Hauke Hillebrandt

Median GDP per capita: how much does the typical person earn in different countries? A look at Global Inequality

Check out our newer article from 2021 that goes into more detail on this topic.

A recent study asked people in the US what they thought the global median income was: participants thought it was $20,000 per year - 10 times more than it actually is.

 Respondents who were then told that the true global income distribution is much more unequal, i.e. that the global median income is much lower, supported higher spending on foreign aid and cuts in agricultural trade protections at larger rates. They also made donations to charities abroad that were 55% larger relative to people in the control group.

Whenever I read about a country that I don’t know that much about, GDP per capita statistics are usually the first thing I look up on Wikipedia. Of course, income only gives a limited picture of a country, but I want to get a general sense of the economic well-being of its people. But the 

 GDP per capita that one typically sees on Wikipedia can be quite misleading in that respect, because it doesn’t take into account wealth inequality (for a detailed explanation see the Appendix at the end of this post). And, until recently, 

 GDP per capita were hard to come by. But a few months ago, the Centre for Global Development released median income/consumption estimates of countries around the world.

This data was very useful for development economists who are interested in how many people live in extreme poverty with under $1,90 a day, but for lay people the problem with the presentation of the data was that it showed 

 income/consumption and most people are probably more used to think about 

 income/consumption. This is why I multiplied the values by 365 to get at the median income/consumption per capita per year around the world (I call this median GDP per capita for sake of comparison).

You can see that there’s considerable inequality within countries - in the United States $17,593 is the median income, whereas the mean GDP per capita is $54,629, which is what everyone would earn if you perfectly redistributed all income.

 inequality in terms of median GDP per capita per year: it ranges from $383 in Madagascar to $21,717 in Norway, with most values at the low end.

 The global median of these medians is $2,630 and the population weighted average of these median values is $4,114 - these two values might be good approximations of global median per capita

, and in line with older empirical estimates of $2,920 by Gallup

 - which is what everyone would earn if you perfectly redistributed all income worldwide.

You might notice that that these estimates are already Purchasing Power Parity (PPP) adjusted: this means that this already takes into account, for example, that housing is cheaper in Madagascar than in the United States, and that the government provides more services in the US. It also already includes goods people produce for themselves in the Madagascar (such as growing food or making baskets).

 In other words, when you read that Madagascar has a median GDP per capita (PPP) of $383 per year, then it is comparable to living on $383 per year in the United States. To get a sense of what this would be like you could go on Amazon.com and see 

How your money can buy somebody else more happiness

This immense global inequality makes the idea of 

 so powerful. GiveDirectly is a charity that sends unconditional cash-transfers through mobile phone banking to some of the poorest people on the planet. You get the same increase in wellbeing from having your $20,000 developed world salary doubled as someone in extreme poverty living on $383 in Madagascar would get from receiving a cash transfer that would double their income (see figure below).

A recent study calculated that because of this, 

giving a one dollar to a truly poor individual is worth the same as giving about $66 to a typical American.

 In other words, if you’d earn $60,000 after tax salary and donated $30,000 and thus forgo the doubling of your wellbeing, you could effectively double the well-being of over 300 people in Madagascar ($30,000/$383 * 4 (adjusting for PPP))! And cash-transfers are considered to be baseline for how much good you can do: Givewell estimates that our recommended charities the Against Malaria Foundation, the Schistosomiasis Control Initiative and the Deworm the World Initiative, are about 10 times more effective than cash transfers, because there is evidence that healthier children earn more later in life

. This means we have an incredible opportunity to do good in the world.

Two-thirds of the variation of how much you earn globally is determined by where in world you were born

**[10]****.** When you add how much your parents earn to this, 80 percent of the variance of how much money you earn is explained by things that are clearly beyond your control.

 Such injustice violates our moral intuitions that there ought to be 

You can check out how lucky you are in global terms with our 

Appendix: What’s the difference between median and mean GDP per capita?

The average or mean GDP per capita statistics can still be quite misleading,

 as it doesn’t take into account wealth inequality. Here are two countries fictitious countries to make the point:

Notice that wealthy people, like Bill Gates, skew the mean value, so that mean GDP per capita is not very representative of the typical person in a country. It’s better to look at 

 GDP per capita. To calculate the median or middle value, you just make a list of all citizens in a country by income/consumption and pick the one who is in the middle (in this case Bob). 50% of all people will be richer and 50% will be poorer than the person on the median income/consumption. This usually gives a better sense of what the economic well being of an average person is like. In both our countries, median income is $20,000.

Malaria may be the worst killer in history. But this map — using the latest data — shows a surprising, and encouraging result.

Bednets Have Prevented 450 Million Cases of Malaria

Malaria may be the worst killer in history. It still kills thousands of people — mostly children — every year.

 that in 2015 alone, 438,000 people died of malaria - 292,000 of whom were children under 5 in sub-Saharan Africa.

But this map shows a surprising, and encouraging result.

The animation shows the percentage of children in Africa who had malarial fevers over the last 15 years. Dark red means 100% -- that is, all children in the area -- had at least one episode of clinical malaria within a given year. Green means 50%, and blue means that no children had a malaria fever within a given year.

Here’s another map using data for people of all ages

 — you can see the same pattern. A massive decrease in malaria cases over the last 15 years.

These maps show a clear trend — in fact, rates of malaria have halved over the past 15 years

. But why has there been such a dramatic decrease in malaria?

The reduction in malaria has been caused — in large part — by people sleeping under bednets. Green means everyone is sleeping under bednets and is protected, yellow means half of all people are protected, and red means nobody is protected from malaria.

Long lasting insecticide-treated bednets are a powerful weapon against malaria

, not only because they’re a physical barrier between mosquitoes and sleeping children — the insecticide coating kills mosquitoes, so they don’t infect other members of the family (and the village) who don’t have mosquito nets.

The data used for these animations comes from a new paper published in 

 (widely regarded as the top science journal). We already had very strong evidence that bednets prevent children from dying of malaria (and related complications like anemia) based on a meta-analysis of 22 experimental trials

But this new paper uses a “spatiotemporal Bayesian geostatistical model of bednet coverage with 27,573 georeferenced population clusters and an optimised suite of temporally dynamic environmental and sociodemographic covariates”.

In other words, this paper tells us about the bigger picture, showing that bednets are incredibly effective, not just at the level of individual villages, but at the level of whole populations. Essentially, the case that we should be distributing bednets just got even stronger.

Women and children carrying insecticide-treaded mosquito nets distributed by the Against Malaria Foundation in Ntcheu, Malawi

The research suggests that anti-malarial interventions have prevented about 

Long-lasting insecticide treated bed nets

 stand out as being particularly effective — being responsible for around 68% of the malaria reduction. This means that 

bednets have prevented around 450 million cases of malaria

 over the last 15 years because of malaria interventions 

We’ve made great progress. But we’re only halfway there.

Notice that, even in 2015, there are red and yellow spots on the map. 45% of all people in Africa are still at risk of disease and death from malaria 

, because they are too poor to buy nets, 

and an additional 245 million nets are needed in the next 2 years.

Blood smear showing Plasmodium Falciparum, the parasite which causes malaria (commons.wikimedia.org)

Malaria is also an immense economic burden on health systems and people: since 2000, malaria treatment in sub-Saharan Africa has cost almost $300 million

. We can see the flip side of this in places in the United States, Brazil and Uganda — children born after malaria was eradicated or heavily controlled and so were not exposed to malaria during pregnancy, had substantially higher income later in life 

We urgently need to keep funding the distribution of bednets, because 

bednet distributions are one of the most cost-effective ways of preventing disease and death.

 Since 2000, one billion bednets have been distributed (costing around 5 dollars each), and have averted 450 million cases of malaria — this suggests that, on average, one episode of clinical malaria can be prevented for about $11 (malarial fevers can be very painful. One recent study suggests that in Kenya, bednet distributions between 2003 and 2008 have prevented a death of a child for about $1,011 on average

The charity evaluator Givewell estimates that the cost per child death averted through bed net distributions funded by the 

 (even though these estimates are uncertain, they're roughly comparable to the new malaria vaccine, which is not 100% effective and experts say should be used in combination with bednets

, and we at Giving What We Can, rank the Against Malaria Foundation as 

. This is not only because we think it is the most cost-effective charity one can donate to, but also because of Against Malaria Foundation’s outstanding transparency and accountability.

 you can see video footage from distributions, as well as detailed financial statements. They also check if the nets they distributed are still hung every 6 months in a random sample of 5% the households (two years after distribution, 81% of nets distributed were still being hung up and the most comprehensive study suggests that bednets are almost never used for things like fishing

preventing deaths will not lead to overpopulation

We can all help to make the maps above more blue and green. The Against Malaria Foundation needs a minimum of $13.4 million to fill their funding gap next year 

. And if you want to keep up the fight long-term, why not join us, and more than 1400 people — among them 

development economists, moral philosophers, students, nurses, entrepreneurs, scientists and teachers

 to give 10% of your income to the charities that you think are most effective (or just 1% for those who don’t work full time).

We’re winning some impressive battles against one of history’s biggest killers. As more people start donating to a cause that is rigorously evidence-based and extremely cost-effective, we can start to win the war.

Hauke holds a PhD in Cognitive Neuroscience from UCL and was a Research Fellow at Harvard

Hauke Hillebrandt

Articles

Median GDP per capita: how much does the typical person earn in different countries? A look at Global Inequality

Bednets Have Prevented 450 Million Cases of Malaria