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How Rich You Are

How rich do you think you are? Before reading any further, try estimating how rich you are compared to the rest of the world (say 'I am probably in the top something percent of the world's population'). Now try using our calculator to see how rich you really are.

 
 

How Rich Am I?

Annual household income (after tax):

Size of your household:

 

You are in the richest % of the world's population.1

Your income is more than times that of the typical person.2

If you donate 10% of your income…

You will still be in the richest % of the world's population.

Your income will be more than times that of the typical person.

  
     
 
 

Reference:

1.

This is the most up to date set of data for the world income distribution by Branko Milanovic, based on the year 2002, adjusted for inflation up to 2009 and using the new PPP ratings. It is not yet published, but it builds upon his data from 'True world income distribution, 1988 and 1993: First calculation based on household surverys alone', Economic Journal issue 112, 2002, p 75. A draft which can be downloaded here.

 
     
 
 

Reference:

2.

This is the most up to date set of data for the world income distribution by Branko Milanovic, based on the year 2002, adjusted for inflation up to 2009 and using the new PPP ratings. It is not yet published, but it builds upon his data from 'True world income distribution, 1988 and 1993: First calculation based on household surverys alone', Economic Journal issue 112, 2002, p 75. A draft which can be downloaded here.


Here and elsewhere we use 'typical' to refer to the 'median', so the typical person is the one who earns more than half the world's population and less than the other half.

 
     

Most people are very surprised to find out how rich they really are because we typically compare our wealth only with that of our peers. We may or may not be richer than our friends or colleagues, but we are nevertheless richer than the great majority of the world’s population.

You might think that the above figures are distorted because each dollar goes further in impoverished countries. However, these figures have already been adjusted to take this into account. Instead of simply using the current exchange rate to compare incomes, they are compared in terms of how much money is needed to buy locally what $1 buys in the United States. This is called purchasing power parity and many developing world statistics are adjusted to take it into account. Therefore we really are part of a very small and wealthy elite — vastly more wealthy than the poorest half of the world’s population, who all live on less than $4 per day.

Did we earn this position? No. It is certainly true that we can increase our incomes with hard work, but the biggest factor is simply where we were born — something we can take no credit for at all. For example, of those born into the United States, almost all will be in the world’s richest 20% regardless of how hard they work. This top 20% control more than 80% of the world's income3 and do so largely on grounds of where they were born. Money is therefore distributed both unequally and unfairly. We tend not to notice the unfairness precisely because it is we who have more money than we can really claim to have earned. If we were born into developing countries where hard work gives only a tiny fraction of the rewards, the unfairness would be painfully apparent.

 
 

Reference:

3.

See Branko Milanovic, 'True world income distribution, 1988 and 1993: First calculation based on household surverys alone', Economic Journal issue 112, 2002, p. 89. A draft of this can paper can be downloaded here.


His figures are that 16% of the people control 84% of the raw income and that 25% of the people control 75% of the PPP adjusted income. We referred to the former figure here as we think it is the more important one. We rounded it off conservatively to take into account the uncertainty involved and to keep the numbers simple.

 
     

Just how unequally is income distributed? You can see from the following graph:4

 
 

Reference:

4.

This is the most up to date set of data for the world income distribution by Branko Milanovic, based on the year 2002, adjusted for inflation up to 2009 and using the new PPP ratings. It is not yet published, but it builds upon his data from 'True world income distribution, 1988 and 1993: First calculation based on household surverys alone', Economic Journal issue 112, 2002, p 75. A draft which can be downloaded here.

 
     

A completely equal distribution would be represented as a flat line. Instead, we have an incredibly skewed distribution where, as mentioned earlier, the richest 20% control more than 80% of the world's income. Indeed the distribution is even more skewed than you can see here: the spike on the right actually continues upwards over ten thousand times as far as shown here (or more than one kilometre above your computer) before the richest people are fully taken into account.

Does charity help to redistribute this money back to the world's poor? Not always. Most donations are simply given to other people within the rich countries and the money therefore stays within the richest 20%. In global terms it is donation by the extremely wealthy to the very wealthy.

However, it is also possible to make extremely effective donations towards the world's poorest people. Since they are so poor every dollar can make a tremendous difference — especially if spent on the world's most efficient aid programs. Read on to see just how much you could achieve and how little it would really cost you.

Next: What you can achieve >>