Visualizing the global income distribution

Arun Jayadev at the OUP Blog:

The evolution of the distribution of income among individuals within countries and across the world has been the subject of considerable academic and popular commentary in the recent past. Works such as Thomas Piketty’s Capital in the 21st Century or Joseph Stiglitz’s The Price of Inequality have become unlikely bestsellers, garnering a startling degree of both academic and popular interest.

The last few decades have seen a sharp increase in global integration with its attendant benefits and anxieties. Concerns about the distributional effects of cross-border flows of trade and finance have grown and are central issues in political debates worldwide. At the same time, massive global inequities, dysfunctional polities, and the most egregious outcrops of these-civil breakdowns and mass migration have become the staple of mass media.

Also in the last couple of decades, for the first time in human history, we have the raw materials to measure the living standards of individuals across the world in comparable terms. The careful collection of survey information from almost every country in the world, led by national statistical offices and multilateral organizations, and the simultaneous collation and harmonization of price data by the International Comparison Project has made it possible, in principle, to truly understand and compare the fortunes of individuals in any country or region in the world with others from elsewhere.

Figure 1 (using data drawn from the Global Consumption and Income Project) provides a simple snapshot of the distribution of income. The height of the ‘skyscrapers’ represent average incomes in purchasing power (PPP) terms in 2005 for each population decile for over 150 countries in the year 2014. That is the height of each building represents the average income in 2014 in dollars for 10% of the population of a country, correcting for the fact that prices differ across countries. The height of each bar in the chart varies along two axes: the first, the horizontal axis is a ranking of countries from the poorest (the Democratic Republic of Congo) on the left of the figure to the richest (Luxembourg) on the right; the second, from the front to the back of the figure, shows the distribution of income from poorest to richest within each country. Note that the skyscrapers for some countries such as India and China are wider. This indicates their relatively large size of population.

Figure 1: average income of each decile of the population, $2005 PPP terms in 2014. Image by CORE, used with permission

As is evident, most of the ‘mass’ of income is on the right-hand side and at the back, indicating that most of world income is held by the rich in the rich countries. A relatively rich US individual sitting on his income skyscraper looks down on a world that is very far below him in terms of living standards.

More here.