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The World 99 Percent

By Taylor Marvin

Here’s an interesting graphic that’s been making the rounds on We Are the 99 Percent tumblr:

Is this true? Is the income of the bottom 99% of US citizens in the top 1% of world income?

Short answer: maybe. From the World Bank, World Development Indicators dataset, in 2009 per capita US income was $45,989, compared to a world average of $8,599. Plugging this into the Global Rich List income comparison tool tell us that the average American falls into the top 1.43% of humanity, suggesting that the 99 Percent graphic’s claim is just off. However, there are a lot of problems with this comparison. For example, the average US income provided by the World Bank is given in GDP per capita. This is problematic for a few reasons. First, it includes the income of the top 1%, which we’re not interested in and in the US is high enough to significantly skew this figure. Similarly, GDP per capita is an averaged measure — while this is often the best income measure economists can get, it doesn’t account for inequality. Is there a better estimate? It’s hard to tell. This morning Washington Post columnist Suzy Khimm reported that in 2010 US households in the bottom 60% earned $59,154, while those in the bottom 20% $33,870. Remember, these are household earnings — suggesting that the average earnings from the bottom 99% of individuals is significantly below the GDP-derived $45,989 figure. However, since this conjecture lowers our expected 99% average income it suggests that the average 99% American even farther below the world top 1%.

However, there’s another problem. We aren’t just interested at looking at inequality within a country, but across the world population. GDP per capita in dollars is a bad measure for this, because we aren’t really interested in strictly income, but rather how much consumption that income buys. Because prices of goods vary widely across countries, it’s more accurate to use Purchasing Power Parity (PPP) — the value of local goods purchasable with the average national income — as a measure of comparing income. The difference between GDP per capita in nominal dollars and PPP isn’t always predictable — for example, Japanese per capita income is roughly constant for both GDP per capita in current US$ and GDP based on PPP per capita GDP, while both Lebanon and Jamaica’s average income plummets when looking at income based on PPP per capita GDP. In the United States however, income goes up when we consider purchasing power: rising to $55,622 when measured in PPP. This makes the average American better off compared to the rest of the world, indicating that the average income for the bottom 99% in the US may fall into the world’s top 1% in terms of consumption if not nominal income — unfortunately it’s difficult to be more precise.

But that doesn’t change the core issue here: on average Americans are much, much better off than nearly all of the rest of the world, and We Are the 99 Percent is right to stress that point. However, implying that famine and extreme poverty is the norm for 99% of humanity is misleading. I’m not arguing that famine and extreme poverty doesn’t exist — as of 2008, one in four residents of the developing world lives on less than $1.25 a day. However, in the last quarter century humanity has made enormous progress combating poverty, and the extreme poverty We Are the 99 Percent highlights is increasingly far from the global norm.

In 2008 1.4 billion people lived in extreme poverty, compared to 1.8 in 1990. When considering the large human population growth of the last twenty years this achievement becomes much more remarkable. Incidence of famines are down drastically, and the developing world is mostly on track to halve 1990 poverty levels by 2015. Again, this isn’t to say that extreme poverty isn’t a pervasive problem — it is, and the degradation and pain of extreme poverty is a continuing horror. However, there are good reasons to be optimistic about the future.

World regional incomes spent most of the last 500 years rapidly diverging, with Europe and select European post-colonial states rapidly becoming much richer than their peers. However, in the last half century world income across regions have begun to converge, with the rest of the world beginning to ‘catch up’ to the historically richer West:

GDP Based on PPP per capita GDP, 1980-2016.

Data Source: International Monetary Fund, September 2011 World Economic Outlook. Image: Google Public Data Explorer. Note: Advanced Economies includes the US.

There’s still a large difference between incomes in the developed and developing worlds. However, if current trends hold this gap is likely to shrink through this century. This projection becomes even more encouraging when considering the size of the regions highlighted in this graph:

GDP Based on PPP per capita GDP, 1980-2016. Regional Population as Percentage of World Total, 2011.

Data Source: International Monetary Fund, September 2011 World Economic Outlook. Image: Google Public Data Explorer. Population figures are rough estimates. Note: Advanced Economies includes the US.

15% of the world’s population live in advanced economies, a fact that often under appreciated in the public consciousness. Moreover, an increasing percentage of advanced economies only recently achieved high-income status. The newly industrialize Asian economies, some of the richest in the world, only matured within the last three decades, unlike the Western European ex-colonial powers that dominated the global economy for centuries.

What’s especially encouraging is that despite the global collapse of 2008 most regional growth trajectories remain fairly robust. This is especially evident in developing economies — while Euro Area and US growth will likely remain anemic throughout the decade, growth rates in developing economies, rather than the developed world, will increasingly determine the course of the global economy. Developing Asia is an especially important part of this trend. Because the region is home to nearly half of humanity, positive developments there have an enormously important impact on the fortunes of humanity in general. Strong growth rates in China and India are an hugely important gain for humanity. This century Americans will increasingly fall out of the world’s top 1%, and in the global aggregate that’s a good thing.

However, despite the ongoing aggregate global convergence, select regions are being left behind. This is extremely worrying. The We Are the 99 Percent graphic highlights famine in Africa as the human norm — while this is increasingly incorrect in a global context, it remains depressingly common in Sub-Saharan Africa, where growth rates are projected to remain low into the foreseeable future. As the rest of humanity becomes richer and increasingly convergent on a global scale, we should become increasingly worried about the bottom 20% that’s being left behind.

Update: Minor changes for clarity.

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18 Comments Post a comment
  1. Tim #

    What about the 15% of Americans below poverty line? Hard to see since its based on income level, but could compare with CPI.

    October 9, 2011
    • joenunya #

      Below US poverty line is STILL above double global average GDP. Even the poorest of poor in the US, are the most ungrateful of PIGS for the rest of the world. (not that those of higher incomes are not even greater pigs.)

      January 25, 2014
  2. Abe #

    “Is the income of the bottom 99% of US citizens in the top 1% of world income?”

    The short answer is not maybe; the statement is definitely and provably false.

    To see that, we need to simply note that 99% of the US population (approximately 300 million people) constitutes about 5% of the world population. So even if, for arguments sake, we assume that every single American is richer than every single non-American, the bottom 99% of US citizen wouldn’t be in the top 1% of the world population (they would form the top 5% of the world population). Of course, the actual income distribution makes the US population slip down even further in the world income pool.

    October 9, 2011
  3. Abe #

    The other way to look at it would be to note that 1% of the world population is about 70 million people, which is numerically equal to about 20-25% of the US population.

    Since the richest 1% of the world (ie richest 60 million) are by definition and simple logic richer than the richest 25% Americans (ie richest 75 million Americans), saying that the “bottom 99% of US citizens in the top 1% of world income” is even more ridiculous than claiming that, say, the “bottom 99% of US citizens are in the top income quartile in US”!

    Reminds me of Lake Wobegone, with all students who are above average. 🙂

    October 9, 2011
  4. LeoG #

    The OECD has posted that the bottom 20% of Americans, when compared with other OECD nations, are among the poorest. America’s poor is on par with the poor in Portugal, far below the rest of Europe, Canada and developed Asia. This doesn’t even account for the universal health care and cheaper university educations that Europeans and Canadians have access to that are out of the reach of poor Americans.

    Sure, the poorest American is better off financially than the undeveloped world, but put the US on par with its economic peers and Americans outside the Top 1% are not doing so well.

    October 9, 2011
  5. The above image is arguably factual, if you remove Europe, Canada, Japan, South Korea, Australia, New Zealand, the Arabian gulf, Taiwan, etc from “The Rest of the World”.

    – “But that doesn’t change the core issue here: on average Americans are much, much better off than nearly all of the rest of the world,”

    I’d say a more accurate statement would be “middle class Americans are much, much better off than 80% of the world.”

    All in all, a very American image.

    October 10, 2011
  6. nate #

    Um, it is a metaphor. Parsing the numbers is silly. The point is the imagery and inverse relationships to wealth across intl lines. Who cares if it is 1% or 1.43% or what have you. I am happy to read the stats, but really, that is the least important bit.

    October 10, 2011
  7. d kippford #

    The money made by one man is his. It is he who decides to spend, save or donate it, not the 99% what ever that is. If you are poor it is not his fault, if you are hungry it is not his fault, it is yours. The economic pie is not one size. If one man takes a large slice someone else does not get a small slice. They have a small slice because the choose that. If one lives in poverty, don’t have kids. Strive to get out of poverty. DO NOT expect someone to come and give you food or money or shelter. I am in my mid 40’s when I was in 1st grade i carried a UNICEF box at Halloween. This was to collect money for the starving kids in poor countries. What has changed in 40 years? There are still starving kids in poor countries…..

    October 10, 2011
  8. Daniel Korn #

    I believe you compared U.S. dollars to International dollars. They are not equivalent.

    October 10, 2011
  9. Trista #

    @ Doug – Let’s be real, poverty in the U.S. isn’t the same as poverty outside of the U.S. I currently have no income because I’m a single parent in school full time. Government grants cover my tuition. I live in a 1500 sf townhouse with clean, running water, heat, and electricity. My children and I are well-fed. Vaccinations and antibiotics are very accessible and very inexpensive. There are numerous charity-based organizations available if I needed clothing, food, or medical care. The biggest differences between the way I live in poverty and the way I lived before in middle class is that I live in a high-crime area and I don’t have a car. But I’ll graduate school next year and hopefully be back among the middle class in no time. It would be pretty disgusting of me to pretend that the majority of the world wouldn’t give their eye teeth to be as “disadavantaged” as I am.

    October 25, 2011
  10. Great point. 99% welcome to the 99% of the rest of the world! Maybe now that poverty has reached Europe and the U.S. something will be done. Sad but true for the billions that have been living in the 99% in developing countries for centuries!

    JUST CORRECT THE TYPO THAT READS “PECENT” INSTEAD OF “PERCENT”

    October 30, 2011
  11. PECENT

    UNLESS OFF COURSE YOU WERE TRYING TO MAKE A RACIAL SLUR WHICH WOULD BE INLINE WITH UCSD’S COLORFUL RACIAL-RELATIONS HISTORY! IF THAT IS THE CASE, MAYBE YOU SHOULD THEN ALSO ADD A PICTURE OF A HANGMAN’S NOOSE!!!

    October 30, 2011
  12. admin #

    @Anonymous,
    The typo in the title has been corrected. Apologies, and I have no idea how I didn’t see that until now.
    -Taylor Marvin

    October 31, 2011

Trackbacks & Pingbacks

  1. What does it take to be in the top 1% » Ambitious Cities
  2. The World 99 Percent, Cont. » PROSPECT Blog
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  5. Who Are The Real 1%? :: Corporate Entrepreneurship ENTR-459

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