Temporal inequality is much larger than income inequality today


Much social science research, including some of my work, focuses on inequality between regions and people. This can be important research because it helps us understand why some places thrive and others do not.

Obviously, understanding this could lead to policy interventions that improve the lives of people today and in the future. One unfortunate by-product of these studies is a general misunderstanding of how extraordinarily good things are today relative to even the proximal past.

We are alive at a time of stunning chronological inequality, which should at least offer us a moment of reflection as we speak about poverty today.

The best estimates I have seen suggest that maybe 108 million humans have ever lived. About 7.5 million, or 6.9 percent of the total, are alive today. Of these there are roughly 325 million people today living in the U.S., amounting to roughly 0.3 percent of all persons who have ever lived. It is interesting that one out of every 15 people who have ever lived are alive today. That fact is attributable to stunning and quite recent changes in the world economy.

Sometime between 1650 and 1700, something fundamental changed in the world’s economy, ushering in a period of largely sustained and massive economic growth that continues today. What exactly caused it remains a matter of debate. I think the best argument comes from Deidre McClosky’s work on the rise of what she calls Bourgeois Dignity and the respectability of commerce and trade.

There are other explanations as well, but we know the revolution began in the UK, expanded quickly to the USA and Europe, and has spread to most of the world today. Its effect is shocking.

From antiquity to about 1650, the average person existed at the margin of subsistence. World GDP per capita was about $1,000 in today’s dollars, and those are the high estimates. By 1900 GDP per capita had grown to roughly $3,000 and is today close to $14,000 per person. Thus, before the rapid economic growth of the past 300 years, nearly all the world was blanketed by deep, persistent poverty.

Prior to about 1700, the typical person survived by consuming little more than $3 a day in food, clothing, housing, fuel, education and healthcare. To be clear, this is not market transactions, but actual consumption value, to include homegrown food, and homemade clothing, housing and healthcare. It also includes barter and trade.

This desperate poverty meant that most people owned one or two sets of clothing, remained barefoot most of the year, and in Europe at least, bathed maybe at birth and marriage. Not surprisingly, close to half of all children died before age five and life expectancy in the most developed part of the world was in the mid-30s.

Not everyone was as desperately poor, but even the most affluent royalty faced high childhood mortality rates and paltry medical care. A hot bath was an expensive luxury. Cutting wood and hauling water was about a day’s worth of labor, not counting a tub and heating pots. Owning a horse was as costly as buying a Prius every year, so most of us walked everywhere we went. Few could read or write, and in much of the world, most lives went unrecorded. This was the life of humans who lived before 1650—85 million of them—or roughly 90 percent of all people who have ever lived. Over the history of our species most of us lived much like a peasant in India or Bangladesh does today.

From about 1700 to 1900, lifespans grew to 50 years, and growing incomes made universal literacy a reasonable goal of much of the world. Today, the average human consumes almost $14,000 worth of goods and services each year, and the desperately poor who live on $2 to $3 a day has shrunk to perhaps 1 billion. None of these are in the developed world, save those who intentionally eschew public assistance.

In the United States, the average person consumes some $57,000 per year in goods and services. We are 50 times better off than the average person who lived just three centuries ago. Even the very poorest among us receives free education for 13 years, a vast social safety net that includes universal access to healthcare, nutrition assistance, housing assistance and more. Today, an American living at the poverty line and receiving Medicaid and SNAP consumes roughly 25 times the value of goods and services as did the average person who has ever lived, and is expected to live more than twice as long.

The lesson inherent in this review of intertemporal inequality is not that we should abandon efforts to better understand and mitigate the effects of poverty and want today. It is simply that in doing so we should not risk slowing economic growth that is the causal force in the profoundly better lives and opportunity that even the poorest among us today enjoy.

Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. Send comments to [email protected].

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