READ: Data Exploration – Global Inequality

Life is getting better for a lot of people, but extreme inequality remains a feature of our world in the twenty-first century. Is income inequality getting better or worse?

The data exploration article below uses “Three Close Reads”. If you want to learn more about this strategy, click here.

First read: preview – what do we have?

This will be your quickest read. It should help you get the general idea of what this chart is about and the information it contains. Pay attention to:

Labels and titles. What is the title? How are the axes labeled? Is anything else on the chart labeled?
Data representation. How many variables are there and what are they? What are the scales? What time period does the chart cover? Is the chart interactive?
Data source. Where did the data for this chart come from? Do you trust it? Who created the chart?

Second read: key ideas – what do we know?

In this read, you will pay attention to the information that most helps you understand the chart and the information it is trying to convey. Pay attention to:

Claim(s). What can you say about the data? What story does it tell? Can you make any claims about this data? Does it change when you zoom in compared to when you look at the data as a whole?
Evidence. What data from the chart supports this story? Does this change if you change the scale or variables?
Presentation. How does the way this chart is presented influence how you read it? Has the author selected certain variables or scales that change the conclusions that can be drawn? Is there anything missing from this chart?

By the end of the second read, you should be able to answer the following questions:

How does Chart 1 provide evidence for the argument that inequality is decreasing?
According to Chart 1, which region of the globe has seen the least improvement in income? Which has seen the most improvement?
What are some historical explanations for the shift from a two-hump (1975) to a one-hump (2015) world?
What argument is Chart 2 making? How did the creator of the chart want you to feel about inequality?
Chart 2 and 3 show the exact same data, but Chart 3 is represented differently. The effect is a drastic difference between the two charts. Why do they look so different, and how did the creator of Chart 3 want you to feel about inequality?
Charts 2 and 3 provide an example of how a chart can be skewed to change the way you understand it. Does Chart 1 do something similar? If so, what? What is the effect?

Third read: making connections – what does this tell us?

The third reading is really about why the chart is important and what it can tell us about the past and help us think about the future. Pay attention to:

Significance. Why does this matter? Does this impact me, and if so, how? How does it connect what is going on in the world right now? How does it relate to what was happening at the time it was created?
Back to the future. How does this data compare to today? Based on what you now know, what are your thoughts on this phenomenon 25 years, 50 years, and 100 years from now?

At the end of the third read, you should be able to respond to these questions:

All three of these charts use the international poverty line of $1.90/day (just under $700/year) as their measurement of people living in extreme poverty. Do you think this is an appropriate measurement for poverty? Does it help us understand inequality? Why or why not?
Using these charts, make one prediction about how income inequality will change in your lifetime. What evidence from the charts supports your prediction? What evidence challenges it?

Now that you know what to look for, it’s time to read! Remember to return to these questions once you’ve finished reading.

Global Inequality in Income Data Introduction

By Max Roser, adapted by Mike Papritz and Trevor R. Getz

Life is getting better for a lot of people, but extreme inequality remains a feature of our world in the twenty-first century. Is income inequality getting better or worse?

Introduction

Life is getting better for a lot of people. Innovations in technology, education, and agriculture have pulled billions of people from poverty. But inequality between and within countries is still staggering in many places. People live in vastly unequal conditions in different parts our world today.

Our individual stories play out amid these major global changes and inequalities. It is these circumstances that largely determine how healthy, wealthy, and educated each of us will be. Yes, our own hard work and life choices matter. But—as we will see in the data—these matter much less than the one big thing over which we have no control: where and when we are born. This single, utterly random factor largely determines the conditions in which we live our lives.

Historical roots of global inequality

Today’s global inequality is the consequence of two centuries of unequal progress. Some places have seen dramatic improvements, while others have improved much more slowly. Today, it is up to us to even the odds and give everyone—no matter where they are born—the chance of a good life. This is not only right, but, as we will see below, realistic. Our hope for giving the next generations the chance to live a good life lies in broad development that makes possible for everyone what is only attainable for a few today.

It strikes many people as inherently unfair that some people are able to enjoy healthy, wealthy, happy lives while others continue to live in ill health, poverty, and sorrow. For them, it is the inequality in the outcomes of people’s lives that matters. For others, it is the inequality in opportunity—the opportunity to achieve good outcomes—that is unfair. But the point of this article is to say that these two aspects of inequality are not separable. Tony Atkinson, a British economist, said it very clearly: “Inequality of outcome among today’s generation is the source of the unfair advantage received by the next generation. If we are concerned about equality of opportunity tomorrow, we need to be concerned about inequality of outcome today.”

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In other words, if you are born to rich parents, you will have more opportunities to become rich yourself.

Measuring inequality

One of the tools economists use to understand inequality between countries and regions is to measure and compare income levels—how much money the average person makes in a year. To make this fair, we can’t simply compare incomes in local currencies, because what you can buy for a given amount of money varies a lot across the world. This is also true if we want to compare incomes over time. What you can buy for one dollar today is not the same as what you could buy with one dollar in 1950. So, to compare income levels economists often use the unit of constant 2011 international dollars (int-$)—this is equal to what $1 would have bought in the United States in 2011. This unit adjusts for differences in prices across countries, and for changes in what you can buy with a given amount of money over time.

Chart 1 shows how the distribution of incomes across the world have changed over time: it shows the world in 1800, 1975, and in 2015. On the x-axis, we see daily incomes per person, with the richest people on the far right, and the poorest on the far left. The height of the graph at any point shows the number of people in the world living on that level of income. So, the tallest regions of the chart represent the income levels of the most people in the world.

What we see is that in the year 1800, almost everyone in the world was poor. Nearly everyone was below what we call the “international poverty line”—this means living on less than $1.90 per day. By 1975, the world had become very unequal: A large number of people had gotten much richer (they moved to the right on the chart), but many were still very poor. It was a very divided world of the rich and poor. Forty years later, in 2015, this gap had closed dramatically: Many more people had seen a rise in income and shifted to the right. Rather than a world of rich and poor, today most people in the world live on incomes in the middle of the distribution.

As you view the chart, pay attention to the different colors, which indicate different regions. Consider how income levels have changed in different parts of the world. Think about everything you have learned about the histories of these regions so far in this class. In particular, for this unit, consider whether the trends you see below could in any way be connected to histories of empire and colonialism.

What does all of this mean for the world today? Looking at Chart 2, you may see that at least some data suggests that global inequality is falling. The two lines—red and blue—follow the annual disposable incomes of the world’s population in 2003 (red) and 2013 (blue). As they move across the x-axis, these lines are cumulative—they move toward 100 percent of the population. The y-axis measures income. So, a line that is further up the y-axis as it moves across the x-axis would suggest more people have a higher income available to spend. The 2013 line moves higher up the y-axis than the 2003 line pretty quickly, suggesting that more of the world’s population in 2013 have higher incomes than they did 10 years earlier.

Chart 2 is one way of presenting data on global income distribution. But take a look at Chart 3. It’s a chart made by the same person using the same data. But this chart looks very different. While Chart 2 is presented on a logarithmic scale (a way of compressing a chart to make it more readable), Chart 3 is made using a linear scale (pay attention to the dollar values on the y-axis). The perspective of Chart 3 shows even more clearly that there is still a very high level of inequality in the world. Though inequality does seem to be falling, when we take history as a guide for what is possible in the future, we have to conclude that global inequality will remain high for a long time. As shown in both Chart 2 and Chart 3, the poorest 10 percent of the population (below 480 int-$ income per year) and the richest 10 percent (at least 14,500 int-$ per year) are separated by an enormous gulf in income.

What do these trends tell us? What will happen in the future? You will have the opportunity to investigate these questions in this data exploration.

Author bio

Max is the founder and director of Our World in Data. He began the project in 2011 and for several years was the sole author, until receiving funding for the formation of a team. Max’s research focuses on poverty, global health, and the distribution of incomes. He is also Programme Director of the Oxford Martin Programme on Global Development at the University of Oxford, and Co-executive Director of Global Change Data Lab, the non-profit organization that publishes and maintains the website and the data tools that make OWID’s work possible.

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