Life Expectancy has doubled in Every Country over the last 200 years

Global Development

Key Points

  • In the last 200 years, life expectancy has doubled in every country across the world.
  • Even the poorest countries in the world have life expectancies at least 10 years higher than the richest countries had two centuries ago.
  • Since the 1950s, there has been rapid convergence in life expectancies for the richest and poorest countries and now over 80% of the world’s population is expected to live over 65 years old.

Background

Today, living standards are dramatically higher than ever before (see here and here) and this has led to a rapid improvement in life expectancies across the world. As can be seen in the chart below, in 1800 the richest countries in the world had life expectancies below 40 years and this has doubled to over 80 years today. While increases in life expectancies in the poorest countries have been smaller in absolute terms they have still doubled from around 25 years in 1800 to over 50 years today.

Life expectancies

In the last half a century there has been a significant convergence in life expectancies between the richest and poorest countries. Much of this advancement has been through improving the quality of life in poorer countries in the last 65 years. In 1950, life expectancies were twice as high in the richest countries in the world compared to the poorest countries. However, today the bottom 40% of the world’s population is expected to live around three-quarters as long as to top 10%. Even in today’s poorest countries, life expectancy is ten years higher than half of the world’s population in 1950 and the richest countries in the world in 1800.

Source:

Max Roser 2015 <http://www.maxroser.com>

Ending Extreme Poverty by 2030 requires a reduction in inequality

Global Development

Key Points

  • Extreme Poverty will not be eliminated by 2030 unless there is a historically unprecedented reduction in inequality.
  • The continuation of recent high economic growth rates for the next 15 years will not be enough to reach a 3% global extreme poverty rate by 2030.
  • For extreme poverty to be eliminated, the incomes of the bottom 40% of the income distribution (the poorest people) must grow an extra two percentage points higher than the average economic growth rate for the next 15 years.

Background

The latest estimates from the World Bank show that eliminating extreme poverty by 2030 is beyond humanity’s grasp, unless unparalleled steps are taken to reduce inequality. This is an important finding given that world leaders are set to commit to ‘Zero Poverty’ by 2030 as part of the United Nations Sustainable Development Goals (SDGs) Agenda. Reducing poverty and the SDGs are clearly about more than increasing incomes through economic growth. They are about broader issues such as health, education, gender equality, environmental sustainability, employment etc. However at the heart of SDGs is the notion of eliminating extreme poverty (defined as 3% or less of the world’s population living below $1.25 a day).

The continuation of recent high economic growth rates throughout most parts of the developing world will not be enough to reduce extreme poverty. Figure 1 shows how the global poverty rate is likely to change based upon historical growth patterns. Even in the best-case scenario, extreme poverty is likely to remain above 5% of the world’s population by 2030. While if growth rates are lower than they have recently been, like they were in the 1980s, then the global extreme poverty rate could be as high in 2030 as it is today.

Figure 1 – Changes in Extreme Poverty based upon different growth rates

Figure 1

The above predictions hold inequality constant. However if inequality was also reduced, along with these patterns of economic growth, extreme poverty could be eliminated. Figure 2 shows that if the incomes of those in the bottom 40% of the income distribution grow by an extra two percentage points faster than the average growth rate the target of a 3% global extreme poverty rate can be reached. This relies on growth rates continuing to be as high as they were in the 2000s and that the poorest people benefit the most from economic growth.

Figure 2 – Changes in Extreme Poverty based upon Growth for the Bottom 40%

Figure 2

Reducing inequality alongside growth appears to be a key factor in eliminating poverty. However achieving this will require significant changes to see the poor benefit the most from economic growth. These changes are essential if world leaders are serious about Zero Poverty being reached by 2030.

Source:

World Bank 2014 <http://www.worldbank.org/en/topic/measuringpoverty/publication/a-measured-approach-to-ending-poverty-and-boosting-shared-prosperity>

The Beginning of the End of Extreme Poverty

Global Development

Key Points

  • In 1820, almost everyone in the world lived in extreme poverty. Since this time, incomes in the developed world have increased more than 12 fold, eradicating extreme poverty in these countries. In the UK, income per person was equivalent to Africa today in 1820 and to Latin America today in 1950. While in China income per person was equivalent to Africa today twenty-five years ago and is now similar to Latin America.
  • Income per person only tells part of the story of how living standards have changed over time. For example, due to improvements in medicine, child mortality in Africa is around one quarter of the rate of the UK in the early 1800s, even though they had similar income per person.
  • The eradication of extreme poverty in less than two centuries in some countries provides hope that extreme poverty can be eliminated from all countries.

Background

For most of human history, extreme poverty was the norm. This only began to change in the last couple of centuries as some countries (largely in Western Europe and North America) experienced prolonged periods of economic growth.

The chart below shows the steady increase in income per person over the last two hundred years in the UK. In 1820, income per person was equivalent to Africa today, while by 1950 incomes were similar to Latin America today.

Income per person overtime

Rapid economic growth in China led to the same increase in income per person, which took the UK 130 years, in just 25 years. This has led to hundreds of millions of people escaping from extreme poverty.

To get a more holistic understanding of how living standards have changed over time, it is important to go beyond the income per person measure. Advances in medicine have allowed for higher levels of development for a given income level than what today’s developed countries experienced in the 1800s. For example, in the UK in the early 1800s, every second child died before the age of five. While around one in seven children die before five in Africa today.

Next month, World Leaders will discuss the next Millennium Development Goals and whether to include a timeframe to end extreme poverty by 2030. This is a truly historic moment in human history as it was really only a couple of centuries ago that extreme poverty began to be permanently reduced.

Sources:

World Economics 2014 <http://www.worldeconomics.com/Data/MadisonHistoricalGDP/Madison%20Historical%20GDP%20Data.efp>

Copenhagan Consesus Center 2011 <http://www.copenhagenconsensus.com/sites/default/files/health.pdf>

 

Mind the Gap

Global Development

Mind the Gap

Have you ever wondered how large the gap in living standards is between countries? Or how this has changed over time?

An excellent resource to allow you to look at the evidence in a visually engaging and user friendly way is http://www.gapminder.org/

For example, to explore how the Wealth and Health of Nations has changed over time click on the picture below to open Gapminder’s interactive display.

Gap Minder picture

Gapminder also has a series of brief and informative YouTube clips, such as the following video that shows how 200 countries have developed over the last 200 years in just 4 minutes.

Grading Bill Gates

Global Development

Could you imagine Grading Bill Gates? Well Columbia University Professor Chris Blattman did just that. What did he grade? A must read for those interested in aid and development. Find out more below.

A Must Read for those interested in Aid and Development

Each year Bill and Melinda Gates release a letter to the public and in 2014 they decided to Bust Three Myths about Aid and Development. These are that:

1) Poor countries are doomed to stay poor

2) Foreign aid is a big waste

3) Saving lives leads to overpopulation

The letter contains a large amount of evidence. If you have not read it already make sure you do, it is available here.

Also check out the following videos that summarise the evidence provided in the letter.

MYTH ONE: Poor Countries are doomed to Stay Poor

MYTH TWO: Foreign Aid is a Big Waste

MYTH THREE: Saving Lives leads to Overpopulation

Bill Gates Graded

Overall Bill and Melinda Gates received an A- from Columbia University Professor, Chris Blattman. The full report can be found here.

The main reason they do not score higher is because they claim aid leads to economic growth. Professor Blattman notes ‘The evidence that aid projects are associated with growth is amazingly absent’. This is problematic for the new Australian Government who have shifted the objective of the aid program away from poverty reduction and towards economic growth. Even though there is not any evidence that aid can actually cause economic growth.

There is however a great deal of evidence that aid can dramatically improve the lives of those in poverty. Professor Blattman comments ‘aid projects work and we know it’ and ‘Plenty of aid projects have huge impact’. 

Who even benefits from Economic Growth?

Global Development

Key Points

  1. The Australian Government has recently changed the focus of the aid program away from poverty alleviation towards economic growth.
  2. However, historically economic growth has disproportionately benefited rich households in developing countries.
  3. Even when economic growth is more equal for rich and poor alike (i.e. equal across the income distribution), the income gap between rich and poor households still increases.
  4. The objective of Australia’s aid program should revert back to helping people overcome poverty.

Background

The Australian Government has changed the focus of the aid program away from poverty alleviation towards economic growth. However, the analysis below shows it is likely that this will largely benefit the wrong end of the income distribution in developing countries. This is because rich households gain the most from economic growth.

While economic growth is often argued to be the solution to poverty in developing countries, poor households have not benefited as much from economic growth as rich households over the last decade. This conclusion can be reached by analysing the World Bank survey data available at the online database Povcal.

Two country specific examples for the last decade of available data are provided below: one with rich households experiencing the greatest economic growth (Indonesia), and the other with more equal economic growth across the income distribution (Philippines).

Unequal economic growth in Indonesia over the last decade resulted in huge increases in income for the richest households. The first diagram below shows that the average income growth experienced by the poorest 20% of households was less than half the rate of growth of the richest 20% of households. The second diagram illustrates the even more unequal change in income that the economic growth brought about. Each year the total increase in income for the richest 20% of households was similar to the other 80% of households combined. In other words, half of the increase in income from economic growth went to the top 20% of the income distribution.

Indo1 Indo2

The Philippines experienced more equal economic growth across the income distribution over the last decade, however a similar pattern emerges. The first diagram below shows that the richest 10% of households experienced around half the rate of growth of the other 90% of households. However as the second diagram shows the richest 10% still experienced a greater increase in income than all the other households. In fact, the richest 10% of households had an increase in income of more than five times the increase in income of the poorest 10% of households. This is because a decade ago the richest households had an income around 30 times larger than the poorest households.

Phil1Phil2

Recent history has shown that a reduction in the income gap between the rich and poor has not occurred in a developing country during a period of prolonged economic growth. This evidence suggests that economic growth does provide some benefits to the poor, however the rich are the main beneficiaries. Even when economic growth is distributed more equally across the income distribution.

With promoting economic growth as the objective of the aid program, Australia’s aid will not focus on those who need it most. The Australian Government should revert back to the previous objective of the aid program – poverty alleviation. Otherwise rich households, as opposed to those in extreme poverty, will benefit the most from the aid program.

Sources

World Bank 2014A <http://iresearch.worldbank.org/povcalnet/index.htm>

World Bank 2014B <http://data.worldbank.org/data-catalog/world-development-indicators>