How Oxfam crunches its inequality stats
An inside look at how we count the billions ahead of the World Economic Forum in Davos, and a response to some questions.
For the tenth year running, Oxfam’s annual inequality report shocked people around the world with its stinging critique of a rigged system that is on its way to creating the first trillionaire.
With over 18,000 media hits in over 25 languages, the report had a truly global reach. World leaders have used the paper to make the case for a more just world, millionaires and billionaires urged governments to tax them more and social media was on fire with stats and stories of a divided world.
A great campaign like this takes a lot of work, with a report underpinning Oxfam’s media, public mobilisation and advocacy efforts.
This week we’re getting especially nerdy, going through how we crunched some of the numbers for the report and responding to some of the questions we received.
The full methodology note for the report is here.
Inequality numbers, in numbers
“Wealth of five richest men doubles since 2020 as five billion people made poorer”. This is the stat that topped our press release and received the most coverage. We started by taking the top five billionaires on Forbes’ real-time billionaires list as of the end of November 2023 and looked each of them up on Forbes’ annual list, published in April 2020. This showed us their collective wealth had increased from $340 billion to $869 billion. This is a nominal increase, so we adjusted for inflation using US Consumer Price Index (CPI). When adjusted for inflation, we find an increase of $464 billion, or 114%, since 2020.
To estimate how wealth has developed for the rest of the world, we used the 2023 UBS Wealth report (formerly the Credit Suisse report but still written by the same team). We took the global wealth data in deciles from 2019 and 2022 (the cut-off is the end of the year) and adjusted them both to 2023 prices so they are constant. We looked at the cumulative change of the wealth groups and found that up to the 60th percentile, combined wealth fell in 2022 compared to 2019. Above the 60th percentile, there was a combined increase.
“If current trends continue, the world will have its first trillionaire within a decade but poverty won’t be eradicated for another 229 years.” This stat did amazingly well, topping many news reports and the subject of various op-eds. The average growth rate of the wealth of the five richest billionaires over the last 5 years was 18% in real terms. Keep adding 18% to the total wealth from 2023 and it’ll take 10.4 years to hit $5 trillion ($1 trillion per billionaire on average).
Poverty rates are calculated using World Bank data on the $6.85 poverty line. Global poverty headcount reduced by 1.7% between 2015-2019, the current poverty rate is 45.9%. So, if poverty reduces by 1.7% every year it will take 229 years to fall below 1%.
Responding to some questions
Here is how we responded to three of the most common questions we heard.
“Do the dates you’ve used exaggerate the growth in billionaire wealth?” Forbes published their annual billionaire list in April 2020 with a data cut off on the 18th March 2020, which was about a week after the pandemic was formally declared. At this point stocks, which billionaire wealth is closely tied to, began to fall, reflecting the wave of unemployment and supply chain disruption that came from lockdowns. However, we don't get to choose when Forbes publishes their annual lists and they don’t provide historical data from their live tracker, so there was no way for us to select a date just before the pandemic. However, if go back to the March 2019 list, the combined wealth of those five men are still 92% richer which suggests a pretty clear trend, despite the pandemic.
“Does student debt mean that people who have high living standards but are in debt are represented as the world’s poorest?” There are about 214 million people living in high-income countries who have negative net wealth. They represent 4.5% of the bottom 60% of humanity. If we removed all these individuals with negative net wealth from our database, our headline conclusion on the overall fall in wealth of the bottom 60% wouldn’t change. In fact, because negative wealth has fallen, if we had removed it from our calculations then the overall drop in the wealth of the bottom 60% would have been larger. The reason that we don't remove negative wealth is that it's impossible to know who is poor and in debt and who are the people with a high standard of living who are in debt.
“Isn’t income a better measure?” We face a dilemma every year, wealth is the best measure for the rich. Arguably income data for the poor is more detailed. But we don’t want to compare apples with oranges.
Both income and wealth show the same clear, and deeply concerning trend. We are clear in the report that the latest figures on income poverty from the World Bank since 2019 remain deeply concerning too - poverty at the poverty line of $6.85 a day (around 3.7 billion people) is still higher than in 2019 due to population growth, with poverty rates declining very slowly. Extreme poverty in the poorest countries is worse than before the pandemic. So, whether we take wealth or income, their levels should be worrying for anyone who cares about global poverty.
Something to watch, read and listen to
Watch Senter Bernie Sanders reel off some powerful inequality figures, including from Oxfam.
Listen to the latest Equals podcast with pioneering Senegalese development economist Ndongo Samba Sylla on the untold vision of former Burkina Faso President Thomas Sankara for economic liberation.
Read former UK Prime Minister Gordon Brown’s article on child poverty in the UK.