrors": [] }, { "type": "text", "value": [ { "text": "What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/human-height", "children": [ { "text": "hunger was widespread", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " and ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/child-mortality-in-the-past", "children": [ { "text": "every second child died", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " no matter where in the world it was born.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they \"could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.\u201d{ref}Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), ", "spanType": "span-simple-text" }, { "children": [ { "text": "How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ", OECD Publishing, Paris,", "spanType": "span-simple-text" }, { "url": "https://doi.org/10.1787/3d96efc5-en", "children": [ { "text": " https://doi.org/10.1787/3d96efc5-en", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are:", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), ", "spanType": "span-simple-text" }, { "children": [ { "text": "How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ", OECD Publishing, Paris,", "spanType": "span-simple-text" }, { "url": "https://doi.org/10.1787/3d96efc5-en", "children": [ { "text": " https://doi.org/10.1787/3d96efc5-en", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Jutta Bolt and Jan Luiten van Zanden (2021) \u2013 The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, ", "spanType": "span-simple-text" }, { "children": [ { "text": "How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": ", OECD Publishing, Paris,", "spanType": "span-simple-text" }, { "url": "https://doi.org/10.1787/3d96efc5-en", "children": [ { "text": " https://doi.org/10.1787/3d96efc5-en", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The historical poverty research was done by economic historian ", "spanType": "span-simple-text" }, { "url": "https://www.uu.nl/medewerkers/mmoatsos", "children": [ { "text": "Michail Moatsos", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " and is based on the \u2018cost of basic needs\u2019-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The \u2018cost of basic needs\u2019-approach was recommended by the \u2018World Bank Commission on Global Poverty\u2019, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the \u2018World Bank Commission on Global Poverty\u2019 can be found", "spanType": "span-simple-text" }, { "url": "https://openknowledge.worldbank.org/handle/10986/25141", "children": [ { "text": " here", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Tony Atkinson \u2013 and after his death his colleagues \u2013 turned this report into a book that was published as Anthony B. Atkinson (2019) \u2013 Measuring Poverty around the World. You find more information on", "spanType": "span-simple-text" }, { "url": "https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/", "children": [ { "text": " Atkinson\u2019s website", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The CBN-approach Moatsos\u2019 work is based on was suggested by Allen in Robert Allen (2017) \u2013 Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,", "spanType": "span-simple-text" }, { "url": "https://doi.org/10.1257/aer.20161080", "children": [ { "text": " https://doi.org/10.1257/aer.20161080", "spanType": "span-simple-text" } ], "spanType": "span-link" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Moatsos describes the methodology as follows: \u201cIn this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries\u2019 poverty estimates on a global scale to account for countries that lack some of the relevant data.\u201d In his publication \u2013 linked above \u2013 you find much more detail on all of the shown poverty data.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes \u201cIt took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.\u201d{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "url": "https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL", "type": "chart", "parseErrors": [] }, { "text": [ { "text": "Economic growth made it possible to leave poverty behind", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services \u2013 food, decent housing and clothes, healthcare, public infrastructure and transport \u2013 and a society in which these products are widely available.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Growth ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/what-is-economic-growth", "children": [ { "text": "means", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Because the total production in an economy equals the total income in that country \u2013 as everyone\u2019s spending is someone else\u2019s income \u2013 incomes grow at the same rate as production increases.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL", "children": [ { "text": "had already achieved some growth", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/breaking-the-malthusian-trap", "children": [ { "text": "my post on the Malthusian Trap", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth \u2013 the production of goods and services increased \u2013 and the share living in poverty declined.", "spanType": "span-simple-text" }, { "spanType": "span-newline" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "[In my post ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/what-is-economic-growth", "children": [ { "text": "'What is Economic Growth?'", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " you find much more on what economic growth is and how it is possible.]", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "Growth-and-poverty-since-1820-OECD-data-Revision.png", "parseErrors": [] }, { "text": [ { "text": "Most extremely poor people today are living in Africa", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "How far do we still have to go?\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes ", "spanType": "span-simple-text" }, { "url": "https://voxeu.org/article/colonialism-and-development-africa", "children": [ { "text": "that hindered the growth", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/grapher/change-of-gdp-per-capita-extremely-poor?time=2000..2020&country=MLI~NER~BDI~MDG~COG~COD~CAF~TGO~LBR~GNB~KIR~SLB~HTI~ZWE~GMB", "children": [ { "text": "in this chart for growth", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " and ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/explorers/poverty-explorer-2011-vs-2017-ppp?tab=chart&facet=none&Metric=Share+in+poverty&International-%24=2011+prices&Poverty+line=%241.90+per+day%3A+International+Poverty+Line&Household+survey+data+type=Show+data+from+both+income+and+expenditure+surveys&country=MOZ~NGA~KEN~BGD~BOL~OWID_WRL", "children": [ { "text": "this chart for poverty", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": ".{/ref}\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "9tCBcCqd-X4NNbjqMOq4GOyBAP2DtAQ71VTfojdAV1BVaPIw7Yjk5gstGk5mfZ2xWpsVy2UDxGcHFLm3hibmGq5mx6XZvwQZWRCOMJX-PsxiFqI0H0BHX4GNoB3PhcpSUlo6dqUG", "parseErrors": [] }, { "type": "text", "value": [ { "text": "To see the consequences of this let\u2019s first focus on one country that achieved large growth and then contrast it with a country that did not.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet \u2013 the predecessor to the World Bank's ", "spanType": "span-simple-text" }, { "children": [ { "text": "Poverty and Inequality Platform", "spanType": "span-simple-text" } ], "spanType": "span-italic" }, { "text": " \u2013 Gapminder, and Michail Moatsos 2021.{/ref}", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "Growth-in-the-UK-200years.png", "parseErrors": [] }, { "type": "text", "value": [ { "text": "The next chart shows the income distribution of the UK in 2019 in green \u2013 just as in the previous chart \u2013 and in red the income distribution of Madagascar, a country ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?country=MDG~GBR", "children": [ { "text": "that did not", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " achieve growth.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The majority of people in Madagascar still live in extreme poverty. Very similar to the global situation two centuries ago, three-quarters of Madagascar\u2019s population are living in extreme poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "alt": "", "size": "wide", "type": "image", "filename": "Madagascar-vs-UK-today.png", "parseErrors": [] }, { "type": "text", "value": [ { "text": "Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes \u2013 and that means economic growth.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "text": [ { "text": "The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating", "spanType": "span-simple-text" } ], "type": "heading", "level": 3, "parseErrors": [] }, { "type": "text", "value": [ { "text": "The history of extreme poverty is at the same time one of humanity\u2019s greatest achievements and failures.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The majority of the world left extreme poverty behind. To me this ranks among the most impressive and most important achievements in humanity\u2019s history.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "But, as we\u2019ve seen, the fight against extreme poverty is far from over. About one in ten people still live in extreme poverty right now.\u00a0", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The worry with extreme poverty today is that some of the world\u2019s poorest countries are not growing. Unless this changes hundreds of millions of people will continue to live in extreme poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Crucially this was true before the pandemic hit \u2013 even before COVID, researchers expected that ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty", "children": [ { "text": "half a billion people", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " would remain in extreme poverty by 2030. The global recession that followed the pandemic ", "spanType": "span-simple-text" }, { "url": "https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty", "children": [ { "text": "exacerbated", "spanType": "span-simple-text" } ], "spanType": "span-link" }, { "text": " this further.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "The economic stagnation of some of the world's poorest countries is not as widely known as it should be. I think it deserves more attention.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world\u2019s very poorest people remain in extreme poverty.", "spanType": "span-simple-text" } ], "parseErrors": [] }, { "type": "text", "value": [ { "text": "Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.", "spanType": "span-simple-text" } ], "parseErrors": [] } ], "type": "article", "title": "Extreme poverty: how far have we come, how far do we still have to go?", "authors": [ "Max Roser" ], "excerpt": "Despite making immense progress against extreme poverty, it is still the reality for every tenth person in the world. ", "dateline": "November 22, 2021", "subtitle": "Despite making immense progress against extreme poverty, it is still the reality for every tenth person in the world. ", "sidebar-toc": false, "featured-image": "Featured-Image-for-the-post.png" }, "createdAt": "2021-11-18T11:44:31.000Z", "published": false, "updatedAt": "2023-04-06T17:39:22.000Z", "revisionId": null, "publishedAt": "2021-11-22T10:30:00.000Z", "relatedCharts": [], "publicationContext": "listed" }	{ "errors": [ { "name": "unexpected wp component tag", "details": "Found unhandled wp:comment tag owid/help" }, { "name": "unexpected wp component tag", "details": "Found unhandled wp:comment tag image" }, { "name": "unexpected wp component tag", "details": "Found unhandled wp:comment tag image" }, { "name": "unexpected wp component tag", "details": "Found unhandled wp:comment tag image" }, { "name": "unexpected wp component tag", "details": "Found unhandled wp:comment tag image" }, { "name": "unexpected wp component tag", "details": "Found unhandled wp:comment tag image" }, { "name": "unexpected wp component tag", "details": "Found unhandled wp:comment tag image" } ], "numBlocks": 70, "numErrors": 7, "wpTagCounts": { "html": 3, "image": 7, "column": 14, "columns": 7, "heading": 7, "owid/help": 1, "paragraph": 63, "owid/summary": 1, "owid/prominent-link": 2, "owid/additional-information": 1 }, "htmlTagCounts": { "p": 64, "h3": 2, "h4": 5, "div": 22, "figure": 7, "iframe": 2 } }	2021-11-22 10:30:00	2024-02-16 14:22:52	1dhmwSpKwamiIYOKC1E9AZLMt7jLF8KmO2uOtl4MfZZA	[ "Max Roser" ]	Despite making immense progress against extreme poverty, it is still the reality for every tenth person in the world.	2021-11-18 11:44:31	2023-04-06 17:39:22	https://ourworldindata.org/wp-content/uploads/2021/11/Featured-Image-for-the-post.png	{}	Our World in Data presents the data and research to make progress against the world’s largest problems. This article draws on data and research discussed in our entry on [Global Extreme Poverty](https://ourworldindata.org/extreme-poverty). <Callout title="Summary"/> ### The World Bank has updated its poverty and inequality data The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$. The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices). This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures. ### Read more about the World Bank's updated methodology https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line ### Explore the latest World Bank data on poverty and inequality https://ourworldindata.org/explorers/poverty-explorer There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family. The definition of poverty differs from country to country, but in high-income countries the poverty line [is around $30 per day](https://ourworldindata.org/higher-poverty-global-line).{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} Even in the world’s richest countries a substantial share of people – between every 10th and every 5th person – lives below this poverty line. In this map, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country-differences in the price level. In the fold-out-box below you find a more detailed explanation of how poverty is measured and how these statistics account for the differences in price level across countries. <Chart url="https://ourworldindata.org/grapher/poverty-share-on-less-than-30-per-day-2011-ppp?country=IND~DNK~KOR~ESP~POL~NOR"/> ## Additional information <Image filename="" alt=""/> Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible. Non-monetary sources of income are taken into account: Many poor people today and in the past rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure. Data is measured in international-$, which means that differences in purchasing power and inflation are taken into account: The data is expressed in _international dollars_. This is a hypothetical currency that results from the price adjustments across time and place.{ref}This is possible by relying on the work of the[ International Comparison Project](https://www.worldbank.org/en/programs/icp), which monitors the prices of goods and services around the world.{/ref} An international dollar is defined as having the same purchasing power as one US-$ _in the US_. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved. Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” _American Economic Journal: Macroeconomics_ 2 (4): 1–35. A working paper version is available online[ here](https://www.nber.org/papers/w14499).{/ref} Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref} Global data is a mix of income and expenditure data: There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people’s incomes, while in poorer countries these surveys tend to capture people’s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about ‘the income of people in richer countries and the monetary value of consumption in poorer countries’. But since it’d be a bit much to repeat this every time researchers simply speak of ‘living standards’ or ‘income’ instead. I do the same in this text. We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account – a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 _in the US_.{/ref} The latest global data tells us that the huge majority – 85% of the world population – live on less than $30 per day. That means 6.5 billion people. <Image filename="Global-income-distribution-plus-30.png" alt=""/> ### Why is an extremely low poverty line necessary? Extreme poverty is defined [by the UN](https://www.un.org/sustainabledevelopment/poverty/) as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low? It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on _very _low incomes. If we’d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter – they would all be considered ‘poor’. Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country [you can do so here](https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29).{/ref} <Image filename="Global-income-distribution-plus-multiple-poverty-lines.png" alt=""/> The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people’s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty. The UN’s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the _very_ poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of [the very poorest](https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty) people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref} In a [related essay](https://ourworldindata.org/history-of-poverty-has-just-begun) I focus on global poverty as defined by a higher poverty line. In this text here I’m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty. ## The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days [hunger was widespread](https://ourworldindata.org/human-height) and [every second child died](https://ourworldindata.org/child-mortality-in-the-past) no matter where in the world it was born. Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they "could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.”{ref}Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), _How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820_, OECD Publishing, Paris,[ https://doi.org/10.1787/3d96efc5-en](https://doi.org/10.1787/3d96efc5-en).{/ref} The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are: Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), _How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820_, OECD Publishing, Paris,[ https://doi.org/10.1787/3d96efc5-en](https://doi.org/10.1787/3d96efc5-en). Jutta Bolt and Jan Luiten van Zanden (2021) – The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, _How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820_, OECD Publishing, Paris,[ https://doi.org/10.1787/3d96efc5-en](https://doi.org/10.1787/3d96efc5-en). The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year. The historical poverty research was done by economic historian [Michail Moatsos](https://www.uu.nl/medewerkers/mmoatsos) and is based on the ‘cost of basic needs’-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson. The ‘cost of basic needs’-approach was recommended by the ‘World Bank Commission on Global Poverty’, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the ‘World Bank Commission on Global Poverty’ can be found[ here](https://openknowledge.worldbank.org/handle/10986/25141). Tony Atkinson – and after his death his colleagues – turned this report into a book that was published as Anthony B. Atkinson (2019) – Measuring Poverty around the World. You find more information on[ Atkinson’s website](https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/). The CBN-approach Moatsos’ work is based on was suggested by Allen in Robert Allen (2017) – Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,[ https://doi.org/10.1257/aer.20161080](https://doi.org/10.1257/aer.20161080) Moatsos describes the methodology as follows: “In this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries’ poverty estimates on a global scale to account for countries that lack some of the relevant data.” In his publication – linked above – you find much more detail on all of the shown poverty data. The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes “It took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.”{/ref} <Chart url="https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL"/> ### Economic growth made it possible to leave poverty behind Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services – food, decent housing and clothes, healthcare, public infrastructure and transport – and a society in which these products are widely available. Growth [means](https://ourworldindata.org/what-is-economic-growth) that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced. Because the total production in an economy equals the total income in that country – as everyone’s spending is someone else’s income – incomes grow at the same rate as production increases. The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US [had already achieved some growth](https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL) in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example [my post on the Malthusian Trap](https://ourworldindata.org/breaking-the-malthusian-trap) and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth – the production of goods and services increased – and the share living in poverty declined. [In my post ['What is Economic Growth?'](https://ourworldindata.org/what-is-economic-growth) you find much more on what economic growth is and how it is possible.] <Image filename="Growth-and-poverty-since-1820-OECD-data-Revision.png" alt=""/> ### Most extremely poor people today are living in Africa How far do we still have to go? The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty. Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes [that hindered the growth](https://voxeu.org/article/colonialism-and-development-africa) of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too. In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail [in this chart for growth](https://ourworldindata.org/grapher/change-of-gdp-per-capita-extremely-poor?time=2000..2020&country=MLI~NER~BDI~MDG~COG~COD~CAF~TGO~LBR~GNB~KIR~SLB~HTI~ZWE~GMB) and [this chart for poverty](https://ourworldindata.org/explorers/poverty-explorer-2011-vs-2017-ppp?tab=chart&facet=none&Metric=Share+in+poverty&International-%24=2011+prices&Poverty+line=%241.90+per+day%3A+International+Poverty+Line&Household+survey+data+type=Show+data+from+both+income+and+expenditure+surveys&country=MOZ~NGA~KEN~BGD~BOL~OWID_WRL).{/ref} <Image filename="9tCBcCqd-X4NNbjqMOq4GOyBAP2DtAQ71VTfojdAV1BVaPIw7Yjk5gstGk5mfZ2xWpsVy2UDxGcHFLm3hibmGq5mx6XZvwQZWRCOMJX-PsxiFqI0H0BHX4GNoB3PhcpSUlo6dqUG" alt=""/> To see the consequences of this let’s first focus on one country that achieved large growth and then contrast it with a country that did not. A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet – the predecessor to the World Bank's _Poverty and Inequality Platform_ – Gapminder, and Michail Moatsos 2021.{/ref} <Image filename="Growth-in-the-UK-200years.png" alt=""/> The next chart shows the income distribution of the UK in 2019 in green – just as in the previous chart – and in red the income distribution of Madagascar, a country [that did not](https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?country=MDG~GBR) achieve growth. The majority of people in Madagascar still live in extreme poverty. Very similar to the global situation two centuries ago, three-quarters of Madagascar’s population are living in extreme poverty. <Image filename="Madagascar-vs-UK-today.png" alt=""/> Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes – and that means economic growth. ### The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating The history of extreme poverty is at the same time one of humanity’s greatest achievements and failures. The majority of the world left extreme poverty behind. To me this ranks among the most impressive and most important achievements in humanity’s history. But, as we’ve seen, the fight against extreme poverty is far from over. About one in ten people still live in extreme poverty right now. The worry with extreme poverty today is that some of the world’s poorest countries are not growing. Unless this changes hundreds of millions of people will continue to live in extreme poverty. Crucially this was true before the pandemic hit – even before COVID, researchers expected that [half a billion people](https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty) would remain in extreme poverty by 2030. The global recession that followed the pandemic [exacerbated](https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty) this further. When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit. The economic stagnation of some of the world's poorest countries is not as widely known as it should be. I think it deserves more attention. If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world’s very poorest people remain in extreme poverty. Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.	{ "id": 46246, "date": "2021-11-22T10:30:00", "guid": { "rendered": "https://owid.cloud/?p=46246" }, "link": "https://owid.cloud/extreme-poverty-in-brief", "meta": { "owid_publication_context_meta_field": { "latest": true, "homepage": true, "immediate_newsletter": true } }, "slug": "extreme-poverty-in-brief", "tags": [], "type": "post", "title": { "rendered": "Extreme poverty: how far have we come, how far do we still have to go?" }, "_links": { "self": [ { "href": "https://owid.cloud/wp-json/wp/v2/posts/46246" } ], "about": [ { "href": "https://owid.cloud/wp-json/wp/v2/types/post" } ], "author": [ { "href": "https://owid.cloud/wp-json/wp/v2/users/2", "embeddable": true } ], "curies": [ { "href": "https://api.w.org/{rel}", "name": "wp", "templated": true } ], "replies": [ { "href": "https://owid.cloud/wp-json/wp/v2/comments?post=46246", "embeddable": true } ], "wp:term": [ { "href": "https://owid.cloud/wp-json/wp/v2/categories?post=46246", "taxonomy": "category", "embeddable": true }, { "href": "https://owid.cloud/wp-json/wp/v2/tags?post=46246", "taxonomy": "post_tag", "embeddable": true } ], "collection": [ { "href": "https://owid.cloud/wp-json/wp/v2/posts" } ], "wp:attachment": [ { "href": "https://owid.cloud/wp-json/wp/v2/media?parent=46246" } ], "version-history": [ { "href": "https://owid.cloud/wp-json/wp/v2/posts/46246/revisions", "count": 28 } ], "wp:featuredmedia": [ { "href": "https://owid.cloud/wp-json/wp/v2/media/46248", "embeddable": true } ], "predecessor-version": [ { "id": 56632, "href": "https://owid.cloud/wp-json/wp/v2/posts/46246/revisions/56632" } ] }, "author": 2, "format": "standard", "status": "publish", "sticky": false, "content": { "rendered": "\n<div class=\"blog-info\">\n<p>Our World in Data presents the data and research to make progress against the world\u2019s largest problems.<br>This article draws on data and research discussed in our entry on <strong><a href=\"https://ourworldindata.org/extreme-poverty\" target=\"_blank\" rel=\"noopener\">Global Extreme Poverty</a></strong>.</p>\n</div>\n\n\n\t<div class=\"wp-block-owid-summary\">\n\t\t<h2>Summary</h2>\n\t\t\n\n<p>Two centuries ago the majority of the world population was extremely poor. Back then it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. Economic growth is possible and poverty can decline. The world has made immense progress against extreme poverty.</p>\n\n\n\n<p>But even after two centuries of progress, extreme poverty is still the reality for every tenth person in the world. This is what the \u2018international poverty line\u2019 highlights \u2013 this metric plays an important (and successful) role in focusing the world\u2019s attention on these very poorest people in the world.</p>\n\n\n\n<p>The poorest people today live in countries which have achieved no growth. This stagnation of the world\u2019s poorest economies is one of the largest problems of our time. Unless this changes millions of people will continue to live in extreme poverty.</p>\n\n\n\t</div>\n\n\t<block type=\"help\">\n\t\t<content>\n\n<h4>The World Bank has updated its poverty and inequality data</h4>\n\n\n\n<p>The data in this article uses a previous release of the World Bank’s poverty and inequality data in which incomes are expressed in 2011 international-$.</p>\n\n\n\n<p>The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).</p>\n\n\n\n<p>This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.</p>\n\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line</link-url>\n <title></title>\n <content>\n\n<p>Read more about the World Bank’s updated methodology</p>\n\n</content>\n <figure></figure>\n </block>\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/explorers/poverty-explorer</link-url>\n <title>Explore the latest World Bank data on poverty and inequality</title>\n <content>\n\n<p></p>\n\n</content>\n <figure></figure>\n </block>\n</content>\n\t</block>\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.</p>\n\n\n\n<p>The definition of poverty differs from country to country, but in high-income countries the poverty line <a href=\"https://ourworldindata.org/higher-poverty-global-line\">is around $30 per day</a>.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the \u2018International Poverty Line\u2019 discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} </p>\n\n\n\n<p>Even in the world\u2019s richest countries a substantial share of people \u2013 between every 10th and every 5th person \u2013 lives below this poverty line.</p>\n\n\n\n<p>In this map, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country-differences in the price level. In the fold-out-box below you find a more detailed explanation of how poverty is measured and how these statistics account for the differences in price level across countries.</p>\n\n\n\n<iframe src=\"https://ourworldindata.org/grapher/poverty-share-on-less-than-30-per-day-2011-ppp?country=IND~DNK~KOR~ESP~POL~NOR\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\t<block type=\"additional-information\" default-open=\"false\">\n\t\t<content>\n\n<h3>Basics of global poverty measurement</h3>\n\n\n\n<div class=\"wp-block-columns is-style-merge-left\">\n<div class=\"wp-block-column\" style=\"flex-basis:25%\">\n<figure class=\"wp-block-image\"><img alt=\"\"/></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\" style=\"flex-basis:75%\">\n<p>Throughout this article \u2013 and in global income and expenditure data generally \u2013 the statisticians who produce these figures are careful to make these numbers as comparable as possible.  </p>\n\n\n\n<p><strong>Non-monetary sources of income are taken into account:</strong> Many poor people today and in the past rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.</p>\n\n\n\n<p><strong>Data is measured in international-$, which means that differences in purchasing power and inflation are taken into account:</strong> The data is expressed in <em>international dollars</em>. This is a hypothetical currency that results from the price adjustments across time and place.{ref}This is possible by relying on the work of the<a href=\"https://www.worldbank.org/en/programs/icp\"> International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref}  An international dollar is defined as having the same purchasing power as one US-$ <em>in the US</em>. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.</p>\n\n\n\n<p>Deaton, A., and Heston, A. 2010. \u201cUnderstanding PPPs and PPP-Based National Accounts.\u201d <em>American Economic Journal: Macroeconomics</em> 2 (4): 1\u201335. A working paper version is available online<a href=\"https://www.nber.org/papers/w14499\"> here</a>.{/ref}</p>\n\n\n\n<p>Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}</p>\n\n\n\n<p><strong>Global data is a mix of income and expenditure data: </strong>There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people\u2019s incomes, while in poorer countries these surveys tend to capture people\u2019s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about \u2018the income of people in richer countries and the monetary value of consumption in poorer countries\u2019. But since it\u2019d be a bit much to repeat this every time researchers simply speak of \u2018living standards\u2019 or \u2018income\u2019 instead. I do the same in this text.</p>\n</div>\n</div>\n\n</content>\n\t</block>\n\n\n<p>We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account \u2013 a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 <em>in the US</em>.{/ref}</p>\n\n\n\n<p>The latest global data tells us that the huge majority \u2013 85% of the world population \u2013 live on less than $30 per day. That means 6.5 billion people.</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"800\" height=\"144\" src=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-800x144.png\" alt=\"\" class=\"wp-image-46249\" srcset=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-800x144.png 800w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-400x72.png 400w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-150x27.png 150w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-768x138.png 768w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-1536x277.png 1536w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-2048x369.png 2048w\" sizes=\"(max-width: 800px) 100vw, 800px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<h4>Why is an extremely low poverty line necessary?</h4>\n\n\n\n<p>Extreme poverty is defined <a href=\"https://www.un.org/sustainabledevelopment/poverty/\">by the UN</a> as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low?</p>\n\n\n\n<p>It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on <em>very </em>low incomes. If we\u2019d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter \u2013 they would all be considered \u2018poor\u2019.</p>\n\n\n\n<p>Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country <a href=\"https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29\">you can do so here</a>.{/ref}</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"800\" height=\"139\" src=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-800x139.png\" alt=\"\" class=\"wp-image-46250\" srcset=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-800x139.png 800w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-400x70.png 400w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-150x26.png 150w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-768x134.png 768w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-1536x267.png 1536w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-2048x356.png 2048w\" sizes=\"(max-width: 800px) 100vw, 800px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people\u2019s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty. </p>\n\n\n\n<p>The UN\u2019s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the <em>very</em> poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href=\"https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty\">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref}</p>\n\n\n\n<p>In a <a href=\"https://ourworldindata.org/history-of-poverty-has-just-begun\">related essay</a> I focus on global poverty as defined by a higher poverty line. In this text here I\u2019m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty.</p>\n\n\n\n<h3>The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable</h3>\n\n\n\n<p>What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days <a href=\"https://ourworldindata.org/human-height\">hunger was widespread</a> and <a href=\"https://ourworldindata.org/child-mortality-in-the-past\">every second child died</a> no matter where in the world it was born. </p>\n\n\n\n<p>Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they “could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.\u201d{ref}Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href=\"https://doi.org/10.1787/3d96efc5-en\"> https://doi.org/10.1787/3d96efc5-en</a>.{/ref}</p>\n\n\n\n<p>The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are:</p>\n\n\n\n<p>Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href=\"https://doi.org/10.1787/3d96efc5-en\"> https://doi.org/10.1787/3d96efc5-en</a>.</p>\n\n\n\n<p>Jutta Bolt and Jan Luiten van Zanden (2021) \u2013 The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href=\"https://doi.org/10.1787/3d96efc5-en\"> https://doi.org/10.1787/3d96efc5-en</a>. </p>\n\n\n\n<p>The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year.</p>\n\n\n\n<p>The historical poverty research was done by economic historian <a href=\"https://www.uu.nl/medewerkers/mmoatsos\">Michail Moatsos</a> and is based on the \u2018cost of basic needs\u2019-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson.</p>\n\n\n\n<p>The \u2018cost of basic needs\u2019-approach was recommended by the \u2018World Bank Commission on Global Poverty\u2019, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the \u2018World Bank Commission on Global Poverty\u2019 can be found<a href=\"https://openknowledge.worldbank.org/handle/10986/25141\"> here</a>.</p>\n\n\n\n<p>Tony Atkinson \u2013 and after his death his colleagues \u2013 turned this report into a book that was published as Anthony B. Atkinson (2019) \u2013 Measuring Poverty around the World. You find more information on<a href=\"https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/\"> Atkinson\u2019s website</a>.</p>\n\n\n\n<p>The CBN-approach Moatsos\u2019 work is based on was suggested by Allen in Robert Allen (2017) \u2013 Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,<a href=\"https://doi.org/10.1257/aer.20161080\"> https://doi.org/10.1257/aer.20161080</a> </p>\n\n\n\n<p>Moatsos describes the methodology as follows: \u201cIn this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries\u2019 poverty estimates on a global scale to account for countries that lack some of the relevant data.\u201d In his publication \u2013 linked above \u2013 you find much more detail on all of the shown poverty data.</p>\n\n\n\n<p>The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes \u201cIt took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.\u201d{/ref}</p>\n\n\n\n<iframe src=\"https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n\n\n\n<h4>Economic growth made it possible to leave poverty behind</h4>\n\n\n\n<p>Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services \u2013 food, decent housing and clothes, healthcare, public infrastructure and transport \u2013 and a society in which these products are widely available.</p>\n\n\n\n<p>Growth <a href=\"https://ourworldindata.org/what-is-economic-growth\">means</a> that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced. </p>\n\n\n\n<p>Because the total production in an economy equals the total income in that country \u2013 as everyone\u2019s spending is someone else\u2019s income \u2013 incomes grow at the same rate as production increases. </p>\n\n\n\n<p>The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US <a href=\"https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL\">had already achieved some growth</a> in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there</p>\n\n\n\n<p>In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example <a href=\"https://ourworldindata.org/breaking-the-malthusian-trap\">my post on the Malthusian Trap</a> and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth \u2013 the production of goods and services increased \u2013 and the share living in poverty declined.<br></p>\n\n\n\n<p>[In my post <a href=\"https://ourworldindata.org/what-is-economic-growth\">‘What is Economic Growth?’</a> you find much more on what economic growth is and how it is possible.]</p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"3000\" height=\"2109\" src=\"https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision.png\" alt=\"\" class=\"wp-image-46247\" srcset=\"https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision.png 3000w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-400x281.png 400w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-782x550.png 782w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-150x105.png 150w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-768x540.png 768w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-1536x1080.png 1536w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-2048x1440.png 2048w\" sizes=\"(max-width: 3000px) 100vw, 3000px\" /></figure>\n\n\n\n<h4>Most extremely poor people today are living in Africa</h4>\n\n\n\n<p>How far do we still have to go? </p>\n\n\n\n<p>The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty. </p>\n\n\n\n<p>Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes <a href=\"https://voxeu.org/article/colonialism-and-development-africa\">that hindered the growth</a> of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too.</p>\n\n\n\n<p>In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail <a href=\"https://ourworldindata.org/grapher/change-of-gdp-per-capita-extremely-poor?time=2000..2020&country=MLI~NER~BDI~MDG~COG~COD~CAF~TGO~LBR~GNB~KIR~SLB~HTI~ZWE~GMB\">in this chart for growth</a> and <a href=\"https://ourworldindata.org/explorers/poverty-explorer-2011-vs-2017-ppp?tab=chart&facet=none&Metric=Share+in+poverty&International-%24=2011+prices&Poverty+line=%241.90+per+day%3A+International+Poverty+Line&Household+survey+data+type=Show+data+from+both+income+and+expenditure+surveys&country=MOZ~NGA~KEN~BGD~BOL~OWID_WRL\">this chart for poverty</a>.{/ref} </p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image is-resized\"><img loading=\"lazy\" src=\"https://lh6.googleusercontent.com/9tCBcCqd-X4NNbjqMOq4GOyBAP2DtAQ71VTfojdAV1BVaPIw7Yjk5gstGk5mfZ2xWpsVy2UDxGcHFLm3hibmGq5mx6XZvwQZWRCOMJX-PsxiFqI0H0BHX4GNoB3PhcpSUlo6dqUG\" alt=\"\" width=\"400\" height=\"234\"/></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>To see the consequences of this let\u2019s first focus on one country that achieved large growth and then contrast it with a country that did not. </p>\n\n\n\n<p>A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet \u2013 the predecessor to the World Bank’s <em>Poverty and Inequality Platform</em> \u2013 Gapminder, and Michail Moatsos 2021.{/ref}</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"8923\" height=\"1881\" src=\"https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years.png\" alt=\"\" class=\"wp-image-46251\" srcset=\"https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years.png 8923w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-400x84.png 400w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-800x169.png 800w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-150x32.png 150w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-768x162.png 768w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-1536x324.png 1536w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-2048x432.png 2048w\" sizes=\"(max-width: 8923px) 100vw, 8923px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>The next chart shows the income distribution of the UK in 2019 in green \u2013 just as in the previous chart \u2013 and in red the income distribution of Madagascar, a country <a href=\"https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?country=MDG~GBR\">that did not</a> achieve growth.</p>\n\n\n\n<p>The majority of people in Madagascar still live in extreme poverty. Very similar to the global situation two centuries ago, three-quarters of Madagascar\u2019s population are living in extreme poverty.</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"8923\" height=\"1994\" src=\"https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today.png\" alt=\"\" class=\"wp-image-46252\" srcset=\"https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today.png 8923w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-400x89.png 400w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-800x179.png 800w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-150x34.png 150w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-768x172.png 768w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-1536x343.png 1536w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-2048x458.png 2048w\" sizes=\"(max-width: 8923px) 100vw, 8923px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes \u2013 and that means economic growth.</p>\n\n\n\n<h4>The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating</h4>\n\n\n\n<p>The history of extreme poverty is at the same time one of humanity\u2019s greatest achievements and failures.</p>\n\n\n\n<p>The majority of the world left extreme poverty behind. To me this ranks among the most impressive and most important achievements in humanity\u2019s history.</p>\n\n\n\n<p>But, as we\u2019ve seen, the fight against extreme poverty is far from over. About one in ten people still live in extreme poverty right now. </p>\n\n\n\n<p>The worry with extreme poverty today is that some of the world\u2019s poorest countries are not growing. Unless this changes hundreds of millions of people will continue to live in extreme poverty.</p>\n\n\n\n<p>Crucially this was true before the pandemic hit \u2013 even before COVID, researchers expected that <a href=\"https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty\">half a billion people</a> would remain in extreme poverty by 2030. The global recession that followed the pandemic <a href=\"https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty\">exacerbated</a> this further.</p>\n\n\n\n<p>When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit.</p>\n\n\n\n<p>The economic stagnation of some of the world’s poorest countries is not as widely known as it should be. I think it deserves more attention.</p>\n\n\n\n<p>If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world\u2019s very poorest people remain in extreme poverty.</p>\n\n\n\n<p>Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.</p>\n\n\n\n<p></p>\n", "protected": false }, "excerpt": { "rendered": "Despite making immense progress against extreme poverty, it is still the reality for every tenth person in the world. ", "protected": false }, "date_gmt": "2021-11-22T10:30:00", "modified": "2023-04-06T18:39:22", "template": "", "categories": [ 1 ], "ping_status": "closed", "authors_name": [ "Max Roser" ], "modified_gmt": "2023-04-06T17:39:22", "comment_status": "closed", "featured_media": 46248, "featured_media_paths": { "thumbnail": "/app/uploads/2021/11/Featured-Image-for-the-post-150x82.png", "medium_large": "/app/uploads/2021/11/Featured-Image-for-the-post-768x422.png" } }

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Extreme poverty: how far have we come, how far do we still have to go?

extreme-poverty-in-brief

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<div class="blog-info"> <p>Our World in Data presents the data and research to make progress against the world’s largest problems.<br>This article draws on data and research discussed in our entry on <strong><a href="https://ourworldindata.org/extreme-poverty" target="_blank" rel="noopener">Global Extreme Poverty</a></strong>.</p> </div>    <p>Two centuries ago the majority of the world population was extremely poor. Back then it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. Economic growth is possible and poverty can decline. The world has made immense progress against extreme poverty.</p>   <p>But even after two centuries of progress, extreme poverty is still the reality for every tenth person in the world. This is what the ‘international poverty line’ highlights – this metric plays an important (and successful) role in focusing the world’s attention on these very poorest people in the world.</p>   <p>The poorest people today live in countries which have achieved no growth. This stagnation of the world’s poorest economies is one of the largest problems of our time. Unless this changes millions of people will continue to live in extreme poverty.</p>      <h4>The World Bank has updated its poverty and inequality data</h4>   <p>The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$.</p>   <p>The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).</p>   <p>This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.</p>    <p>Read more about the World Bank's updated methodology</p>     <p></p>     <div class="wp-block-columns"> <div class="wp-block-column"> <p>There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.</p>   <p>The definition of poverty differs from country to country, but in high-income countries the poverty line <a href="https://ourworldindata.org/higher-poverty-global-line">is around $30 per day</a>.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} </p>   <p>Even in the world’s richest countries a substantial share of people – between every 10th and every 5th person – lives below this poverty line.</p>   <p>In this map, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country-differences in the price level. In the fold-out-box below you find a more detailed explanation of how poverty is measured and how these statistics account for the differences in price level across countries.</p>   <iframe src="https://ourworldindata.org/grapher/poverty-share-on-less-than-30-per-day-2011-ppp?country=IND~DNK~KOR~ESP~POL~NOR" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> </div>   <div class="wp-block-column"></div> </div>    <h3>Basics of global poverty measurement</h3>   <div class="wp-block-columns is-style-merge-left"> <div class="wp-block-column" style="flex-basis:25%"> <figure class="wp-block-image"><img alt=""/></figure> </div>   <div class="wp-block-column" style="flex-basis:75%"> <p>Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible.  </p>   <p><strong>Non-monetary sources of income are taken into account:</strong> Many poor people today and in the past rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.</p>   <p><strong>Data is measured in international-$, which means that differences in purchasing power and inflation are taken into account:</strong> The data is expressed in <em>international dollars</em>. This is a hypothetical currency that results from the price adjustments across time and place.{ref}This is possible by relying on the work of the<a href="https://www.worldbank.org/en/programs/icp"> International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref}  An international dollar is defined as having the same purchasing power as one US-$ <em>in the US</em>. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.</p>   <p>Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” <em>American Economic Journal: Macroeconomics</em> 2 (4): 1–35. A working paper version is available online<a href="https://www.nber.org/papers/w14499"> here</a>.{/ref}</p>   <p>Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}</p>   <p><strong>Global data is a mix of income and expenditure data: </strong>There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people’s incomes, while in poorer countries these surveys tend to capture people’s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about ‘the income of people in richer countries and the monetary value of consumption in poorer countries’. But since it’d be a bit much to repeat this every time researchers simply speak of ‘living standards’ or ‘income’ instead. I do the same in this text.</p> </div> </div>    <p>We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account – a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 <em>in the US</em>.{/ref}</p>   <p>The latest global data tells us that the huge majority – 85% of the world population – live on less than $30 per day. That means 6.5 billion people.</p>   <div class="wp-block-columns is-style-sticky-right"> <div class="wp-block-column"> <figure class="wp-block-image size-large"><img src="https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-800x144.png" alt="" class="wp-image-46249"/></figure> </div>   <div class="wp-block-column"></div> </div>   <h4>Why is an extremely low poverty line necessary?</h4>   <p>Extreme poverty is defined <a href="https://www.un.org/sustainabledevelopment/poverty/">by the UN</a> as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low?</p>   <p>It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on <em>very </em>low incomes. If we’d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter – they would all be considered ‘poor’.</p>   <p>Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country <a href="https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29">you can do so here</a>.{/ref}</p>   <div class="wp-block-columns is-style-sticky-right"> <div class="wp-block-column"> <figure class="wp-block-image size-large"><img src="https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-800x139.png" alt="" class="wp-image-46250"/></figure> </div>   <div class="wp-block-column"></div> </div>   <p>The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people’s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty. </p>   <p>The UN’s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the <em>very</em> poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href="https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref}</p>   <p>In a <a href="https://ourworldindata.org/history-of-poverty-has-just-begun">related essay</a> I focus on global poverty as defined by a higher poverty line. In this text here I’m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty.</p>   <h3>The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable</h3>   <p>What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days <a href="https://ourworldindata.org/human-height">hunger was widespread</a> and <a href="https://ourworldindata.org/child-mortality-in-the-past">every second child died</a> no matter where in the world it was born. </p>   <p>Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they "could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.”{ref}Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href="https://doi.org/10.1787/3d96efc5-en"> https://doi.org/10.1787/3d96efc5-en</a>.{/ref}</p>   <p>The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are:</p>   <p>Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href="https://doi.org/10.1787/3d96efc5-en"> https://doi.org/10.1787/3d96efc5-en</a>.</p>   <p>Jutta Bolt and Jan Luiten van Zanden (2021) – The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href="https://doi.org/10.1787/3d96efc5-en"> https://doi.org/10.1787/3d96efc5-en</a>. </p>   <p>The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year.</p>   <p>The historical poverty research was done by economic historian <a href="https://www.uu.nl/medewerkers/mmoatsos">Michail Moatsos</a> and is based on the ‘cost of basic needs’-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson.</p>   <p>The ‘cost of basic needs’-approach was recommended by the ‘World Bank Commission on Global Poverty’, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the ‘World Bank Commission on Global Poverty’ can be found<a href="https://openknowledge.worldbank.org/handle/10986/25141"> here</a>.</p>   <p>Tony Atkinson – and after his death his colleagues – turned this report into a book that was published as Anthony B. Atkinson (2019) – Measuring Poverty around the World. You find more information on<a href="https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/"> Atkinson’s website</a>.</p>   <p>The CBN-approach Moatsos’ work is based on was suggested by Allen in Robert Allen (2017) – Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,<a href="https://doi.org/10.1257/aer.20161080"> https://doi.org/10.1257/aer.20161080</a> </p>   <p>Moatsos describes the methodology as follows: “In this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries’ poverty estimates on a global scale to account for countries that lack some of the relevant data.” In his publication – linked above – you find much more detail on all of the shown poverty data.</p>   <p>The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes “It took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.”{/ref}</p>   <iframe src="https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe>   <h4>Economic growth made it possible to leave poverty behind</h4>   <p>Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services – food, decent housing and clothes, healthcare, public infrastructure and transport – and a society in which these products are widely available.</p>   <p>Growth <a href="https://ourworldindata.org/what-is-economic-growth">means</a> that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced. </p>   <p>Because the total production in an economy equals the total income in that country – as everyone’s spending is someone else’s income – incomes grow at the same rate as production increases. </p>   <p>The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US <a href="https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL">had already achieved some growth</a> in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there</p>   <p>In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example <a href="https://ourworldindata.org/breaking-the-malthusian-trap">my post on the Malthusian Trap</a> and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth – the production of goods and services increased – and the share living in poverty declined.<br></p>   <p>[In my post <a href="https://ourworldindata.org/what-is-economic-growth">'What is Economic Growth?'</a> you find much more on what economic growth is and how it is possible.]</p>   <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision.png" alt="" class="wp-image-46247"/></figure>   <h4>Most extremely poor people today are living in Africa</h4>   <p>How far do we still have to go? </p>   <p>The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty. </p>   <p>Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes <a href="https://voxeu.org/article/colonialism-and-development-africa">that hindered the growth</a> of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too.</p>   <p>In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail <a href="https://ourworldindata.org/grapher/change-of-gdp-per-capita-extremely-poor?time=2000..2020&country=MLI~NER~BDI~MDG~COG~COD~CAF~TGO~LBR~GNB~KIR~SLB~HTI~ZWE~GMB">in this chart for growth</a> and <a href="https://ourworldindata.org/explorers/poverty-explorer-2011-vs-2017-ppp?tab=chart&facet=none&Metric=Share+in+poverty&International-%24=2011+prices&Poverty+line=%241.90+per+day%3A+International+Poverty+Line&Household+survey+data+type=Show+data+from+both+income+and+expenditure+surveys&country=MOZ~NGA~KEN~BGD~BOL~OWID_WRL">this chart for poverty</a>.{/ref} </p>   <div class="wp-block-columns is-style-sticky-right"> <div class="wp-block-column"> <figure class="wp-block-image is-resized"><img src="https://lh6.googleusercontent.com/9tCBcCqd-X4NNbjqMOq4GOyBAP2DtAQ71VTfojdAV1BVaPIw7Yjk5gstGk5mfZ2xWpsVy2UDxGcHFLm3hibmGq5mx6XZvwQZWRCOMJX-PsxiFqI0H0BHX4GNoB3PhcpSUlo6dqUG" alt="" width="400" height="234"/></figure> </div>   <div class="wp-block-column"></div> </div>   <p>To see the consequences of this let’s first focus on one country that achieved large growth and then contrast it with a country that did not. </p>   <p>A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet – the predecessor to the World Bank's <em>Poverty and Inequality Platform</em> – Gapminder, and Michail Moatsos 2021.{/ref}</p>   <div class="wp-block-columns is-style-sticky-right"> <div class="wp-block-column"> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years.png" alt="" class="wp-image-46251"/></figure> </div>   <div class="wp-block-column"></div> </div>   <p>The next chart shows the income distribution of the UK in 2019 in green – just as in the previous chart – and in red the income distribution of Madagascar, a country <a href="https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?country=MDG~GBR">that did not</a> achieve growth.</p>   <p>The majority of people in Madagascar still live in extreme poverty. Very similar to the global situation two centuries ago, three-quarters of Madagascar’s population are living in extreme poverty.</p>   <div class="wp-block-columns is-style-sticky-right"> <div class="wp-block-column"> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today.png" alt="" class="wp-image-46252"/></figure> </div>   <div class="wp-block-column"></div> </div>   <p>Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes – and that means economic growth.</p>   <h4>The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating</h4>   <p>The history of extreme poverty is at the same time one of humanity’s greatest achievements and failures.</p>   <p>The majority of the world left extreme poverty behind. To me this ranks among the most impressive and most important achievements in humanity’s history.</p>   <p>But, as we’ve seen, the fight against extreme poverty is far from over. About one in ten people still live in extreme poverty right now. </p>   <p>The worry with extreme poverty today is that some of the world’s poorest countries are not growing. Unless this changes hundreds of millions of people will continue to live in extreme poverty.</p>   <p>Crucially this was true before the pandemic hit – even before COVID, researchers expected that <a href="https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty">half a billion people</a> would remain in extreme poverty by 2030. The global recession that followed the pandemic <a href="https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty">exacerbated</a> this further.</p>   <p>When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit.</p>   <p>The economic stagnation of some of the world's poorest countries is not as widely known as it should be. I think it deserves more attention.</p>   <p>If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world’s very poorest people remain in extreme poverty.</p>   <p>Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.</p>   <p></p>

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                                "text": "Two centuries ago the majority of the world population was extremely poor. Back then it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. Economic growth is possible and poverty can decline. The world has made immense progress against extreme poverty.",
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                                                "text": "Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}",
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                                            }
                                        ],
                                        "parseErrors": []
                                    },
                                    {
                                        "type": "text",
                                        "value": [
                                            {
                                                "children": [
                                                    {
                                                        "text": "Global data is a mix of income and expenditure data: ",
                                                        "spanType": "span-simple-text"
                                                    }
                                                ],
                                                "spanType": "span-bold"
                                            },
                                            {
                                                "text": "There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people\u2019s incomes, while in poorer countries these surveys tend to capture people\u2019s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about \u2018the income of people in richer countries and the monetary value of consumption in poorer countries\u2019. But since it\u2019d be a bit much to repeat this every time researchers simply speak of \u2018living standards\u2019 or \u2018income\u2019 instead. I do the same in this text.",
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                                        ],
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                                ],
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                        "text": "We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account \u2013 a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "in the US",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-italic"
                    },
                    {
                        "text": ".{/ref}",
                        "spanType": "span-simple-text"
                    }
                ],
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                "type": "text",
                "value": [
                    {
                        "text": "The latest global data tells us that the huge majority \u2013 85% of the world population \u2013 live on less than $30 per day. That means 6.5 billion people.",
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                    }
                ],
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                "alt": "",
                "size": "wide",
                "type": "image",
                "filename": "Global-income-distribution-plus-30.png",
                "parseErrors": []
            },
            {
                "text": [
                    {
                        "text": "Why is an extremely low poverty line necessary?",
                        "spanType": "span-simple-text"
                    }
                ],
                "type": "heading",
                "level": 3,
                "parseErrors": []
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                "type": "text",
                "value": [
                    {
                        "text": "Extreme poverty is defined ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://www.un.org/sustainabledevelopment/poverty/",
                        "children": [
                            {
                                "text": "by the UN",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low?",
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                    }
                ],
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                "type": "text",
                "value": [
                    {
                        "text": "It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on ",
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                    },
                    {
                        "children": [
                            {
                                "text": "very ",
                                "spanType": "span-simple-text"
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                        ],
                        "spanType": "span-italic"
                    },
                    {
                        "text": "low incomes. If we\u2019d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter \u2013 they would all be considered \u2018poor\u2019.",
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                "type": "text",
                "value": [
                    {
                        "text": "Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29",
                        "children": [
                            {
                                "text": "you can do so here",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".{/ref}",
                        "spanType": "span-simple-text"
                    }
                ],
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                "alt": "",
                "size": "wide",
                "type": "image",
                "filename": "Global-income-distribution-plus-multiple-poverty-lines.png",
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                "value": [
                    {
                        "text": "The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people\u2019s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty.\u00a0",
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                "type": "text",
                "value": [
                    {
                        "text": "The UN\u2019s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "very",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-italic"
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                    {
                        "text": " poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty",
                        "children": [
                            {
                                "text": "the very poorest",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref}",
                        "spanType": "span-simple-text"
                    }
                ],
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            {
                "type": "text",
                "value": [
                    {
                        "text": "In a ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/history-of-poverty-has-just-begun",
                        "children": [
                            {
                                "text": "related essay",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " I focus on global poverty as defined by a higher poverty line. In this text here I\u2019m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty.",
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                    }
                ],
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            {
                "text": [
                    {
                        "text": "The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable",
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                    }
                ],
                "type": "heading",
                "level": 2,
                "parseErrors": []
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                "type": "text",
                "value": [
                    {
                        "text": "What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/human-height",
                        "children": [
                            {
                                "text": "hunger was widespread",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " and ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/child-mortality-in-the-past",
                        "children": [
                            {
                                "text": "every second child died",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " no matter where in the world it was born.\u00a0",
                        "spanType": "span-simple-text"
                    }
                ],
                "parseErrors": []
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            {
                "type": "text",
                "value": [
                    {
                        "text": "Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they \"could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.\u201d{ref}Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-italic"
                    },
                    {
                        "text": ", OECD Publishing, Paris,",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://doi.org/10.1787/3d96efc5-en",
                        "children": [
                            {
                                "text": " https://doi.org/10.1787/3d96efc5-en",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".{/ref}",
                        "spanType": "span-simple-text"
                    }
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                "type": "text",
                "value": [
                    {
                        "text": "The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are:",
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                ],
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            {
                "type": "text",
                "value": [
                    {
                        "text": "Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-italic"
                    },
                    {
                        "text": ", OECD Publishing, Paris,",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://doi.org/10.1787/3d96efc5-en",
                        "children": [
                            {
                                "text": " https://doi.org/10.1787/3d96efc5-en",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".",
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                ],
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            {
                "type": "text",
                "value": [
                    {
                        "text": "Jutta Bolt and Jan Luiten van Zanden (2021) \u2013 The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "children": [
                            {
                                "text": "How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-italic"
                    },
                    {
                        "text": ", OECD Publishing, Paris,",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://doi.org/10.1787/3d96efc5-en",
                        "children": [
                            {
                                "text": " https://doi.org/10.1787/3d96efc5-en",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".\u00a0",
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                "type": "text",
                "value": [
                    {
                        "text": "The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year.",
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                ],
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                "type": "text",
                "value": [
                    {
                        "text": "The historical poverty research was done by economic historian ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://www.uu.nl/medewerkers/mmoatsos",
                        "children": [
                            {
                                "text": "Michail Moatsos",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " and is based on the \u2018cost of basic needs\u2019-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson.",
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                ],
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                        "text": "The \u2018cost of basic needs\u2019-approach was recommended by the \u2018World Bank Commission on Global Poverty\u2019, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the \u2018World Bank Commission on Global Poverty\u2019 can be found",
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                        "url": "https://openknowledge.worldbank.org/handle/10986/25141",
                        "children": [
                            {
                                "text": " here",
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                    {
                        "text": ".",
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                        "text": "Tony Atkinson \u2013 and after his death his colleagues \u2013 turned this report into a book that was published as Anthony B. Atkinson (2019) \u2013 Measuring Poverty around the World. You find more information on",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/",
                        "children": [
                            {
                                "text": " Atkinson\u2019s website",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": ".",
                        "spanType": "span-simple-text"
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                "type": "text",
                "value": [
                    {
                        "text": "The CBN-approach Moatsos\u2019 work is based on was suggested by Allen in Robert Allen (2017) \u2013 Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://doi.org/10.1257/aer.20161080",
                        "children": [
                            {
                                "text": " https://doi.org/10.1257/aer.20161080",
                                "spanType": "span-simple-text"
                            }
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                "value": [
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                        "text": "Moatsos describes the methodology as follows: \u201cIn this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries\u2019 poverty estimates on a global scale to account for countries that lack some of the relevant data.\u201d In his publication \u2013 linked above \u2013 you find much more detail on all of the shown poverty data.",
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            {
                "type": "text",
                "value": [
                    {
                        "text": "The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes \u201cIt took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.\u201d{/ref}",
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                ],
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            },
            {
                "url": "https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL",
                "type": "chart",
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            {
                "text": [
                    {
                        "text": "Economic growth made it possible to leave poverty behind",
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                "type": "heading",
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                        "text": "Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services \u2013 food, decent housing and clothes, healthcare, public infrastructure and transport \u2013 and a society in which these products are widely available.",
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                "type": "text",
                "value": [
                    {
                        "text": "Growth ",
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                    {
                        "url": "https://ourworldindata.org/what-is-economic-growth",
                        "children": [
                            {
                                "text": "means",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
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                    {
                        "text": " that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced.\u00a0",
                        "spanType": "span-simple-text"
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                "value": [
                    {
                        "text": "Because the total production in an economy equals the total income in that country \u2013 as everyone\u2019s spending is someone else\u2019s income \u2013 incomes grow at the same rate as production increases.\u00a0",
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                        "text": "The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL",
                        "children": [
                            {
                                "text": "had already achieved some growth",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there",
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                        "text": "In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://ourworldindata.org/breaking-the-malthusian-trap",
                        "children": [
                            {
                                "text": "my post on the Malthusian Trap",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth \u2013 the production of goods and services increased \u2013 and the share living in poverty declined.",
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                        "spanType": "span-newline"
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                "type": "text",
                "value": [
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                        "text": "[In my post ",
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                    {
                        "url": "https://ourworldindata.org/what-is-economic-growth",
                        "children": [
                            {
                                "text": "'What is Economic Growth?'",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " you find much more on what economic growth is and how it is possible.]",
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                "alt": "",
                "size": "wide",
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                "filename": "Growth-and-poverty-since-1820-OECD-data-Revision.png",
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                "text": [
                    {
                        "text": "Most extremely poor people today are living in Africa",
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                ],
                "type": "heading",
                "level": 3,
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            {
                "type": "text",
                "value": [
                    {
                        "text": "How far do we still have to go?\u00a0",
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            {
                "type": "text",
                "value": [
                    {
                        "text": "The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty.\u00a0",
                        "spanType": "span-simple-text"
                    }
                ],
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                "value": [
                    {
                        "text": "Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes ",
                        "spanType": "span-simple-text"
                    },
                    {
                        "url": "https://voxeu.org/article/colonialism-and-development-africa",
                        "children": [
                            {
                                "text": "that hindered the growth",
                                "spanType": "span-simple-text"
                            }
                        ],
                        "spanType": "span-link"
                    },
                    {
                        "text": " of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too.",
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                        "text": "In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail ",
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                        "text": "To see the consequences of this let\u2019s first focus on one country that achieved large growth and then contrast it with a country that did not.\u00a0",
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                        "text": "A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet \u2013 the predecessor to the World Bank's ",
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                        "text": "The next chart shows the income distribution of the UK in 2019 in green \u2013 just as in the previous chart \u2013 and in red the income distribution of Madagascar, a country ",
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                        "text": "Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes \u2013 and that means economic growth.",
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                        "text": "When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit.",
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                        "text": "If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world\u2019s very poorest people remain in extreme poverty.",
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2024-02-16 14:22:52

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[
    "Max Roser"
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Despite making immense progress against extreme poverty, it is still the reality for every tenth person in the world.

2021-11-18 11:44:31

2023-04-06 17:39:22

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Our World in Data presents the data and research to make progress against the world’s largest problems. This article draws on data and research discussed in our entry on **[Global Extreme Poverty](https://ourworldindata.org/extreme-poverty)**. <Callout title="Summary"/> ### The World Bank has updated its poverty and inequality data The data in this article uses a previous release of the World Bank's poverty and inequality data in which incomes are expressed in 2011 international-$. The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices). This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures. ### Read more about the World Bank's updated methodology https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line ### Explore the latest World Bank data on poverty and inequality https://ourworldindata.org/explorers/poverty-explorer There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family. The definition of poverty differs from country to country, but in high-income countries the poverty line [is around $30 per day](https://ourworldindata.org/higher-poverty-global-line).{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the ‘International Poverty Line’ discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref} Even in the world’s richest countries a substantial share of people – between every 10th and every 5th person – lives below this poverty line. In this map, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country-differences in the price level. In the fold-out-box below you find a more detailed explanation of how poverty is measured and how these statistics account for the differences in price level across countries. <Chart url="https://ourworldindata.org/grapher/poverty-share-on-less-than-30-per-day-2011-ppp?country=IND~DNK~KOR~ESP~POL~NOR"/> ## Additional information <Image filename="" alt=""/> Throughout this article – and in global income and expenditure data generally – the statisticians who produce these figures are careful to make these numbers as comparable as possible. **Non-monetary sources of income are taken into account:** Many poor people today and in the past rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure. **Data is measured in international-$, which means that differences in purchasing power and inflation are taken into account:** The data is expressed in _international dollars_. This is a hypothetical currency that results from the price adjustments across time and place.{ref}This is possible by relying on the work of the[ International Comparison Project](https://www.worldbank.org/en/programs/icp), which monitors the prices of goods and services around the world.{/ref} An international dollar is defined as having the same purchasing power as one US-$ _in the US_. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved. Deaton, A., and Heston, A. 2010. “Understanding PPPs and PPP-Based National Accounts.” _American Economic Journal: Macroeconomics_ 2 (4): 1–35. A working paper version is available online[ here](https://www.nber.org/papers/w14499).{/ref} Throughout this text I’m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out ‘international’ as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I’m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref} **Global data is a mix of income and expenditure data: **There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people’s incomes, while in poorer countries these surveys tend to capture people’s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about ‘the income of people in richer countries and the monetary value of consumption in poorer countries’. But since it’d be a bit much to repeat this every time researchers simply speak of ‘living standards’ or ‘income’ instead. I do the same in this text. We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account – a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 _in the US_.{/ref} The latest global data tells us that the huge majority – 85% of the world population – live on less than $30 per day. That means 6.5 billion people. <Image filename="Global-income-distribution-plus-30.png" alt=""/> ### Why is an extremely low poverty line necessary? Extreme poverty is defined [by the UN](https://www.un.org/sustainabledevelopment/poverty/) as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low? It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on _very _low incomes. If we’d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter – they would all be considered ‘poor’. Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country [you can do so here](https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29).{/ref} <Image filename="Global-income-distribution-plus-multiple-poverty-lines.png" alt=""/> The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people’s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty. The UN’s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the _very_ poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of [the very poorest](https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty) people have not risen. A big part of the reason for why this issue doesn’t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref} In a [related essay](https://ourworldindata.org/history-of-poverty-has-just-begun) I focus on global poverty as defined by a higher poverty line. In this text here I’m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty. ## The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days [hunger was widespread](https://ourworldindata.org/human-height) and [every second child died](https://ourworldindata.org/child-mortality-in-the-past) no matter where in the world it was born. Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they "could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.”{ref}Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), _How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820_, OECD Publishing, Paris,[ https://doi.org/10.1787/3d96efc5-en](https://doi.org/10.1787/3d96efc5-en).{/ref} The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are: Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), _How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820_, OECD Publishing, Paris,[ https://doi.org/10.1787/3d96efc5-en](https://doi.org/10.1787/3d96efc5-en). Jutta Bolt and Jan Luiten van Zanden (2021) – The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, _How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820_, OECD Publishing, Paris,[ https://doi.org/10.1787/3d96efc5-en](https://doi.org/10.1787/3d96efc5-en). The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year. The historical poverty research was done by economic historian [Michail Moatsos](https://www.uu.nl/medewerkers/mmoatsos) and is based on the ‘cost of basic needs’-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson. The ‘cost of basic needs’-approach was recommended by the ‘World Bank Commission on Global Poverty’, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the ‘World Bank Commission on Global Poverty’ can be found[ here](https://openknowledge.worldbank.org/handle/10986/25141). Tony Atkinson – and after his death his colleagues – turned this report into a book that was published as Anthony B. Atkinson (2019) – Measuring Poverty around the World. You find more information on[ Atkinson’s website](https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/). The CBN-approach Moatsos’ work is based on was suggested by Allen in Robert Allen (2017) – Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,[ https://doi.org/10.1257/aer.20161080](https://doi.org/10.1257/aer.20161080) Moatsos describes the methodology as follows: “In this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries’ poverty estimates on a global scale to account for countries that lack some of the relevant data.” In his publication – linked above – you find much more detail on all of the shown poverty data. The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes “It took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.”{/ref} <Chart url="https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL"/> ### Economic growth made it possible to leave poverty behind Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services – food, decent housing and clothes, healthcare, public infrastructure and transport – and a society in which these products are widely available. Growth [means](https://ourworldindata.org/what-is-economic-growth) that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced. Because the total production in an economy equals the total income in that country – as everyone’s spending is someone else’s income – incomes grow at the same rate as production increases. The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US [had already achieved some growth](https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL) in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example [my post on the Malthusian Trap](https://ourworldindata.org/breaking-the-malthusian-trap) and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth – the production of goods and services increased – and the share living in poverty declined. [In my post ['What is Economic Growth?'](https://ourworldindata.org/what-is-economic-growth) you find much more on what economic growth is and how it is possible.] <Image filename="Growth-and-poverty-since-1820-OECD-data-Revision.png" alt=""/> ### Most extremely poor people today are living in Africa How far do we still have to go? The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty. Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes [that hindered the growth](https://voxeu.org/article/colonialism-and-development-africa) of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too. In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail [in this chart for growth](https://ourworldindata.org/grapher/change-of-gdp-per-capita-extremely-poor?time=2000..2020&country=MLI~NER~BDI~MDG~COG~COD~CAF~TGO~LBR~GNB~KIR~SLB~HTI~ZWE~GMB) and [this chart for poverty](https://ourworldindata.org/explorers/poverty-explorer-2011-vs-2017-ppp?tab=chart&facet=none&Metric=Share+in+poverty&International-%24=2011+prices&Poverty+line=%241.90+per+day%3A+International+Poverty+Line&Household+survey+data+type=Show+data+from+both+income+and+expenditure+surveys&country=MOZ~NGA~KEN~BGD~BOL~OWID_WRL).{/ref} <Image filename="9tCBcCqd-X4NNbjqMOq4GOyBAP2DtAQ71VTfojdAV1BVaPIw7Yjk5gstGk5mfZ2xWpsVy2UDxGcHFLm3hibmGq5mx6XZvwQZWRCOMJX-PsxiFqI0H0BHX4GNoB3PhcpSUlo6dqUG" alt=""/> To see the consequences of this let’s first focus on one country that achieved large growth and then contrast it with a country that did not. A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet – the predecessor to the World Bank's _Poverty and Inequality Platform_ – Gapminder, and Michail Moatsos 2021.{/ref} <Image filename="Growth-in-the-UK-200years.png" alt=""/> The next chart shows the income distribution of the UK in 2019 in green – just as in the previous chart – and in red the income distribution of Madagascar, a country [that did not](https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?country=MDG~GBR) achieve growth. The majority of people in Madagascar still live in extreme poverty. Very similar to the global situation two centuries ago, three-quarters of Madagascar’s population are living in extreme poverty. <Image filename="Madagascar-vs-UK-today.png" alt=""/> Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes – and that means economic growth. ### The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating The history of extreme poverty is at the same time one of humanity’s greatest achievements and failures. The majority of the world left extreme poverty behind. To me this ranks among the most impressive and most important achievements in humanity’s history. But, as we’ve seen, the fight against extreme poverty is far from over. About one in ten people still live in extreme poverty right now. The worry with extreme poverty today is that some of the world’s poorest countries are not growing. Unless this changes hundreds of millions of people will continue to live in extreme poverty. Crucially this was true before the pandemic hit – even before COVID, researchers expected that [half a billion people](https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty) would remain in extreme poverty by 2030. The global recession that followed the pandemic [exacerbated](https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty) this further. When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit. The economic stagnation of some of the world's poorest countries is not as widely known as it should be. I think it deserves more attention. If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world’s very poorest people remain in extreme poverty. Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.

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        "rendered": "\n<div class=\"blog-info\">\n<p>Our World in Data presents the data and research to make progress against the world\u2019s largest problems.<br>This article draws on data and research discussed in our entry on <strong><a href=\"https://ourworldindata.org/extreme-poverty\" target=\"_blank\" rel=\"noopener\">Global Extreme Poverty</a></strong>.</p>\n</div>\n\n\n\t<div class=\"wp-block-owid-summary\">\n\t\t<h2>Summary</h2>\n\t\t\n\n<p>Two centuries ago the majority of the world population was extremely poor. Back then it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. Economic growth is possible and poverty can decline. The world has made immense progress against extreme poverty.</p>\n\n\n\n<p>But even after two centuries of progress, extreme poverty is still the reality for every tenth person in the world. This is what the \u2018international poverty line\u2019 highlights \u2013 this metric plays an important (and successful) role in focusing the world\u2019s attention on these very poorest people in the world.</p>\n\n\n\n<p>The poorest people today live in countries which have achieved no growth. This stagnation of the world\u2019s poorest economies is one of the largest problems of our time. Unless this changes millions of people will continue to live in extreme poverty.</p>\n\n\n\t</div>\n\n\t<block type=\"help\">\n\t\t<content>\n\n<h4>The World Bank has updated its poverty and inequality data</h4>\n\n\n\n<p>The data in this article uses a previous release of the World Bank&#8217;s poverty and inequality data in which incomes are expressed in 2011 international-$.</p>\n\n\n\n<p>The World Bank has since updated its methods, and now measures incomes in 2017 international-$. As part of this change, the International Poverty Line used to measure extreme poverty has also been updated: from $1.90 (in 2011 prices) to $2.15 (in 2017 prices).</p>\n\n\n\n<p>This has had little effect on our overall understanding of poverty and inequality around the world. But because of the change of units, many of the figures mentioned in this article will differ from the latest World Bank figures.</p>\n\n\n    <block type=\"prominent-link\" style=\"is-style-thin\">\n        <link-url>https://ourworldindata.org/from-1-90-to-2-15-a-day-the-updated-international-poverty-line</link-url>\n        <title></title>\n        <content>\n\n<p>Read more about the World Bank&#8217;s updated methodology</p>\n\n</content>\n        <figure></figure>\n    </block>\n\n    <block type=\"prominent-link\" style=\"is-style-thin\">\n        <link-url>https://ourworldindata.org/explorers/poverty-explorer</link-url>\n        <title>Explore the latest World Bank data on poverty and inequality</title>\n        <content>\n\n<p></p>\n\n</content>\n        <figure></figure>\n    </block>\n</content>\n\t</block>\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>There are poor people in every country, people who live in poor housing and who struggle to afford basic goods and services like heating, transport, and healthy food for themselves and their family.</p>\n\n\n\n<p>The definition of poverty differs from country to country, but in high-income countries the poverty line <a href=\"https://ourworldindata.org/higher-poverty-global-line\">is around $30 per day</a>.{ref} For the moment it is important to note that this $30 per day poverty line is defined in international-$ and therefore comparable with the \u2018International Poverty Line\u2019 discussed in the following section. Much more details about how to compare incomes across countries, the income concept here, and the definition of this poverty line follows further below in this text.{/ref}&nbsp;</p>\n\n\n\n<p>Even in the world\u2019s richest countries a substantial share of people \u2013 between every 10th and every 5th person \u2013 lives below this poverty line.</p>\n\n\n\n<p>In this map, and in all international poverty statistics on Our World in Data, the data is adjusted for inflation and cross-country-differences in the price level. In the fold-out-box below you find a more detailed explanation of how poverty is measured and how these statistics account for the differences in price level across countries.</p>\n\n\n\n<iframe src=\"https://ourworldindata.org/grapher/poverty-share-on-less-than-30-per-day-2011-ppp?country=IND~DNK~KOR~ESP~POL~NOR\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\t<block type=\"additional-information\" default-open=\"false\">\n\t\t<content>\n\n<h3>Basics of global poverty measurement</h3>\n\n\n\n<div class=\"wp-block-columns is-style-merge-left\">\n<div class=\"wp-block-column\" style=\"flex-basis:25%\">\n<figure class=\"wp-block-image\"><img alt=\"\"/></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\" style=\"flex-basis:75%\">\n<p>Throughout this article \u2013 and in global income and expenditure data generally \u2013 the statisticians who produce these figures are careful to make these numbers as comparable as possible.&nbsp;&nbsp;</p>\n\n\n\n<p><strong>Non-monetary sources of income are taken into account:</strong> Many poor people today and in the past rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians that produce these figures estimate the monetary value of their home production and add it to their income/expenditure.</p>\n\n\n\n<p><strong>Data is measured in international-$, which means that differences in purchasing power and inflation are taken into account:</strong> The data is expressed in <em>international dollars</em>. This is a hypothetical currency that results from the price adjustments across time and place.{ref}This is possible by relying on the work of the<a href=\"https://www.worldbank.org/en/programs/icp\"> International Comparison Project</a>, which monitors the prices of goods and services around the world.{/ref} &nbsp;An international dollar is defined as having the same purchasing power as one US-$ <em>in the US</em>. This means no matter where in the world a person is living on int.-$30, they can buy the goods and services that cost $30 in the US. None of these adjustments are ever going to be perfect, but in a world where price differences are large it is important to attempt to account for these differences as well as possible, and this is what these adjustments do.{ref}Angus Deaton and Alan Heston (2010) discuss the methods behind such price adjustments and many of the difficulties and limitations involved.</p>\n\n\n\n<p>Deaton, A., and Heston, A. 2010. \u201cUnderstanding PPPs and PPP-Based National Accounts.\u201d <em>American Economic Journal: Macroeconomics</em> 2 (4): 1\u201335. A working paper version is available online<a href=\"https://www.nber.org/papers/w14499\"> here</a>.{/ref}</p>\n\n\n\n<p>Throughout this text I\u2019m always adjusting incomes for price changes over time and price differences between countries in this way. All dollar values discussed here are presented in int.-$; the UN does the same for the $1.90 poverty line. Sometimes I leave out \u2018international\u2019 as it is awkward to repeat it all the time; but everytime I mention any $ amount in this text I\u2019m referring to international-$ and not US-$.{ref}Keep in mind that in the special case of the US the US-$ equals the international-$.{/ref}</p>\n\n\n\n<p><strong>Global data is a mix of income and expenditure data: </strong>There is no global survey of incomes: researchers need to rely on the available national surveys. Such surveys are designed with cross-country comparability in mind, but because they reflect the circumstances and priorities of individual countries there are some important differences across countries. In most high-income countries the surveys capture people\u2019s incomes, while in poorer countries these surveys tend to capture people\u2019s consumption. The two concepts are closely related: the income of a household equals their consumption plus any saving (or minus any borrowing). When speaking about these statistics it would therefore be accurate to speak about \u2018the income of people in richer countries and the monetary value of consumption in poorer countries\u2019. But since it\u2019d be a bit much to repeat this every time researchers simply speak of \u2018living standards\u2019 or \u2018income\u2019 instead. I do the same in this text.</p>\n</div>\n</div>\n\n</content>\n\t</block>\n\n\n<p>We can apply this $30-a-day-poverty-line to the global income distribution to see the share in poverty as judged by the definition of poverty in high-income countries.{ref}Remember that these statistics take the cost of living into account \u2013 a person who lives on less than int-$30 is a person who cannot afford the goods and services that cost US-$30 <em>in the US</em>.{/ref}</p>\n\n\n\n<p>The latest global data tells us that the huge majority \u2013 85% of the world population \u2013 live on less than $30 per day. That means 6.5 billion people.</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"800\" height=\"144\" src=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-800x144.png\" alt=\"\" class=\"wp-image-46249\" srcset=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-800x144.png 800w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-400x72.png 400w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-150x27.png 150w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-768x138.png 768w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-1536x277.png 1536w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-30-2048x369.png 2048w\" sizes=\"(max-width: 800px) 100vw, 800px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<h4>Why is an extremely low poverty line necessary?</h4>\n\n\n\n<p>Extreme poverty is defined <a href=\"https://www.un.org/sustainabledevelopment/poverty/\">by the UN</a> as living on less than $1.90 a day. Why do we need a poverty line that is so extremely low?</p>\n\n\n\n<p>It is not enough to measure global poverty solely by a higher poverty line because a large number of people live on <em>very </em>low incomes. If we\u2019d only rely on the poverty line from high-income countries we would hide the very stark differences between people with very different living standards. Whether someone was living on almost $30 a day or on 30-times less would not matter \u2013 they would all be considered \u2018poor\u2019.</p>\n\n\n\n<p>Adding more poverty lines draws attention to the large income differences between people and highlights how many live on extremely low incomes.{ref}If you want to explore this data for any world region or any individual country <a href=\"https://ourworldindata.org/grapher/distribution-of-population-between-different-poverty-thresholds-stacke-bar?country=OWID_WRL~Europe+and+Central+Asia~Sub-Saharan+Africa~Middle+East+and+North+Africa~South+Asia~East+Asia+and+Pacific~Latin+America+and+the+Caribbean~Other+high+Income+%28World+Bank%29\">you can do so here</a>.{/ref}</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"800\" height=\"139\" src=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-800x139.png\" alt=\"\" class=\"wp-image-46250\" srcset=\"https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-800x139.png 800w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-400x70.png 400w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-150x26.png 150w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-768x134.png 768w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-1536x267.png 1536w, https://owid.cloud/app/uploads/2021/11/Global-income-distribution-plus-multiple-poverty-lines-2048x356.png 2048w\" sizes=\"(max-width: 800px) 100vw, 800px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>The $1.90 poverty line, set by the UN, shows that globally close to one in ten people live in extreme poverty. In all these statistics the researchers are not only taking people\u2019s monetary income into account, but also their non-monetary income and home production. One reason why this is important is because many poor people are small scale farmers who produce their own food.{ref}See also the previous box on poverty measurement. This is of course also true of the historical research.{/ref} The fact that there are so many extremely poor people in the world makes it necessary to have such a low poverty line. Without an extremely low poverty line, we would not be able to see that a large share of the world lives in such deep poverty.&nbsp;</p>\n\n\n\n<p>The UN\u2019s global poverty line is valuable because it has been successful in drawing attention to the terrible depths of extreme poverty of the poorest people in the world.{ref}Indeed there is an argument for using an even lower poverty line. To understand what is happening to the <em>very</em> poorest in the world, we need to look even lower than $1.90. This is because one of the biggest failures of development is that over the last decades the incomes of <a href=\"https://ourworldindata.org/poverty?insight=global-extreme-poverty-declined-substantially-over-the-last-generation#key-insights-on-poverty\">the very poorest</a> people have not risen. A big part of the reason for why this issue doesn\u2019t get discussed enough is that the International Poverty Line we rely on is too high to see this fact.{/ref}</p>\n\n\n\n<p>In a <a href=\"https://ourworldindata.org/history-of-poverty-has-just-begun\">related essay</a> I focus on global poverty as defined by a higher poverty line. In this text here I\u2019m focusing on the very poorest in the world and want to look at what needs to happen to end extreme poverty.</p>\n\n\n\n<h3>The big lesson of the last 200 years: Economic growth is possible, poverty is not inevitable</h3>\n\n\n\n<p>What needs explanation is not poverty, but prosperity. Deep poverty was the condition that the majority of humanity has always lived in. In the pre-modern days <a href=\"https://ourworldindata.org/human-height\">hunger was widespread</a> and <a href=\"https://ourworldindata.org/child-mortality-in-the-past\">every second child died</a> no matter where in the world it was born.&nbsp;</p>\n\n\n\n<p>Historian Michail Moatsos has recently produced a new global dataset that goes back two centuries. The chart shows his data. According to his research three-quarters of the world lived in extreme poverty in 1820. This means they &#8220;could not afford a tiny space to live, some minimum heating capacity, and food that would not induce malnutrition.\u201d{ref}Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href=\"https://doi.org/10.1787/3d96efc5-en\"> https://doi.org/10.1787/3d96efc5-en</a>.{/ref}</p>\n\n\n\n<p>The chart looks simple, but it would be a mistake to think that it was simple to produce this data. Underlying it is a wealth of careful historical research that Moatsos made use of. Historians gathered data for people around the world over two centuries to reconstruct how many of them were able to afford a set of very basic goods and services and aggregated this detailed information into this final picture. You find more information on the methodology at the footnote.{ref}The sources for the measures shown in this chart and the following chart are:</p>\n\n\n\n<p>Michail Moatsos (2021) \u2013 Global extreme poverty: Present and past since 1820. Published in OECD (2021), <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href=\"https://doi.org/10.1787/3d96efc5-en\"> https://doi.org/10.1787/3d96efc5-en</a>.</p>\n\n\n\n<p>Jutta Bolt and Jan Luiten van Zanden (2021) \u2013 The GDP data in the chart is taken from The long view on economic growth: New estimates of GDP, <em>How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820</em>, OECD Publishing, Paris,<a href=\"https://doi.org/10.1787/3d96efc5-en\"> https://doi.org/10.1787/3d96efc5-en</a>.&nbsp;</p>\n\n\n\n<p>The latest datapoint for the poverty data refers to 2018, while the latest datapoint for GDP per capita in the chart below refers to 2016. In that chart I have chosen the middle year (2017) as the reference year.</p>\n\n\n\n<p>The historical poverty research was done by economic historian <a href=\"https://www.uu.nl/medewerkers/mmoatsos\">Michail Moatsos</a> and is based on the \u2018cost of basic needs\u2019-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson.</p>\n\n\n\n<p>The \u2018cost of basic needs\u2019-approach was recommended by the \u2018World Bank Commission on Global Poverty\u2019, headed by Tony Atkinson, as a complementary method in measuring poverty. The report for the \u2018World Bank Commission on Global Poverty\u2019 can be found<a href=\"https://openknowledge.worldbank.org/handle/10986/25141\"> here</a>.</p>\n\n\n\n<p>Tony Atkinson \u2013 and after his death his colleagues \u2013 turned this report into a book that was published as Anthony B. Atkinson (2019) \u2013 Measuring Poverty around the World. You find more information on<a href=\"https://www.tony-atkinson.com/book-measuring-poverty-around-the-world/\"> Atkinson\u2019s website</a>.</p>\n\n\n\n<p>The CBN-approach Moatsos\u2019 work is based on was suggested by Allen in Robert Allen (2017) \u2013 Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721,<a href=\"https://doi.org/10.1257/aer.20161080\"> https://doi.org/10.1257/aer.20161080</a>&nbsp;</p>\n\n\n\n<p>Moatsos describes the methodology as follows: \u201cIn this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalise this approach, alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries\u2019 poverty estimates on a global scale to account for countries that lack some of the relevant data.\u201d In his publication \u2013 linked above \u2013 you find much more detail on all of the shown poverty data.</p>\n\n\n\n<p>The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes \u201cIt took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years our global measure of extreme poverty was halved again by 2014.\u201d{/ref}</p>\n\n\n\n<iframe src=\"https://ourworldindata.org/grapher/share-living-in-extreme-poverty-basic-needs-estimate?country=~OWID_WRL\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n\n\n\n<h4>Economic growth made it possible to leave poverty behind</h4>\n\n\n\n<p>Economic growth made it possible to leave the widespread extreme poverty of the past behind. It made the difference between a society in which the majority were lacking even the most basic goods and services \u2013 food, decent housing and clothes, healthcare, public infrastructure and transport \u2013 and a society in which these products are widely available.</p>\n\n\n\n<p>Growth <a href=\"https://ourworldindata.org/what-is-economic-growth\">means</a> that a society produces an increasing quantity and quality of economic goods and services. The key to economic growth is the development of technology that makes it possible to increase productivity by which these goods and services are produced.&nbsp;</p>\n\n\n\n<p>Because the total production in an economy equals the total income in that country \u2013 as everyone\u2019s spending is someone else\u2019s income \u2013 incomes grow at the same rate as production increases.&nbsp;</p>\n\n\n\n<p>The 9 charts show the data for different regions in the world. On the x-axis of each chart you find the average income (GDP per capita) and on the y-axis you see the share living in extreme poverty. The starting point of each trajectory shows the data for 1820 and it tells us that two centuries ago the majority of people lived in extreme poverty, no matter where in the world they were at home.{ref}Parts of Western Europe and the US <a href=\"https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?tab=chart&amp;country=Western+Europe~Western+Offshoots~East+Asia~South+and+South-East+Asia~Middle+East~Eastern+Europe~Latin+America~Sub-Sahara+Africa~OWID_WRL~CAN~USA~AUS~NZL\">had already achieved some growth</a> in the decades before this chart begins so that the share in poverty had already fallen, but even in 1820 the majority was still living in extreme poverty there</p>\n\n\n\n<p>In the centuries and millennia before no region in the world had achieved sustained economic growth (see for example <a href=\"https://ourworldindata.org/breaking-the-malthusian-trap\">my post on the Malthusian Trap</a> and links therein). The chart here focuses on the very exceptional two last centuries when economic growth reduced widespread poverty.{/ref} Since then all world regions achieved growth \u2013 the production of goods and services increased \u2013 and the share living in poverty declined.<br></p>\n\n\n\n<p>[In my post <a href=\"https://ourworldindata.org/what-is-economic-growth\">&#8216;What is Economic Growth?&#8217;</a> you find much more on what economic growth is and how it is possible.]</p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"3000\" height=\"2109\" src=\"https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision.png\" alt=\"\" class=\"wp-image-46247\" srcset=\"https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision.png 3000w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-400x281.png 400w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-782x550.png 782w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-150x105.png 150w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-768x540.png 768w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-1536x1080.png 1536w, https://owid.cloud/app/uploads/2021/11/Growth-and-poverty-since-1820-OECD-data-Revision-2048x1440.png 2048w\" sizes=\"(max-width: 3000px) 100vw, 3000px\" /></figure>\n\n\n\n<h4>Most extremely poor people today are living in Africa</h4>\n\n\n\n<p>How far do we still have to go?&nbsp;</p>\n\n\n\n<p>The previous chart showed that Sub-Saharan Africa is the poorest region. Almost 40% of the population lives in extreme poverty.&nbsp;</p>\n\n\n\n<p>Not all African countries are struggling, in fact most African countries have achieved good growth after the end of the oppressive colonial regimes <a href=\"https://voxeu.org/article/colonialism-and-development-africa\">that hindered the growth</a> of African economies. But in a number of countries the situation is particularly bad. These countries remain as poor as they were in the past. Since the economy is stagnant, poverty is too.</p>\n\n\n\n<p>In the small chart you see the daily mean income in three of the poorest countries today. For four decades they did not achieve economic growth.{ref}You can explore this in detail <a href=\"https://ourworldindata.org/grapher/change-of-gdp-per-capita-extremely-poor?time=2000..2020&amp;country=MLI~NER~BDI~MDG~COG~COD~CAF~TGO~LBR~GNB~KIR~SLB~HTI~ZWE~GMB\">in this chart for growth</a> and <a href=\"https://ourworldindata.org/explorers/poverty-explorer-2011-vs-2017-ppp?tab=chart&amp;facet=none&amp;Metric=Share+in+poverty&amp;International-%24=2011+prices&amp;Poverty+line=%241.90+per+day%3A+International+Poverty+Line&amp;Household+survey+data+type=Show+data+from+both+income+and+expenditure+surveys&amp;country=MOZ~NGA~KEN~BGD~BOL~OWID_WRL\">this chart for poverty</a>.{/ref}&nbsp;</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image is-resized\"><img loading=\"lazy\" src=\"https://lh6.googleusercontent.com/9tCBcCqd-X4NNbjqMOq4GOyBAP2DtAQ71VTfojdAV1BVaPIw7Yjk5gstGk5mfZ2xWpsVy2UDxGcHFLm3hibmGq5mx6XZvwQZWRCOMJX-PsxiFqI0H0BHX4GNoB3PhcpSUlo6dqUG\" alt=\"\" width=\"400\" height=\"234\"/></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>To see the consequences of this let\u2019s first focus on one country that achieved large growth and then contrast it with a country that did not.&nbsp;</p>\n\n\n\n<p>A country that achieved large growth is the UK: the orange distribution on the left shows incomes in the UK two centuries ago; the majority lived in extreme poverty. The green distribution shows how the distribution of incomes has changed since then. Two centuries of economic growth lifted the majority of people out of the deep poverty of the past.{ref}The data shown in the small plots of the income distribution in the UK and Madagascar is again taken from PovcalNet \u2013 the predecessor to the World Bank&#8217;s <em>Poverty and Inequality Platform</em> \u2013 Gapminder, and Michail Moatsos 2021.{/ref}</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"8923\" height=\"1881\" src=\"https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years.png\" alt=\"\" class=\"wp-image-46251\" srcset=\"https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years.png 8923w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-400x84.png 400w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-800x169.png 800w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-150x32.png 150w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-768x162.png 768w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-1536x324.png 1536w, https://owid.cloud/app/uploads/2021/11/Growth-in-the-UK-200years-2048x432.png 2048w\" sizes=\"(max-width: 8923px) 100vw, 8923px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>The next chart shows the income distribution of the UK in 2019 in green \u2013 just as in the previous chart \u2013 and in red the income distribution of Madagascar, a country <a href=\"https://ourworldindata.org/grapher/gdp-per-capita-maddison-2020?country=MDG~GBR\">that did not</a> achieve growth.</p>\n\n\n\n<p>The majority of people in Madagascar still live in extreme poverty. Very similar to the global situation two centuries ago, three-quarters of Madagascar\u2019s population are living in extreme poverty.</p>\n\n\n\n<div class=\"wp-block-columns is-style-sticky-right\">\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"8923\" height=\"1994\" src=\"https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today.png\" alt=\"\" class=\"wp-image-46252\" srcset=\"https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today.png 8923w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-400x89.png 400w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-800x179.png 800w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-150x34.png 150w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-768x172.png 768w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-1536x343.png 1536w, https://owid.cloud/app/uploads/2021/11/Madagascar-vs-UK-today-2048x458.png 2048w\" sizes=\"(max-width: 8923px) 100vw, 8923px\" /></figure>\n</div>\n\n\n\n<div class=\"wp-block-column\"></div>\n</div>\n\n\n\n<p>Not just economic growth, but also the distribution of that growth matters. If the inequality of incomes increases, the poorest can be left behind. But without economic growth there is no chance at all to leave poverty behind. The data from Madagascar makes clear that a reduction of inequality cannot end extreme poverty in a poor country. If inequality in Madagascar would be entirely eradicated then everyone would live on the average income. In Madagascar this is $1.60 a day. For poor countries, the only way to end poverty is an increase of incomes \u2013 and that means economic growth.</p>\n\n\n\n<h4>The majority of the world is making good progress against poverty, but not all: some of the very poorest economies are stagnating</h4>\n\n\n\n<p>The history of extreme poverty is at the same time one of humanity\u2019s greatest achievements and failures.</p>\n\n\n\n<p>The majority of the world left extreme poverty behind. To me this ranks among the most impressive and most important achievements in humanity\u2019s history.</p>\n\n\n\n<p>But, as we\u2019ve seen, the fight against extreme poverty is far from over. About one in ten people still live in extreme poverty right now.&nbsp;</p>\n\n\n\n<p>The worry with extreme poverty today is that some of the world\u2019s poorest countries are not growing. Unless this changes hundreds of millions of people will continue to live in extreme poverty.</p>\n\n\n\n<p>Crucially this was true before the pandemic hit \u2013 even before COVID, researchers expected that <a href=\"https://ourworldindata.org/poverty?insight=hundreds-of-millions-will-remain-in-extreme-poverty-on-current-trends#key-insights-on-poverty\">half a billion people</a> would remain in extreme poverty by 2030. The global recession that followed the pandemic <a href=\"https://ourworldindata.org/poverty?insight=the-pandemic-pushed-millions-into-extreme-poverty#key-insights-on-poverty\">exacerbated</a> this further.</p>\n\n\n\n<p>When it comes to the consequences of climate change this is what I am most worried about. Richer people will be able to adapt in many ways. It is the extremely poor population that will be hardest hit.</p>\n\n\n\n<p>The economic stagnation of some of the world&#8217;s poorest countries is not as widely known as it should be. I think it deserves more attention.</p>\n\n\n\n<p>If the stagnation of the very poorest economies persists we will see a growing divide at the lowest end of the global income distribution. While the living standards of the majority of the world are rising, some of the world\u2019s very poorest people remain in extreme poverty.</p>\n\n\n\n<p>Whether or not the poorest countries achieve growth is among the most important questions for the coming years. It will decide whether humanity wins its long fight against extreme poverty or not.</p>\n\n\n\n<p></p>\n",
        "protected": false
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    "excerpt": {
        "rendered": "Despite making immense progress against extreme poverty, it is still the reality for every tenth person in the world. ",
        "protected": false
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    "date_gmt": "2021-11-22T10:30:00",
    "modified": "2023-04-06T18:39:22",
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    "ping_status": "closed",
    "authors_name": [
        "Max Roser"
    ],
    "modified_gmt": "2023-04-06T17:39:22",
    "comment_status": "closed",
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