Every ten minutes, black Volkswagen shuttle vans ferry delegates from their hotels in Davos, Switzerland, to this year’s World Economic Forum, held from January 17th to 20th. If you could squeeze the world’s eight richest men into one of these vans, they might feel cramped. But they could comfort themselves with an extraordinary statistic: according to Oxfam, a charity, they own as much wealth ($426bn) as half the world’s population combined ($409bn).
To make this striking calculation, the charity draws on data from Forbes magazine, which lists the wealth of the billionaires, and Credit Suisse, which estimates the smaller holdings of everyone else, thanks to painstaking work by three scholars of wealth, Anthony Shorrocks, Jim Davies and Rodrigo Lluberas.
Pedants can nonetheless criticise Oxfam’s headline-grabbing comparison for its handling of debt, the dollar, labour and data. The world’s least wealthy include over 420m adults whose debts exceed their assets, leaving them with negative net worth. Most of this net debt is owed by people in high-income countries. There are, for example, over 21m Americans with a combined wealth of minus $357bn. Only people with relatively good prospects, by global standards, can be so poor; the wretched of the earth could never borrow so much. If all of the people with sub-zero wealth are excluded from the comparison, the poorest half of the remaining population would have a combined wealth equivalent to the richest 98 billionaires.
The Credit Suisse team converts the world’s wealth into dollars at market rates. But the dollar stretches further in poor countries. So studies of global poverty typically make currency conversions at “purchasing-power parity” (PPP) instead. Wealth data also exclude the poor’s biggest asset: their labour or “human capital”. The returns on that asset—such as wages—do however appear in income statistics. So whereas the bottom half of the global population have a negligible share of global wealth (only 0.15% at market exchange rates, according to Credit Suisse), they have a bigger share of global income (10.6% at PPP in 2013, the latest number available, according to Christoph Lakner of the World Bank).
In valuing the poor’s wealth at $409bn, Oxfam also seems to have committed a rounding error. The figure should be just $384bn, according to Mr Shorrocks (although the data are too patchy to allow much precision). For what it’s worth, $384bn is less than the wealth of the world’s seven richest men. There would be no need to squeeze Michael Bloomberg, the world’s eighth-richest person, into the minivan. That would leave room for the magnificent seven to stretch their legs.
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