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So...Are You
Grateful?

“It’s like we live in another world”

Much has been made in our nation recently about the 99% and the 1% in reference to America’s household incomes.  But have you ever considered this question in a more global way?  Even if the 1% in America hold the majority of America’s wealth, how does America’s 99% compare to the rest of the world’s income?   Economist Branko Milanovic of the World Bank recently produced this chart in part to show how to answer this question.  Look at it for a minute or two, then read on and we will try to make sense of it together.  It is not easy, but it is powerful.

global_domestic_inequality

To try and do this comparison, Milanovic first divided each country into 20 equally-sized income groups, ranked by their household per-capita income. These are called “ventiles,” as you can see on the horizontal axis, and each “ventile” translates to a cluster of five percentiles. The household income numbers are all converted into international dollars adjusted for equal purchasing power, since the cost of goods varies from country to country. In other words, the chart adjusts for the cost of living in different countries, so we are looking at consistent living standards worldwide.

This allows us to now look at the ventiles of a given country up against the entire world’s income.  Look at Brazil first.  Brazil has some extreme income inequalities in its population.  So you see that its poorest 5% is about as poor as anyone in the world, while its top 5% is among the wealthiest in the world.  China and India, the two most populous countries in the world are on the chart as well.

But now look at America.  The bottom 5% of American income starts in the top half of the chart. Our poorest are on the same level as the wealthiest people in India.  Another way of putting this would be that the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants.

Another way of approaching this would be consider how the American bottom 5% can be so well off in global terms, when the average income of that group is around $6,700 per year.  In American terms, that is extremely poor, but no when taken out into the world income market, where it is a relatively good standard of income in places like India or China.  Keep in mind that in India, about one quarter of its population lives on roughly $1 per day.

If you live in America, you have a lot to be thankful for, even if you are in the lowest 5% of the nation’s income level.  So how should this change how you live, and how you think about your life? Gratitude is definitely a part of answering that question.