How Rich Am I?
Reference:
| 1. | This is the most up to date set of data for the world income distribution provided by Branko Milanovic, based on household survey data from the year 2008, adjusted for inflation up to early 2013 and using current PPP ratings and currency conversions. It is not yet published, but builds upon his data described in "'Worlds Apart''. His approach is also described for a general audience in his recent book The Haves and Have Nots . These survey data are only accurate between approximately the 80th percentile and the 99th percentile. Above and below these values, survey data is very poorly sampled, and so results are not shown. Further income distribution related data for the full range of incomes can be found at PovCal available here.
Here and elsewhere we use ''typical'' to refer to the ''median'', so the typical person is the one who earns more than half the world's population and less than the other half. (Close footnote) |
Many people are surprised at how rich they actually are compared to the rest of the world. A little redistribution of this wealth can go a long way, when given to the most effective causes. For example, If the average American citizen decided to donate 10% of their income to a cost-effective charity, they could treat 7,100 people for neglected tropical diseases per year. When you consider just how much good you can do with this money, this is a tiny sacrifice. This is why our members take a pledge to give 10% of their income away. For more information about what you can do, please see our pages about what you can achieve, and how giving affects your happiness.
Distribution of wealth around the world
You might think that the above figures are distorted because each dollar goes further in impoverished countries. However, we account for this: incomes are compared in terms of how much money is needed to buy locally what $1 buys in the United States. This is called purchasing power parity and many developing world statistics are adjusted to take it into account. So we really are part of a very small and wealthy elite — vastly more wealthy than the poorest half of the world’s population, who all live on less than $4 per day.
Did we earn this position? No. Of those born in the United States, almost all will be in the world’s richest 20%, and control more than 80% of the world's income.3 This is in large part because they were lucky to be born in the right place. Money is thus distributed both unequally and unfairly around the world. We tend not to notice the unfairness, but for those born into countries where hard work gives only a tiny fraction of our rewards, this injustice is painfully apparent.
Reference:
| valign="top" width="20px"> 3. | See Branko Milanovic, ''True world income distribution, 1988 and 1993: First calculation based on household surverys alone'', Economic Journal issue 112, 2002, p. 89. A draft of this can paper can be downloaded here. His figures are that 16% of the people control 84% of the raw income and that 25% of the people control 75% of the PPP adjusted income. We referred to the former figure here as we think it is the more important one. We rounded it off conservatively to take into account the uncertainty involved and to keep the numbers simple. (Close footnote) |
Just how unfair the distribution is:
You can see just how unfair this is from this graph:4
A completely equal distribution would be represented as a flat line. Instead, we have an incredibly skewed distribution, where in fact, the spike on the right actually continues up over ten thousand times as far as this (or more than 1km above your computer) before the richest people are accounted for.
Does charity help to redistribute this money back to the world's poor? Not always. Most donations are simply given to other people within the rich countries and the money therefore stays within the richest 20%. In global terms it is donation by the extremely wealthy to the very wealthy.
Reference:
| 4 | This is the most up to date set of data for the world income distribution by Branko Milanovic, based on the year 2002, adjusted for inflation up to 2009 and using the new PPP ratings. It is not yet published, but it builds upon his data from ''True world income distribution, 1988 and 1993: First calculation based on household surverys alone'', Economic Journal issue 112, 2002, p 75. A draft which can be downloaded here. (Close footnote) |
However, it is also possible to make extremely effective donations towards the world's poorest people. Because they have so little money, every dollar you give can make a tremendous difference — especially if spent on the world's most efficient aid programs. Read on to see just how much you could achieve and how little it would really cost you.
