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The income of the world’s poor is going up, but they’re $1 trillion poorer. What’s going on?

Duncan Green's picture

Oxfam number cruncher Deborah Hardoon tries to get her head round something weird – according to the stats, the poorest half of the world is getting poorer even though the incomes of these people are rising.

It has become something of a tradition that in January every year we take a look at the Forbes list of billionaires and the Credit Suisse Global Wealth databook and calculate how many billionaires it takes to have the same amount of wealth as the bottom 50% of the planet. Since we started doing these calculations, we have watched the wealth of the top grow at the same time as the wealth of the bottom 50% has fallen. The data tells us that the bottom 50% have approximately $1 trillion (that’s $1,000 billion) less wealth than they did 5 years ago, whilst the richest 62 have about $0.5 trillion more.

The extremely wealthy are able to accumulate more wealth in a day than a whole factory full of workers could earn in a year. On 21stApril, in a 24 hour period, Carlos Slim made more than $400 million. Thomas Piketty famously points out that the rate of return on capital is higher than the general growth rate, such that capital owners are at a distinct economic advantage.

Meanwhile those 3.6 billion people in the bottom 50% include people in debt, people with nothing and people with a net wealth of up to about $5,000. People with little, no, or negative wealth, especially in developing countries with poor social insurance mechanisms (four out of five people in the bottom 50% live in Africa or Asia – including China and India), will not only find it hard to respond to financial shocks – like a poor harvest or a medical bill, but will also find it much harder to invest in their families’ future. Having little wealth may be concerning, but having less and less wealth year to year is even more worrying.

The things we do: The connection between sleep and poverty

Roxanne Bauer's picture

It’s well-established that a lack of sleep can impair cognitive function and lead to adverse physical outcomes. But is it possible that a lack of sleep can also explain social issues, like poverty? 

YA woman naps on a hand cart, used for hauling goods around the crowded streets of Mumbaiou’ve probably heard the saying, “Work, play, sleep: pick two.” 
 
Unfortunately, as human beings, we cannot do everything.  Turns out, in this constant negotiation, many more people should be picking sleep over work or play. 

Researchers have demonstrated that, for most people, sleeping less than six hours a night results in cognitive impairment and a host of other health problems, including increased risk for Type II diabetes and cardiovascular disease. These diseases are also more common among the poor, which leads to some obvious questions: Does poor sleep lead to health problems and lower earnings?  Or is it the other way around- that poor health and lower earnings result in poor sleep?  Can a lack of sleep explain the income gap?

Freakonomics recently published a two-part podcast on the topic of sleep and how it may affect not just health outcomes, but also the financial outcomes for people.  It begins by discussing the puzzle over whether poverty leads to poor sleep (environmental factors, the stress of poverty, or the need to work more than one job may interfere with regular sleep) or whether poor sleep leads to poverty (the impaired cognition that results from insufficient sleep keeps us from earning our full potential).