Economists at MIT and Columbia have studied global poverty rates since 1970, and have come up with some important findings.
1. Globally, the poverty rate has declined dramatically. The 1970s and 1980s witnessed especially sharp declines in poverty rates.
2. The distribution of income has shifted upward, but also toward equality among various regions of the world. Here’s the graph for 1970:
Here’s the same information for 2006. Notice how the peaks have moved into alignment:
3. Global inequality is declining. The rich may be getting richer, but the poor are also getting richer, and at a much faster rate.
4. Consequentialists, rejoice! “Finally, for many theoretical concepts of welfare (e.g. Atkinson’s expected utility for the society, or Sen’s real national income) it is possible to find an inequality index described above such that the welfare concept can be represented as GDP multiplied by one minus the inequality index. Since we can compute these inequality indices, we can show that because world inequality fell, welfare measured for the world as a whole grew even faster than world GDP did, and more than doubled over the period 1970-2006.” (My emphasis. HT: Brian Hollar)