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[Data] Poverty in the World: Where Do We Stand?

BLOG - 30 July 2019

Based on an original idea by Marc-Antoine Jamet, Mayor of Val-de-Rueil.

Inequalities, on which the G7 summit, to be held in Biarritz from August 24th to August 26th, will focus, are a constant issue of global - and French - concern. In a world irrigated with false information, where emotion often prevails over reason, it is important to take the heat out of the public debate on this subject, especially in France, a country particularly passionate about equality, where perceptions are often far from reality. Julien Damon, sociologist and associate professor at Sciences Po, shares his analysis on poverty, the middle class and inequalities in France and in the world today.
 

Made dozens of times into movies, plays, and even manga, Victor Hugo's Les Misérables is proof that, while poverty is an evolving concept, it remains at the heart of social concerns. Poverty is an evolving concept in its definition - who can be described as poor? - but also in what it reflects of society - how many people are poor? Of course, each of these two borders influences the other: the lower the poverty line, the fewer people are affected. In France, as at the global level, debates on inequalities go hand in hand with debates on poverty. How has the level of poverty in the world evolved in recent years? And at the French level, what changes can be observed?

In the world: decrease in extreme poverty, increase in relative poverty

Source : World Bank
 
 
 
 
 
 
 

 

In 1981, when the international poverty line was $1 a day in purchasing power parity (PPP) - that is, in consumption capacity - almost one in two people in the world was considered poor. The poverty line currently used, since 2014, is set at $1.9 per day. At this level, extreme poverty fell below 10% of the population in 2015. While it is clear that the situation of an individual who rises to $2 a day does not change radically, the overall evolution towards the "disimpoverishment" of the world is clear.

Centre of gravity of extreme poverty
Source : World Bank
 

 


While the world is moving towards an even greater reduction in extreme poverty, there are important geographical variations. Extreme poverty is shifting, fuelled by the considerable decline in poverty among demographic giants that have become economic giants: China officially has "almost" no more poor people below this extreme threshold (only 10 million), while this volume is shrinking rapidly in India (less than 100 million people in 2017). Poverty is now concentrated in sub-Saharan Africa, which, in 2015, hosted 90% of the world’s population living below the $1.9 a day threshold. There are now more poor people in Nigeria than in India, and this will soon also be the case in the Democratic Republic of Congo. On a very young continent where the rate of urbanization, although growing rapidly, is only 40% (it is over 80% in France), extreme poverty mainly affects children and rural areas.

Sources : World Bank

 

Although global economic progress has reduced extreme poverty, nearly half of the world's population - 3.4 billion people - still face great challenges in meeting their basic needs. In 2018, the World Bank proposed two new poverty lines: the first, at $3.2 per day, which leads to consider 25% of the world as poor, and the second at $5.5, which involves nearly 50% of the world. Nevertheless, international comparisons no longer focus only on absolute poverty, even with different thresholds, but on relative poverty, which includes households living below a certain fraction of the median income.  While absolute poverty is falling in developing countries (1.84 billion people in 1990 compared to 766 million in 2013), relative poverty is increasing (482 million people in 1990 compared to 1.32 billion in 2013). Thus, total poverty is falling but inequalities are increasing.

Source : World Bank

 

What about the perception of the evolution of poverty in the world?

In 2017, 26,000 people in 28 countries were surveyed on this subject. For the entire population:
 

  • 20% rightly believed that, over the past 20 decades, extreme poverty had decreased worldwide;
  • 28% did not know, or believed that it had not evolved;
  • The majority - 52% - mistakenly believed that the share of the population living in extreme poverty had increased over the past two decades.
     
Sources : Ipsos - Our World In Data

 

92% of French respondents believed that poverty had increased or remained stable since the 1990s. Only Hungarians, Italians and Japanese were more pessimistic than French respondents on this subject. In short, contrary to what all the expertise and figures showed, French respondents did not believe in reducing extreme poverty in the world. This French pessimism about global social and economic developments is reflected at the national level: 80% of French people wrongly believed in 2015 that inequalities had increased in France in the previous five years!

In France: transformed poverty in one of the wealthiest countries

However, and despite a feeling of downgrading, France is still ahead in terms of GDP per capita. In France, as in Germany, Finland and Norway, at the poverty line of $5.5 per day, only 0.2% of the population is affected, compared to 10 times more in high-income countries in general. While in terms of purchasing power parity (PPP), the French population does not know the extreme wealth levels of Qataris, Swiss, Luxembourgers or Norwegians, they are still above the average of the European Union or the OECD, in PPP or common currency. In half a century, this GDP per capita will have increased almost fourfold (in PPP).

Source : World Bank

 

 

Source : Insee

 

Poverty is not exploding in France. It is evolving. With a relative income poverty line set at 60% of the median standard of living – or €1,000 per month of disposable income for a single person and €2,500 for a couple with two children - poverty is fairly stable, at around 14% of the population. But, more important than the figures for a given year, are the long trends and transformations. After the Second World War, poverty was a phenomenon affecting the elderly. Today, the picture is very different: it affects mainly young people, it is concentrated in certain problematic urban areas, and it concerns single-parent families over large ones. Finally, proportionally, it increasingly affects working poor and foreigners. A stable poverty rate disguises these transformations and concrete problems: the growing share of constrained household spending, particularly housing costs.

Source : Eurostat

 

The income poverty rate (percentage of people living on €1,000 per month of disposable income) in France - at 14% - is below the European average of 17%. In total, the European Union is estimated to have 87 million poor people, including 13 million in Germany, 12 million in Italy, 10 million in the United Kingdom... and 9 million in France. This favourable situation in France compared to the EU is due in particular to the high level of social spending and redistribution.

Another way of assessing poverty is to measure "material deprivation" or "poverty in living conditions", which refers to the inability to obtain certain goods and services considered by most people to be desirable, or even necessary, for an acceptable standard of living. Here again, France is in a good position, with a poverty rate in living conditions of 13% - similar to the United Kingdom and Belgium - when the European average is 16%.
 

Source : Eurostat
 
 
 
 
 
 
 

 

Thus, contrary to popular perception, the world is becoming wealthier, with less than 10% of the world's population now living below the extreme poverty line. Nevertheless, relative poverty, i.e. inequality, is increasing, which probably explains why 52% of respondents wrongly believed that the share of the population living in extreme poverty had increased over the last two decades. France enjoys a favourable situation in the world, with income poverty rates and poverty in living conditions below the European average. However, when it comes to perceptions, the French population is not the most optimistic.

 

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