Oxfam's careful arithmetic

Posted in: Comment, News and Updates

I got an email from Oxfam the other day.  You probably did too.

Its subject line said: "8 billionaires have the same wealth as half the planet."  Shocking, of course, if true.  And of course, it is.  Well, it is if you make certain decisions during your calculations that help you get an answer that's good for marketing.

What Oxfam did, it seems, was to base its calculations on net wealth, not actual wealth.  That is, assets minus debts.  It follows from this that some of the poorest people in the world are in the USA; that is, those with $zillions of debt.  Those getting by on £1.90 a day (but with no debts) are rich by comparison.

For the distasteful details go this Reuters' blog.  There's a nice graph which shows the problem with the Oxfam metrics.  And here is Ben Southwood on the issue:

Oxfam is once again misleading everyone with its punchy wealth inequality stats.  By Oxfam's measures, the poorest people in the world are recent Harvard graduates with student debt piles.  The bottom 2bn don't have zero wealth, but rather about $500bn of negative wealth.  The poorest person in the world is richer than the next 30% put together.  Having negative wealth may actually be a sign of prosperity, since only people with prospects can secure loans.  But there is a bigger issue with the narrative: more meaningful measures show greater equality.  Those in the middle and bottom of the world income distribution have all got pay rises of around 40% between 1988-2008.  Global inequality of life expectancy and height are narrowing too—showing better nutrition and better healthcare where it matters most.  What we should care about is the welfare of the poor, not the wealth of the rich."

Posted in: Comment, News and Updates


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