[ Question ]

Why has poverty worldwide fallen so little in recent decades outside China?

by richard_ngo 2mo7th Aug 20196 comments

23


In this article, I found this graph of the percentage of people earning less than $7.40 a day worldwide, excluding China. That number has barely shifted from 1981 to 2015 - it's down by 3 percentage points from 62% to 59%. We can contrast this with the drop in people earning less than $1.90 a day: even excluding China, this has dropped by 17 percentage points (from 29% to 12%) in the same time. I played around with the data source for a while, and the $7.40 threshold doesn't seem particularly cherrypicked (nor are the dates). Excluding China is not totally standard but seems reasonable since otherwise the data from this one country would make it difficult to see more general trends.

The original article uses this data (and other arguments, like critiques of neoliberalism in the 80s and 90s, and criticism of Rosling's data sources) to argue that books like Rosling's Factfulness and Pinker's Enlightenment Now are misleading. To be fair, it makes sense that when you use a higher threshold, the percentage of people crossing that threshold in a given time decreases. But going from 62% to 59% is a very small difference over 34 years! So I'm tempted to conclude that the decline in extreme poverty is a less robust indicator of beneficial long-term economic growth than I thought, and that the two books I mentioned are missing important trends in global poverty. Is this reasonable?

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2 Answers

I don't think that this article is a good representation of the debate over these issues and takes an approach where the author seems to have already made up their mind about possible solutions.


This post from Our World in Data probably gives the best overview of stagnation in global poverty

"A generation ago the majority of the world's poorest lived in economies that went on to grow very fast. What is different now is that a rising share of the world's poorest are living in economies which have not achieved economic growth in the recent past.

Half a billion are expected to remain in extreme poverty by 2030 if current trends of economic growth and levels of within-country inequality persist.
The decline of extreme poverty is expected to slow down.

Much of the progress will be driven by economic growth in Asia, and India in particular. The number of people in extreme poverty in Africa is expected to stagnate."



I can't get on to the newint site for some reason so I don't know if they say anything more in support of excluding China, but it doesn't seem reasonable to ignore the progress made in a country that contains ~20% of the world's population. But even if we do that, the progress made at the lower end of the income distribution is still significant, and ignoring it by adopting a higher poverty threshold doesn't make sense to me (bear in mind that there would always be a higher threshold at which progress in poverty would look much weaker, and people suggest different ones all the time).

Of course, the choices about what countries/poverty lines to look at depend on what you are interested in. For instance, if you want to know the impact of global capitalism on poverty, you would not want to exclude China if you think that its rise was largely due to liberalization and trade with developed capitalist economies (I am agnostic about this). My sense of Rosling's main point is that people were/are massively underestimating progress, even at lower poverty thresholds where it should be easier. This is true even if progress at higher thresholds has been less good. Whether Pinker's book is misleading on recent changes in global poverty may depend a lot on how much China's progress can be attributed to 'enlightenment values'.

Also leaving this as a good summary of the debate https://www.cgdev.org/blog/12-things-we-can-agree-about-global-poverty