1995-2021 World Share on Private Wealth of Billionaires
The 2022 World Inequality Report released on 7 December is the most up-to-date report on international research efforts to chart global inequalities. The data and analyzes presented here are based on the work of more than 100 researchers over four years, located on all continents, who contribute to the World Inequality Database (WID.world), managed by the World Inequality Lab. This vast network collaborates with institutions. statistics, tax authorities, universities and international organizations, to harmonize, analyze and disseminate comparable international data on inequality. Here are the conclusions of the Report. Contemporary income and wealth inequalities are very strong
An average adult individual earns € 16,700 PPP (value for purchasing power parity) per year in 2021, and an average adult owns € 72,900 in assets. These averages mask large disparities both between countries and within them. The richest 10% of the world population currently accounts for 52% of global income, while the poorest half of the population earns 8%. On average, an individual in the richest 10% of the global income distribution earns € 87,200 per year, while an individual in the poorest half of the global income distribution earns € 2,800 per year.
Global wealth inequalities are even more pronounced than income inequalities. The poorest half of the global population barely own any form of wealth, owning only 2% of the total. In contrast, the richest 10% of the global population owns 76% of all wealth. On average, the poorest half of the population owns 2,900 PPP euros per adult, while the richest 10% owns an average of 550,900 euros. Middle East-North Africa the most unequal area in the world, Europe the least
Inequality varies significantly between the most equal (Europe) and the most unequal (Middle East and North Africa, i.e. MENA) regions. In Europe, the top 10% income share is around 36%, while in the MENA region it reaches 58%. Between these two levels, we see a diversity of models. In East Asia, the top 10% makes up 43% of the total income and in Latin America 55%. Average national incomes say little about inequality
The world map of inequalities reveals that national median income levels are poor in describing inequality: among high-income countries, some are very unequal (such as the United States), while others are relatively equal (e.g. Sweden). The same is true among low- and middle-income countries, with some showing extreme inequality (e.g. Brazil and India), quite high levels (e.g. China) and moderate to relatively low levels (e.g. Malaysia, Uruguay) . Inequality is a political choice, it is not inevitable
Inequalities of income and wealth have increased almost everywhere since the 1980s, following a series of deregulation and liberalization programs that have taken different forms in different countries. The increase has not been uniform: some countries have experienced spectacular increases in inequality (including the United States, Russia and India) while others (European countries and China) have experienced relatively smaller increases. These differences, which we discussed at length in the previous edition of the World Inequality Report, confirm that inequality is not inevitable, it is a political choice. Contemporary global inequalities are close to those of the early twentieth century
While inequality has increased within most countries, global inequalities between countries have declined over the past two decades. The gap between the average incomes of 10% of the richest countries and the average incomes of the 50% of the poorest countries has fallen from about 50 times to just under 40 times. At the same time, inequalities have increased significantly within countries. The gap between the average incomes of the top 10% and the bottom 50% of individuals within countries has nearly doubled, from 8.5 to 15 times. It also means that inequalities within countries are now even greater than the significant inequalities observed between countries, which appear to be as strong today as they were at the peak of Western imperialism in the early 20th century. Indeed, the share of income currently captured by the poorest half of the world population is about half of what it was in 1820, before the great divergence between Western countries and their colonies. In other words, there is still a long way to go to undo the global economic inequalities inherited from the very unequal organization of world production born between the mid-19th and mid-20th centuries.Nations are richer, but governments have become poor
One way to understand these inequalities and focus on the gap between the net wealth of governments and the net wealth of the private sector. Over the past 40 years, countries have gotten significantly richer, but their governments have gotten significantly poorer. The share of wealth held by public actors is close to zero or negative in rich countries, which means that all wealth is in private hands (Figure 8). This trend was amplified by the Covid crisis, during which governments borrowed the equivalent of 10-20% of GDP, essentially from the private sector. Governments’ current low wealth has important implications for the state’s ability to tackle inequality in the future, as well as key 21st century challenges such as climate change.Wealth inequalities have increased at the top of the pyramid
The increase in private wealth has also been uneven within countries and globally. Global multimillionaires have captured a disproportionate share of global wealth growth in recent decades: the top 1% took 38% of all the additional wealth accumulated since the mid-1990s, while the bottom 50% only captured the 2%. This results from a severe inequality in growth rates between the upper and lower segments of the wealth distribution. The wealth of the richest individuals on earth grew from 1995 to 6-9% per year, while average wealth grew by 3.2% per year (Figure 9). Since 1995, the share of global wealth owned by billionaires has risen from 1% to over 3%. This increase was exacerbated during the COVID pandemic. Indeed, 2020 marked the strongest increase in the share of global wealth of billionaires ever recorded (Figure 10).Wealth inequality within countries narrowed for most of the 20th century, but the bottom 50% share was always very low
Wealth inequality decreased significantly in Western countries in the early 20th century and the 1980s, but the poorest half of the population in these countries has always owned very little, ie between 2% and 7% of the total. In other regions, the lower 50% share is even lower. These results show that there is still a lot to do, in every region of the world, if we are to reduce extreme wealth inequalities. Gender inequalities remain considerable globally, and progress within countries is too slow
The World Inequality Report 2022 provides the first estimates of gender inequality in global earnings. Overall, the share of women in total earned income (earned income) approached 30% in 1990 and now stands at less than 35% (Figure 12). The current income inequality between the sexes remains very high: in a fair world, women would earn 50% of all earned income. In 30 years, progress has been very slow globally, and dynamics have varied across countries, with some progressing but others seeing reductions in women’s earnings. The great inequalities in CO2 emissions
Global inequalities of income and wealth are closely linked to ecological inequalities and inequalities in contributions to climate change. On average, humans emit 6.6 tons of carbon dioxide equivalent (CO2) per capita, per year. Our new carbon inequality dataset reveals important inequalities in CO2 emissions globally: the top 10% of emitters are responsible for nearly 50% of all emissions, while the bottom 50% produce 12% of the total. These inequalities are not just a problem of rich countries versus poor countries. There are high issuers in low and middle income countries and low issuers in rich countries. In Europe, the bottom 50% of the population emits about 5 tons per year per person; the bottom 50% in East Asia emits around 3 tons and the bottom 50% in North America around 10 tons. This contrasts sharply with the top 10% emissions in these regions (29 tonnes in Europe, 39 in East Asia and 73 in North America).
This report also reveals that the poorest half of the population in rich countries have already met (or are approaching) the 2030 climate goals set by rich countries, when these goals are expressed on a per capita basis. This is not the case in the upper half of the population. Large inequalities in emissions suggest that climate policies should target wealthier polluters more. So far, climate policies such as carbon taxes have often had a disproportionate impact on low- and middle-income groups, leaving the consumption habits of the wealthiest groups unchanged. How to redistribute wealth to invest in the future
The World Inequality Report 2022 examines several policy options for redistributing wealth and investing in the future in order to meet the challenges of the 21st century. There are major income gains that would come from a modest progressive tax on the wealth of global multimillionaires. Given the large volume of wealth concentration, modest progressive taxes can generate significant revenues for governments. In our scenario, we find that 1.6% of global income could be generated and reinvested in education, health and ecological transition. The report is accompanied by an online simulator so that everyone can design their favorite wealth tax globally, or in their region.
We emphasize at the outset that facing the challenges of the 21st century is not feasible without significant redistribution of income and wealth inequalities. The rise of modern welfare states in the 20th century, which has been associated with tremendous progress in health, education and opportunities for all, has been linked to the rise of steep progressive taxation rates. This has played a critical role in ensuring the social and political acceptability of increased taxation and the socialization of wealth. A similar evolution will be needed to meet the challenges of the 21st century. Recent developments in international taxation show that progress towards fairer economic policies is indeed possible globally as well as within countries. Chapters 8, 9 and 10 of the report discuss various options for addressing inequality, learning from examples around the world and throughout modern history. Inequality is always a political choice and learning from policies implemented in other countries or at other times is fundamental to designing more equitable development paths.
The World Inequality Report 2018, Harvard University Press, is online at wir2018.wid.world
