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Where Do Poor Americans Rank Globally?

How does the poverty line in the United States compare in a global context?

February 2, 2013

How does the poverty line in the United States compare in a global context?

According to recent Census Bureau numbers, some 15% of Americans live below the poverty line, the highest percentage in 18 years. But how does the U.S. poverty line compare in a global context?

We wonder: Those Americans whose income is just low enough to be classified as poor, according to U.S. standards, are still better-off than…

[toggle title_open=”A. About 22% is not correct.” title_closed=”A. About 22% of the world population”]

Those among the poorest 22% of the world’s population are incredibly poor by U.S. standards. They are the 1.3 billion people who, according to new World Bank data, have incomes below what the Bank designates as the absolute poverty line: $1.25 per day — or roughly $450 per year.

Although U.S. poverty thresholds are differentiated by gender, age, place of residence and other criteria, the average poverty line for a "typical" household of four is $22,400 annually. This works out as a little over $15 per day per person — or twelve times higher than the World Bank’s absolute poverty line.[/toggle]

[toggle title_open=”B. About half is not correct.” title_closed=”B. About half of the world population”]

People exactly in the middle of the global income distribution have incomes of less than $1,500 a year per person (adjusted for purchasing power), or just a bit over $4 per day. This is close to the average level of income in countries like Cambodia and the Philippines. [/toggle]

[toggle title_open=”C. About 65% is not correct.” title_closed=”C. About 65% of the world population”]

People who are around 65th percentile by income make about $2,800 a year per person (also adjusted for purchasing power). This is the average income level of people in Thailand. There are indeed some among the very poor in the United States whose incomes are around that level. They are considered "extra poor" by U.S. standards and fall well below the U.S. poverty line.[/toggle]

[toggle title_open=”D. About 80% is correct.” title_closed=”D. About 80% of the world population”]

The income of those who are just sufficiently "bad off" to be considered poor in the United States is about $5,600 a year per person (or $22,400 for a four-person household). This is slightly less than the average income in Poland, and it makes these Americans better-off than about 80% of the world population, according to economist Branko Milanovic, author of a recent book on global income distribution, The Haves and the Have-Nots.

The poorest Americans benefit from a social safety net that the vast majority of the world’s poor must do without. On the other hand, there are in-kind goods and services that are consumed by the people in poor countries that may not always be fully reflected in the household surveys from which income data is derived. The two biases might balance themselves out.[/toggle]

Editor’s note: To listen to The Globalist’s Stephan Richter discuss this quiz with Mark Garrison of the Marketplace Morning Report, click here to open a pop-up media player.