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Extreme Poverty Has Dropped in Half Since 1990

Stashed in: Winner take all., America!, Poverty, Freakonomics

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So why aren’t we celebrating the good news?

Well, for starters, it depends on who is included as “we.” For Americans, huge achievements in poverty reduction seem at odds with trends in the United States. In a sense, this is a misperception. Columbia University researchers found that poverty has decreased from 26% to 16% since 1967, when the policies of Lyndon Johnson’s “war on poverty” began to take affect. 

On the other hand, that reduction relied solely on the introduction of a safety net. Official metrics, which do not account for benefits like nutritional assistance, find that the incidence of poverty in the U.S. has not budged since 1967. In addition, the average wage of the American worker has stagnated, and the share of income earned by the top one percent of earners doubled over the same time frame. This has almost nothing to do with extremepoverty, but to an American audience, a context in which the rich seem to be getting richer and the poor poorer is at odds with this optimistic global narrative. One paradox of recent economic trends is that inequality has increased nationally in the West, but decreased globally as poor countries like China, India, and Indonesia catch up with the wealth of the U.S. and Europe. 

So, extreme poverty in the world is down.

But poverty in America is not.

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