Paul Wolfowitz Changes His Story...
links for 2007-05-07

"Rich" and "Poor" Across the World

Dani Rodrik writes:

Dani Rodrik's weblog: And the winner is ...: The  correct answer is that a poor person in a rich country is three times better off than a rich person in a poor country (given my definition of what "rich" and "poor" mean in this context). It is not even close.

The relevant numbers are [rich individual in poor country = $3,039; poor individual in rich country = $9,387]

He goes on:

The reason we are tempted to answer "rich in a poor country" is the obvious wealth at the very top of the income distribution. But by the time you average the entire top 10%, the income level goes down quite a bit...

The thought experiment Dani does is to compare the income of the 10th percentile person in the 90th percentile country with the income of the 90th percentile person in the 10th percentile country.

I suspect that people get this wrong because when they think of "rich" they think not of Dani's 10th percentile but of the 0.1st percentile. The 10th percentile person in the world's richest country has a GDP-per-capita-concept income of roughly $12,000 a year. The 0.1st percentile person in the 10th percentile country has a GDP-per-capita-concept income of something like $60,000 a year.

The 90th percentile person we call "upper middle class"; not "rich."

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