A graphic showing the rapid decline of global poverty over the past 100 years is making the rounds as evidence that the world is getting better. While technically true based on the extreme poverty line used, it hides a more complicated truth – fewer people are extremely poor but a lot are not doing much better.
The number of people living on just $1.25 a day fell dramatically starting around 1950 and picked up speed over the past few decades. In 200 years, the world went from a place where the majority are extremely poor to one where less than 20 percent fall below the line. It is a massive achievement. At the current rate, extreme poverty would essentially disappear by the end of this century.
Before running around giving everyone around you high-fives for humanity, there is reason to think beyond the stunning chart.
The story of falling global poverty is a bit more nuanced than the chart may lead some to conclude. There are three problems, argues Kevin Grier, economist at the the University of Oklahoma. First, the data are based on an artificial line drawn in the sand to classify people as extremely poor. The difference between a person making $1.20 a day is not all that much from the person making $1.30 a day. Nobody below that threshold is wonderful, but it is not the end of poverty.
Second, he says that the big drop is thanks to the improvement of highly populated countries like China and India. That sharp downward trajectory of poverty is much flatter when they are not included in the numbers. Lastly, he points out that the actual number of people living in poverty is getting smaller with regard to percentages, but staying roughly the same when it comes to total number of people due to population growth.
Basically, extreme poverty is getting better, but a lot of people are still poor and the total number of extreme poor is unchanged.
“I am not saying the world hasn’t made a lot of progress. I am not saying things were better in the past,” blogged Grier. “I am saying that global poverty is still a very serious issue, more serious that the ‘you won’t believe this one amazing chart’ type of journalism makes it seem.”
At the core of the concern is the fact that people who cross the $1.25 line struggle to continue upward and beyond $2 per day. Grier cites a World Bank report showing that the number of people living on between $1.25 and $2 a day rose from 600 million in 1981 to 1.2 billion in 2005. The total number of people living on less than $2 a day held at 2.5 billion over the same period of time.
With population growth, the percentage of people living on less than $2 a day is falling. But 2.5 billion is still a lot of people. Ten years later, the data available shows roughly the same trend remains. But it is fragile. People who barely escape extreme poverty remain on the brink of falling back. In rural Ethiopia, for example, more than 60 percent of households that escaped extreme poverty between 1999 and 2009 fell back into poverty.
That is the worst case scenario. Vietnam saw less than 20 percent of people fall back into poverty between 2002 and 2006. Countries are finding ways to lift people out of poverty permanently, but the progress is not necessarily universal nor permanent in all places.
The world is undoubtedly getting better. The rate of preventable deaths in mothers and children are falling. And so is the poverty rate. But the fireworks remain on hold for the-end-of-poverty-is-near celebrations.