average daily income in the worldaverage daily income in the world

For historical estimates, the output approach is often considered the more reliable in practice given the available evidence, though information on incomes and expenditure still provide benchmarks to cross-check the plausibility of estimates. The PPP exchange rate adjusts for both the currency and the price level ratio. If you then find that the price of bread doubled over a period, but your employer still pays you the same income, then you can only buy half as many breads from your income and your income in terms of bread has halved. These researchers put extensive work in these reconstructions and typically focused on one particular region or country only. For recent decades several international datasets on GDP are available. Making the PPP-adjustment reveals that the average income of someone living in India is $4,800 (international dollars), only 10 times smaller than in the US. The data covers1,569 subnational regions from 110 countries covering 74% of the worlds surface and 97% of its GDP. This topic page can be cited as: All visualizations, data, and code produced by Our World in Data are completely open access under the Creative Commons BY license. Life too changed remarkably little. More deaths, higher incomes. In these cases we adjust for the price changes and look at real GDP. Because of this identity the measurement of GDP can be approached from any one of these three angles: output, income, or expenditure. And all those countries that have an income higher than the global average today are more prosperous than the US in 1950: Iran, Mexico, Bulgaria. For example, the calculator shows estimated daily incomes of both $9.90 and $10.30 as $10 per day, but the income bracket will be reported as low income in the former case and as middle income in the latter. Before the modern era of economic growth, the economy worked very differently. The World Bank Global Financial Inclusion data is available for 2011 and 2014. There are two ways to increase output over time: Increase inputs or to increase productivity, the ratio of output to input. Stephen Broadberry, Bruce M. S. Campbell, Alexander Klein, Mark Overton, and Bas van Leeuwen British Economic Growth 12701870;bookpage. But this is a much rarer problem. (But since comparisons only make sense when one adjusts for price changes, it is usually the case that adjustments for inflation have been made even when it is not explicitly said.). And many paths for growth point in a direction that does not increase our environmental damage and instead can often reduce the impact (better care for the sick and elderly, better educational institutions, alternatives to meat,care for mental health, improved solar technology; all these improvements would mean more growth). Purchasing Power Parity (PPP) adjustments to GDP are an attempt to isolate differences in the volume of output of two economies. Average income around the world The worldwide highest income is earned in Monaco. We dont know much about how this access has changed over time and to understand this change better we have attempted to combine different sources the result of which is shown in the world map below. Real incomes measure the change to income, adjusted for the fact that nominal prices have increased (or decreased) and in income statistics real incomes are therefore reported as incomes in constant prices. But today they do while many economies achieved strong growth some stagnated around their level from 1950. In the long time before sustained economic growth incomes never exceeded $3.50 per day [3.50*365=1277.5] in prices of 1990.5 For the UK this changes in the 17th century, the fluctuation of incomes that we see in the four preceding centuries gives way to a steady increase of average incomes. GDP per capita in the USA on the eve of independence was still below $2,500 adjusted for inflation and measured in prices of 2011 it is estimated to be $2,419. But historians know about history and where non-market sources of income make up a substantial part of total income, it is very obvious that money would represent a rather silly indicator of welfare. Share of population living in poverty by national poverty lines. It was in England (and Holland) in the early 17th century where it became first possible to grow incomes over a sustained period of time. This has been represented as a point for 2005, however its important to note that this varies between 2000-2005 across countries. When Malthus raised the concerns about population growth in 17981 he was wrong about his time and the future, but he was indeed right in his diagnosis of the dynamics of his past. Feenstra, Robert C., Robert Inklaar, and Marcel P. Timmer. Share of population living in extreme poverty vs. mean income or consumption per day. Another way to look at it is to start with the richest people in the past shown furthest to the right in the chart. Today the average person on the planet is as rich as the average person in the richest country in 1950. From 0.29 to 492 per week. 1695 divided by 152 is 11.2. World Bank, international-$ at 2017 prices, Penn World Table, international-$ at 2017 prices, Maddison Project Database, international-$ at 2011 prices, Access to a financial account or services, CO emissions per capita vs GDP per capita, Expected years of schooling vs. GDP per capita, GDP per capita from the World Bank vs. GDP per capita from the Maddison Project, GDP per capita: World Bank vs. Penn World Table, Growth rate of real GDP per employed person, Historical Index of Human Development (without GDP metric) vs. GDP per capita, Historical Index of Human Development vs. GDP per capita, Historical Index of Human Development with GDP metric vs. without GDP metric, Human Development Index vs. GDP per capita, Labor force participation rate of men, 65 years and older in the USA, Median income or consumption per day vs. GDP per capita, Medical doctors per 1,000 people vs. GDP per capita, Nominal wages, consumer prices, and real wages in the UK, Output of key industrial sectors in England and the UK, Output of key service and industrial sectors in England and the UK, Price level relative to the US vs GDP per capita, Self-reported life satisfaction vs GDP per capita, Share of adults who smoke vs GDP per capita, Share of children who are stunted vs. GDP per capita, Share of manufacturing in gross domestic product (GDP), From poverty to prosperity: The UK over the long run, The economy before economic growth: The Malthusian trap, The world economy over the last two millennia, Growth at the technological frontier and catch-up growth. Quamrul Ashraf and Oded Galor. Here is the data. This interpretation is incorrect. Research and data to make progress against the world's largest problems Secondly, the GDP deflator covers capital goods, goods that are not bought by consumers. The successors of Maddison in Groningen have then extended his original work by combining them with the many new reconstructions that were published in recent years. India An Indian market during the Diwali festival. In the US, income inequality has been on the rise in the last four decades, with incomes for the bottom 10% growing much slower than incomes for the top 10%. This decoupling of income and population is shown in the chart. Since PPP is a spatial measure, each ICP estimate is indexed to a benchmark year. Available at the Groningen Growth and Development Centre here. Understanding the methodology and purpose of each dataset is important when conducting data analysis. The plague killed almost half(!) In 2018, the average GDP per capita was 15,212 international-$ almost 15-times the average of 1820. Since the data is extrapolated from the 2011 ICP, data is only presented for the years 1990-2014 as any further extrapolation is likely to give unreliable estimates. This implies that the production of one copy of the Bible meant 136 days (4.5 months) of work. Image taken from visualizingeconomics.com. As consumption differs in different countries, these household consumption baskets vary from country-to-country and over time as new technologies emerge which make new goods and services available and because consumption preferences change.18. Each time-series is indexed to the year 1700 so that the focus here is on the change over time as all changes are relative to that year. The ratio between these two observations is 100/0.66 = 152, which tells us that the nominal prices that consumers face have increase 152-fold in these 265 years. The data is very scarce on this pre-2011, but World Bank estimates provide an additional single point for countries. The data in the chart is taken from the seminal book on the history of material living conditions in Britain British Economic Growth 1270-1870 by Broadberry, Campbell, Klein, Overton, and van Leeuwen. But beyond this global average, how did incomes change in countries around the world? The visualization below shows the rising output of the economy by industry. Ashraf and Galor (2011)3 studied the Malthusian economy theoretically and empirically in a paper published in the American Economic Review. COVID-19 drives wages down, new ILO report finds In 1950 the country with the highest average income was the USA with a GDP per capita of $15,241 (and they had just become prosperous a few decades before; before some economies achieved sustained economic growth, income differences between different regions were very small and the vast majority of people were extremely poor). The level of detail that goes into such estimates although this is hard to do in a short overview like this one. . It would be wrong to believe that these GDP series do not account for the value of non-market production, including domestic production for households own use. And on the chart on the right, we see that the higher productivity of the land did impact peoples living standards. In the very long time in which humanity was trapped in the Malthusian economy it was births and deaths that determined incomes. In the absence of data collected at the time, researchers have to bring together what evidence they can from historical sources, but the basic principles are the same. Since the total sum of incomes is the total sum of production this also means that the production of the average person in two weeks today is equivalent to the production of the average person in an entire year in the past. As a consequence of these two adjustments incomes are expressed in international-dollars in 2011 prices, which means that the incomes are comparable to what you would have been able to buy with US-dollars in the USA in 2011. This changed fundamentally when Johannes Gutenberg adopted the technology of the screw-type wine presses of the Rhine Valley where he was from to develop a printing press. An important exception to the services that are included is the housing services consumed by owner-occupiers. Wikipedias list of regions by past GDP (PPP) per capita includes Maddisons estimates for countries and world regions between 1CE and 2003CE. The estimated income is shown as the nearest whole number, but your place in the global distribution is based on a more precise estimate. Switching to the map view shows the large differences between countries. One reason is due to the biases coming from the way GDP is defined. 7. A halving of your income in terms of bread is your income adjusted for the inflation of bread prices. Your spending is my income, and my spending is your income.15, This symmetry allows us to use GDP to approximate average incomes by dividing GDP by the total population. YouTubers can make . The discussion above focused mostly on output per capita; the map below shows the total output by country. Only incomes in relation to prices gives us an idea about how the prosperity of a population changes. Yet in that same year, the 56 year old died of an infection that is curable today by antibiotics, which are available around the world for even the poorest people today.20. The chart below compares the economic growth at the technological frontier with the growth of countries that are further away from the technological frontier. Inequality in the US has been growing substantially in recent decades. Which countries achieved economic growth? From the long-term perspective of social history, we know that economic prosperity and lasting economic growth is a very recent achievement for humanity. And, when it comes to wealth (valuable assets and items over and above income), the gap is even wider. The volume set is described at the publishers website. This dataset has many different sources and is curated by the project team. We also summarized some of our research for VoxEU: Stagnating median incomes despite economic growth: Explaining the divergence in 27 OECD countries And more related research you find on my personal website here. Whilst global inequalities were lower in a world where sustained economic growth had yet to occur anywhere, economic inequality within pre-modern societies was extremely high and the average person was living in conditions that we would call extreme poverty today. This conversion takes into account differences in the price levels of both countries. Nevertheless, another complicating factor is that exchange rates are highly volatile and determined by currency speculation, interest rates and international capital flows. This project is referred to as the Maddison Project Database and this is the main source of long-run reconstructions of economic growth used today. Look at the world average in the middle of the chart. This is particularly hard for people in the monetary middle, defined by Pew Research Center as "those with an annual household income of about $52,000 to $156,000 annually in 2020 dollars for a . In 1820 the global GDP per capita is estimated to have been around 1,102 international-$ per year and this is already after some world regions had achieved some economic growth. The Review of Economics and Statistics, February 2009, 91(1): 201212.Simon Johnson, William Larson, Chris Papageorgiou, Arvind Subramanian (2013) Is Newer Better? WW Norton & Company, 1999. The average global personal income is $9,733 per year. It's easy to miss what this means: Had the world economy not grown, a 3-fold increase of the world . For all the hundreds, and really thousands, of years before 1820, the average GDP per capita was even lower. 2.53 billion in 1950 to 7.43 billion in 2016. Consequently there are several important differences of the two price indices:21. The US dollar is the most common unit of currency used to make international comparisons and, for clarity, PPP-adjusted quantities are quoted in international or Geary-Khamis dollars.24, We can decompose the GDP ratio of two economies into. World Population by Income. Malthus (1789) An Essay on the Principle of Population. The same is true for health globally. Clark (2007) quotes his earlier working paper with Patricia Levin as the source of these estimates. As this chart of total GDP in the England over seven centuries shows, the increase of the total output of the UK economy grew by even larger extent, because not only average incomes increased since the onset of the Industrial Revolution, but the number of people in the country increased as well. Incomes on their own or prices on their own cannot give us an idea about changing prosperity. The smallest budget per capita exists in Afghanistan. Economic growth has allowed us to break out of the conditions of the past when everyone was stuck in poor health, hard and monotonous work, and malnutrition. The hours of work a printer had to put in were now measured as hours rather than months. Therefore increases to GDP are either the result of more output, higher prices or a combination of the two. When making international comparisons we are interested in the ratio of output volume. To calculate the real increase in wages we need to look at the nominal wage increase in relation to the nominal price increase. It is a story that has only two parts: The first part is the very long time in which the average person was very poor and human societies achieved no economic growth to change this.Incomes remained almost unchanged over a period of several centuries when compared to the increase in incomes over the last 2 centuries. Notes from the documentation: The main purpose of the data is to produce graphical presentations that display the magnitude of income disparities in the world over time Hence we discourage the use of this data set for statistical analysis The observations for the period before 1950 are, in the majority of cases, based on rough estimates within a range of likely values. As explained in the sources tab of the visualization I have extended backward from 1990 by relying on the growth rates of global GDP implied in the historical estimates by Angus Maddison. The dataset also includes estimates of GDP per capita for individual countries some of which extend even further back in history, as shown in the second chart. This is GDP per capita.The change from one year to the next is referred to as economic growth.As everyone who had a beer or a haircut ten years ago will remember the price of goods and services usually increases over time, this is called inflation and is most commonly measured with the consumer price index (CPI). The World Bank data in constant 2017 international-dollars is available from 1990 onwards. The idea for inflation adjustment for incomes is therefore to instead rely on a commodity bundle of goods and services that are representative of the consumption of the average household. The challenge is that it is not exactly the same measure as the 2011 and 2014 data, but instead a composite measure of access to a bank account and financial services. This dataset is most commonly used for statistical analysis by economists and covers the years 1950-2019. The chart shows all economies that have achieved growth since 1950 above the diagonal 45 line. Incomes increased by around a third in a period of just a few years. They raised living standards only temporarily and instead raised the size of the population permanently. The average life expectancy in the world today is 71 years, just 1 year less than the life expectancy in the very best-off places in 1950. I have rounded the numbers here to make it easier to remember them. It is not the case anymore that one persons or one countrys gain is automatically another ones loss. The basic metric is the regional equivalent of gross domestic product. Gregory Clark and Patricia Levin (2001) How Different Was the Industrial Revolution? On average, an individual from the top 10% will earn $122,100, but an individual from the bottom half will earn just $3,920. From 1870 to 2018 GDP per person in the U.S. economy has grown on average at 1.67 percent per year with only very short deviations from this very steady trend. Mean vs. median daily income World Bank; Median income or consumption per day vs. GDP per capita; . Online here. Read our research on: LGBTQ Attitudes & Experiences| Artificial Intelligence | Affirmative Action, 1615 L St. NW, Suite 800Washington, DC 20036USA The use of composite measures is, of course, not ideal. And below is one of the many tables from this book, showing the authors estimates of output of just one part of the agricultural sector of England. Creators who are a part of YouTube's Partner Program can make money from their videos with ads. Output of key service and industrial . A new 2020 update. It also includes Bairochs estimates for Europe between 18301938. Catch-up growth can be much faster than growth at the technological frontier. Nominal GDP is a measure of the value of output produced in a country or region over a specified period (usually one year). The economy was a brutal zero-sum game and the death of your neighbor was to the benefit of those that did survive. These statistics comply to protocols laid down in the 1993 version of the Systems of National Accounts, SNA93. This failure to grow the economy and to provide the goods and services that they need is one of the largest failures in recent decades. It is because a person has more choices as their prosperity grows that economists care so much about growth. The UK is particularly interesting as it was the first economy that achieved sustained economic growth and thereby previously unimaginable prosperity for the majority of the population. Average incomes (as measured by GDP per capita) in England between the year 1270 and 1650 were 1,051 when measured in todays prices. As such it gives us a perspective on the history of material living conditions of the English population over the last 746 years. Not technological progress, but the size of the population determined the standards of living. By relying on a representative commodity bundle instead of bread alone allows you to adjust incomes not only for bread, but for the cost-of-living more broadly. This tells us that average real wages are 11.2-times higher today than for the average wage earner back in 1750. If you go back to the chart of GDP per capita in England you see that early in the 14th century there was a substantial spike in the level of income. When interpreting these reconstructions it is important to bear in mind the fundamental identity in this historical accounting: Within the methodological framework provided by national income accounting, the estimation of GDP can be approached in three different ways, via income, expenditure and output, all of which ought to yield broadly similar results.27 For the important case of the subsistence farmer for example, the value of the food they produce represents both the economic output of the activity and the income received by the farmer. This is one of hundreds of datasets that are required to construct the time series in the chart above. Average yearly income (USD): $440 Cost of living index: NA 24. Cambridge: Cambridge University Press. This is a common misunderstanding that is often at the heart of misinformed critiques of historical research. Different data sets on growth in the last decades, International GDP Comparisons: market vs. PPP exchange rates, Historical reconstructions of national accounts the case of the UK, Productivity increases make economic growth possible, this chart of total GDP in the England over seven centuries, purchasing power parity conversion factors, detailed explanation of the methodology and findings of the 2011 ICP, http://data.worldbank.org/indicator/PA.NUS.PRVT.PP, https://www.rug.nl/ggdc/productivity/pwt/pwt-documentation, methodology used can be found in the documentation, http://www.ggdc.net/maddison/maddison-project/home.htm, list of regions by past GDP (PPP) per capita, https://www.aeaweb.org/articles?id=10.1257/jep.29.4.227. 2011. Median income or consumption per day vs. GDP per capita. GDP Gross Domestic Product measures the total production of an economy as the monetary value of all goods and services produced during a specific period, mostly one year. Journal of Monetary Economics. In our comparison over 69 countries, the USA comes 8th with an average income of 64,550 USD. The time when this change happened in various countries can be seen in these two charts. I wrote about it here. The precise nature of PPP adjustments is explained in the section below. This made it possible that when people in one place became richer, other people in other places could become richer at the same time. The SNA93 established the production boundary, a crucial definition of what is and is not included in GDP figures: In principle there are three equivalent ways to calculate GDP: It theory these three measures should be equal; they constitute an accounting identity. It is only after 1650 that the English economy breaks out of the Malthusian Trap and that incomes are not determined by the size of the population anymore. This figure is taken from Roger Fouquet and Stephen Broadberry Seven Centuries of European Economic Growth and Decline. The following chart plots the share that answered very important against the average prosperity of the population for each country in the survey. In broad terms, the strategy is to extend back to earlier periods the system of national income accounting that countries use today to estimate the total output of the economy. 227-44). Our World in Data is free and accessible for everyone. What Malthus did not foresee was that the increasing output of the economy will decouple from the change of the population so that the output available for all will increase over a long period. Landes, David S. The wealth and poverty of nations: Why some are so rich and some so poor. As explained below, it is not only capturing the production of workers paid in the labor market, but also the production of subsistence farmers and other producers which were not paid a monetary salary. The chart below shows the reconstructed GDP per capita in England and the UK over the last 7 centuries. You can add further countries by selecting In The Quarterly Journal of Economics (2013) 128 (1): 105-164 doi:10.1093/qje/qjs050. A companys revenue is the income it generates from selling the goods and services it produces to consumers; yet that same revenue is also the expenditure of consumers on those goods and services. The study covers 199 countries and is the most extensive study of PPPs ever conducted. Gregory Clark14 estimates that the scribes who were doing this work back then were able to copy 3,000 words of plain text per day. Windmills, irrigation technology, and also non-technical novelties especially the new crops from the New World. Numbers, Facts and Trends Shaping Your World. Notes from the documentation: The Maddison Project database places the emphasis more on the international comparability of the estimates than on their consistency over time.. Our World In Data is a project of the Global Change Data Lab, a registered charity in England and Wales (Charity Number 1186433). Our articles and data visualizations rely on work from many different people and organizations. To some extent the opposite problem also exists and some goods that were available in the past like slaves are not available today. See the Appendix of the original publication for a longer explanation. The many sources are very well documented at the website of the CLIO project. A survey asked the question How important is religion in your life? and the possible answers were very important, somewhat important, not too important and not at all important. What is new about modern times is that the growth of incomes lasted for a very long time until today and that this growth did not only increase the incomes in one economy, but instead spread to other economies as well. By 2016 GDP per capita in Taiwan had increased to $42,300. But how is this actually done? More precisely, it is the monetary value of all final goods and services produced within a country or region in a specific time period. Comparisons over time and across borders are complicated by price, quality and currency differences, as explained below. After tax | Chartbook of Economic Inequality, Annual growth of the income or consumption of the poorest 40%, Annual growth of the income or consumption of the poorest 40% vs. the total population, Distribution of income across richer and poorer groups, Distribution of income across richer and poorer groups (after tax), Distribution of income across richer and poorer groups (before tax), Gini coefficient: World Inequality Database vs. World Bank, Income inequality: Gini coefficient (after tax), Income inequality: Gini coefficient (before tax), Income inequality: Gini coefficient before and after tax, Income inequality: Gini coefficient in Latin America (after tax), Income inequality: Palma ratio (after tax), Income inequality: Palma ratio (before tax), Income or consumption of the poorest 10% vs. GDP per capita, Income or consumption of the poorest and richest 10%, Income or consumption share of the richest 10%, Income share of the richest 1% (before tax), Income share of the richest 1% before and after tax, Income share of the richest 1% vs. Gini coefficient, Income share of the richest 10% (after tax), Income share of the richest 10% (before tax), Income share of the richest 10% before and after tax, Income share of the richest 10% vs. Gini coefficient, Mean income or consumption per day vs. GDP per capita, Median income or consumption per day vs. GDP per capita, Reduction in income inequality before and after tax, Threshold income for each decile (after tax), Threshold income for each decile (before tax).