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In a recent Vox article, the author claims (without citation):

In 1820, some 94 percent of humans lived on less than $2 a day. Over the next two centuries, extreme poverty fell dramatically; in 2018, the World Bank estimated that 8.6 percent of people lived on less than $1.90 a day

However, I am afraid he did not adjust for inflation as this seems a frighteningly common problem with news media. Adjusting for inflation, $2 would represent ~$50 in modern purchasing power (About 7% of humans lived on > $50/day in 2011 according to Pew).

I cannot find world-wide wage information for 1820 to check this $2 figure however.

Laurel
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johnDanger
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    Another thing it likely doesn't consider is the cost of living and in some places $2($50) a day is easy to live on while it is impossible in other areas. – Joe W Jun 08 '22 at 00:21
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    @JoeW but the source of the 94% says they used 1985 Purchasing Power Parity (PPP) dollars, as I say in my answer. – DavePhD Jun 08 '22 at 01:53
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    @DavePhD Maybe there is a miscommunication but what I was saying is the amount you earn may or may not be below the poverty line in some parts of the world but enable a comfortable life in other parts. – Joe W Jun 08 '22 at 02:01
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    The amount of dollars is a bit misleading. In South Arica, during the lockdown, after I lost my job I was living on 5.5K ZAR pm which is barely 350 dollars a month. I ate every day and had a roof over my head. I lived frugally over that period but I was far from poverty-stricken. – Neil Meyer Jun 08 '22 at 08:13
  • depending on what your housing situation is and how many dependents you have you could absolutely live for 50$ per day. People would be amazed at how little money you need to survive if you are willing to adapt your lifestyle. In South Africa, there were people during lockdown that lived for 5$ a day. – Neil Meyer Jun 08 '22 at 08:21
  • You need to do your inflation adjustment from the other direction. Start with the standard of living 2$ per day will get you today. How many dollars per day did you need in 1820 to get that and what proportion of the world population in 1820 achieved a comparable standard of living? – quarague Jun 08 '22 at 08:50
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    $2/day would have been a large amount in 1820 in the terms used then, more than [the pay of most senior officers of a ship](http://memory.loc.gov/cgi-bin/ampage?collId=llsp&fileName=023/llsp023.db&recNum=836) (which they would then need to divide between the members of their family). The quotation is about $2 worth of income per person in more modern terms – Henry Jun 08 '22 at 12:09
  • This is about absolute/extreme poverty and, probably, the World Bank's quantitative definition of it. See https://en.wikipedia.org/wiki/Extreme_poverty#Consumption-based_definition and https://en.wikipedia.org/wiki/Poverty_threshold#Absolute_poverty_and_the_International_Poverty_Line – adamaero Jun 08 '22 at 13:32
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    Also take into account that many people lived on self-sufficient farms, with effectively no income or expenditure. – Ray Butterworth Jun 08 '22 at 13:32
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    @Henry The one answer to this question and the comments that follow indicate that the studies **do** account for inflation. $2 per day in whatever semi-recent year that was used as a baseline would be equivalent to perhaps less than a dime per day in 1820, and certainly less a quarter per day in 1820. The premise of this question is flawed. – David Hammen Jun 09 '22 at 04:18
  • @DavidHammen I agree. The $2/day poverty measure is in (fairly) recent monetary terms and I was trying to say that it was clearly not in 1820 dollars. Incidentally it seems in nominal terms some US Naval salaries are now just over $100$ times what they were in 1820 (a lieutenant get over $4000/month rather than $40, though that will include some real-terms growth as well as inflation. – Henry Jun 09 '22 at 08:06
  • Does this take into account the large numbers of people living on $0/day due to slavery being still acceptable in many parts of the world at this time? – Darrel Hoffman Jun 09 '22 at 13:28
  • @RayButterworth: *Also take into account that many people lived on self-sufficient farms, with effectively no income or expenditure.*-- this is a common misconception by laypersons/non-economists. The $2/day figure includes all consumption, paid or unpaid. –  Apr 01 '23 at 04:34
  • @user24096 says "*The $2/day figure includes all consumption, paid or unpaid.*". Then how is it evaluated? The cost of food is quite different depending upon where one lives. Where I live, a pepper costs $1 or more, but in the summer I can easily grow many of them in planters. Does that make me richer than someone that grows their own peppers in a country where they can be bought for 10¢ each? It seems like the $2 is an absolute world-wide value, while the actual produce is priced locally. If so, that presents a very skewed view of the situation. – Ray Butterworth Apr 01 '23 at 13:34
  • @user24096, wouldn't it be better, rather than using absolute dollars, to price things in terms of the local price of the common carbohydrate? (e.g. rice, potatoes, wheat flour) – Ray Butterworth Apr 01 '23 at 13:35

1 Answers1

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According to World Income Inequality 1820-2000 by Joerg Baten, Peter Foldvari, Bas van Leeuwen and Jan Luiten van Zanden, Table 5, in 1820 73% of people had real incomes of less than 2 1990 dollars per day.

The 94% figure comes from Inequality among World Citizens: 1820-1992 by François Bourguignon and Christian Morrisson The American Economic Review, Vol. 92, No. 4. (Sep., 2002), pp. 727-744. This article says 94.4% of people were in "poverty" defined as "consumption per capita of $2 ... a day, expressed in 1985 PPP".

So some compensation for inflation was taken into account, but two 1985 dollars was about $4.18 in 2011. The World Bank offers a tool that tells you how many people were below an arbitrary income threshold in 2018, (in 2011 PPP dollars) and for $4.18 it gives 2.52 billion out of 7.6 billion, or 33%.

DavePhD
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    So these argue against the part of the OP: "I am afraid he did not adjust for inflation" – GEdgar Jun 08 '22 at 00:35
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    @GEdgar there was adjustment for inflation, but $2 in 1985 is equivalent to $4.67 in 2018, not $1.90. – DavePhD Jun 08 '22 at 01:43
  • Here in India $2 is currently 155 Rupees. I can easily buy plenty of food with that money (5 kilograms of rice can feed me for at least a week). And that is for people living above the poverty line. But food is not the only cost even a tribal citizen will have. So the Government of India supplies 1 kilogram of rice for 2 rupees (3 cents USD) for everyone below the poverty line. – Akshay K Nair Jun 08 '22 at 07:39
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    So the answer to OPs headline question is essentially 'yes'. – quarague Jun 08 '22 at 08:53
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    "94.4% of people were in "poverty" defined as "consumption per capita of $2 ... a day, expressed in 1985 PPP " - but in the claim we are comparing our values with 2018 data. According to [a random inflation calculator](https://www.officialdata.org/us/inflation/1985?endYear=2018&amount=1), 2$ in 1985 money would be 4.6$ in 2018. – Danila Smirnov Jun 08 '22 at 11:01
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    @quarague Is the 37% the last paragraph mentions close enough to 8.6% to say yes? I don't think most people would agree those are the same... – mbrig Jun 08 '22 at 15:25
  • It seems the World Bank tool is in 2011 PPP, not 2018, hence the 8,6% number. In Bourguignon’s paper, poverty is defined as below $2 a day in 1985 PPP, so the definition of poverty is not actually the same. – Didier L Jun 08 '22 at 15:31
  • I think this answer is great +1, but could do with a definitive yes/no statement about the question. As @mbrig says I think the answer is no. – User65535 Jun 11 '22 at 16:33
  • @DidierL makes a good point, and using the same calculator DavePhD used, the threshold should be around 2.519bn, so around 33% (not 37% as in the answer). Still, it's significantly more than the 8.6% quoted in the question. – jaskij Jun 13 '22 at 18:57
  • @1muflon1 ok, I changed to what you and others are saying about 2011 PPP dollars – DavePhD Jun 25 '22 at 21:11
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    @DavePhD thanks for correcting it +1 – 1muflon1 Jun 25 '22 at 21:14
  • I wonder what the number would be if you excluded socialist countries... – CuriousIndeed Jun 26 '22 at 00:47
  • I figured my previous comment was not entirely clear: the World Bank tool gives 652.44M people living under $1,9 a day (default value) in 2011 PPP in 2018. This seem to quite closely match the 8.6% of the question (2018 population was 7,602M according to [World Bank](https://databank.worldbank.org/source/world-development-indicators), which gives 8.582%). – Didier L Jun 27 '22 at 17:21
  • @DidierL yes, the OP Vox article links to this https://data.worldbank.org/topic/poverty which specifically says that the $1.90 is 2011 PPP dollars. – DavePhD Jun 27 '22 at 17:26