Global poverty, and the world's richest 8 people

Does it matter that, according to Oxfam, the world's richest 8 people have as much wealth as the 3.6 billion people who make up the poorest half of the world?

Each year Oxfam produces a report drawing a graphic comparison between the world's poorest and wealthiest people, to coincide with the start of the World Economic Forum in Davos, a Swiss ski resort. The annual event attracts many of the world's top political and business leaders. The data this year provides this stark contrast between the wealth half the world's population and just eight individuals, but the conclusions are criticised by some bodies.

The Adam Smith Institute suggests that the most important measure relating to poverty is one which looks at the year-on-year improvement in welfare, or standard of living, for those poorest people. The Institute of Economic Affairs take a similar line, saying that rather than measure the gap to the world's richest people, a more appropriate focus would be on measures that encourage economic growth, which would enable governments to fund programmes for improvements in the standard of living for the poorer communities.

It is particularly important here to focus on the difference between economic GDP growth - an increase in the value of goods and services produced by a country as a whole - and the level of development in a country, which measures the standard of living for all of it's citizens. GDP growth per capita can appear to measure an increase in average income, but if the gap in income inequality in a country is very wide, it may well be that almost all of a country's growing income is distributed to those who are already rich, leaving the poor no better off.

For an activity that introduces this topic to students, in order to stimulate discussion about the matter, have a look at this item by Jonny Clark on the Tutor2u Economics blog.