The Poor May Not Be Getting Richer

But they are living longer, eating better, and learning to read

Wealthier is healthier—and more educated, more equal for women, more electrified, automotive, and computer-literate.

So the conventional wisdom in development economics has long been that to boost the prospects of the world's poor, one needs to boost their incomes. This is still true, but as World Bank economist Charles Kenny points out in a provocative article titled "Why Are We Worried About Income? Nearly Everything that Matters is Converging," income growth does not tell the full story.

Even though some of the world's poorest people are not earning much more than they were two generations ago, they're still living much better than they were. In fact, many quality of life indicators are converging toward levels found in the richer countries.

To illustrate this point, Kenny compares what has happened to life expectancy in Britain and India. The average age span in both countries was 24 years in the 14th century, but Britain then began a gradual rise, and by 1931 its life expectancy was 60.8 years, compared to just 26.8 for its colony. Since then, though, the numbers have begun to converge—by 1999, Indians lived on average to 63, while Brits nudged upward to 77.

One of the main reasons for the gap-closing is the fall of infant mortality. In 1900 Britain, the infant survival rate was 846 per 1,000 births, compared to 655 in India. Today, 992 British infants out of every 1,000 survive, compared to 920 Indians.

Kenny notes that increasing life expectancy correlates with greater caloric intake. "Worldwide, the proportion of the world's population living in countries where per capita food supplies are under 2,200 [calories per day] was 56 percent in the mid-1960s, compared to below 10 percent by the 1990s," Kenny notes. And although he doesn't mention it, one reason is that buying food is a whole lot cheaper than it used to be—the real prices for corn, wheat, and rice have decreased by more than 70 percent since 1900.

Other social indicators, such as literacy rates, are also converging. In 1913, only 9 percent of Indians could read, compared to 96 percent of Britons. Today, 57 percent of Indians and 100 percent of people in the UK are literate. According to Kenny, between 1950 and 1999, global literacy increased from 52 percent to 81 percent of the world. And women have made up much of the gap: Female literacy as a percentage of male literacy has increased from 59 percent in 1970 to 80 percent in 2000.

Kenny also observes that what he calls "non-necessary consumption" has been increasing for the world poorest, too. For example, while the bottom 20 percent and the top 20 percent of the world's population both increased their beer drinking between 1950 and 1990, the bottom quintile's consumption grew five times as fast.

Incomes in the world's poorest countries have been rising slightly over the past 50 years, so perhaps these large improvements demonstrate that small changes in earning power at the lower income levels have dramatic effects? Surely that's been part of the story, but Kenny points out that incomes have been falling since 1950 in several basket-case countries like Cuba, Angola, Nicaragua, Mozambique, and Bolivia, yet life expectancy, literacy rates and the percentage of kids in primary school have still gone up.

So why is the quality of life for the world's poorest people improving, and in fact converging toward levels found in the richer countries? Because improvements become cheaper over time. Kenny notes: "Broadly, the results suggest that it takes one-tenth the income to achieve the same life expectancy in 1999 as it took in 1870.

Consider the virtuous circle of agricultural improvements, such as the way discovering how to properly use inorganic fertilizers boosted agricultural production, which increased the calories available to families, which in turn meant they didn't need their kids to work the fields full time, thus permitting them to go to school to become literate, which enabled them to more effectively adopt even better farming techniques, and so forth. Literacy makes educating people about the germ theory of disease a lot easier. Once-expensive medicines like penicillin eventually cost only pennies per pill. Although building infrastructure remains relatively expensive, technology can leapfrog entire costly steps, as has been demonstrated by the lightning-fast growth of cellular-telephone adoption from zero to 1.5 billion people.

The world's poor have clearly benefited enormously from spillover knowledge and technologies devised in the rich capitalist countries. But they would be a whole lot better off if their incomes increased, too. For that to happen, institutions like private property and the rule of law must be adopted. Poor countries remain poor largely because the incompetent despots who rule over them keep them that way. Poverty was once humanity's natural state, but today it is almost always man-made.