I agree the OP seems to not understand PPP (and be under the misapprehension that the issue is a lack of ‘empathy’), but I do think something of their argument can be salvaged. PPP uses something like the average basket of goods, but the basket of goods that the poorest people buy may well be more expensive in the first world because regulation etc. mean the low-end products that would be an ideal fit for their budget constraint are simply unavailable. I don’t think PPP adequately captures the fact that something being regulated out of existence is sort of like it costing a lot more, and this disproportionately affects the poorest people.
I think the first post I linked to makes a similar point that I think matters more, in practice:
However, if you’re thinking about consumption rather than income (as you should), there is a difference which does make the comparison to “$1.25 living in the US” misleading: in the US you just can’t buy the sort of low-quality goods that you can in developing countries. Markets just don’t exist for those goods. Even the most basic lentils and rice sold at Walmart in the US would be regarded as a luxury item for people living on $1.25 a day.
But maybe regulations matter even more in some jurisdictions with e.g. mandatory expensive health insurance, or no social housing, strong anti-homelessness legislation/architecture, and expensive regulations on habitability.
In any case, an even more important point, in my experience, is that the difference between “necessities” and “luxuries”, and between “rich” and “poor”, is very cultural/contextual. So regardless of PPP, if someone is living on $2/day and everyone around them is living on $100/day, they’re going to be much worse off than someone living on $2/day surrounded by people living on $1/day.[1]
I do not think this hurts the core argument (the global poor are really poor) significantly, though, given how strong it is and that there are strong arguments in the opposite direction. From the same post:
[In a rich country] With an income of $1.25 a day you could have a much better quality of life than the extremely poor. You can dumpster dive and live off the excess of the affluent country; [you] have free access to roads and lighting, a good legal system and police protection, and medical assistance if [you] get sick.
Anecdote: when all my friends were university students, we were living on a few hundred € per month (~75% of it in rent). Now that all my friends make lots of money, their “needs” are clearly much more expensive, and someone living on the same standards now would be socially/comparatively much poorer.
Thank you both. That’s actually the first time I see the $1.25/day post. I’m not sure if it’s due to it being more than a decade old or other reasons, but I found it extremely useful in directly and concisely explaining that such values are taking into account PPP and are based on consumption.
As that relates to the readings in the EA intro program, I just went back to check, and what I missed was that the analysis and comparisons are based on “international dollars” which account for PPP.
As mentioned though having a dedicated post in the handbook referring to this would be recommended. It would certainly answer some of the confusion I’ve had understanding some of the points before y’all took the time to respond here!
I agree the OP seems to not understand PPP (and be under the misapprehension that the issue is a lack of ‘empathy’), but I do think something of their argument can be salvaged. PPP uses something like the average basket of goods, but the basket of goods that the poorest people buy may well be more expensive in the first world because regulation etc. mean the low-end products that would be an ideal fit for their budget constraint are simply unavailable. I don’t think PPP adequately captures the fact that something being regulated out of existence is sort of like it costing a lot more, and this disproportionately affects the poorest people.
I think the first post I linked to makes a similar point that I think matters more, in practice:
But maybe regulations matter even more in some jurisdictions with e.g. mandatory expensive health insurance, or no social housing, strong anti-homelessness legislation/architecture, and expensive regulations on habitability.
In any case, an even more important point, in my experience, is that the difference between “necessities” and “luxuries”, and between “rich” and “poor”, is very cultural/contextual. So regardless of PPP, if someone is living on $2/day and everyone around them is living on $100/day, they’re going to be much worse off than someone living on $2/day surrounded by people living on $1/day.[1]
I do not think this hurts the core argument (the global poor are really poor) significantly, though, given how strong it is and that there are strong arguments in the opposite direction. From the same post:
Anecdote: when all my friends were university students, we were living on a few hundred € per month (~75% of it in rent). Now that all my friends make lots of money, their “needs” are clearly much more expensive, and someone living on the same standards now would be socially/comparatively much poorer.
Thank you both. That’s actually the first time I see the $1.25/day post. I’m not sure if it’s due to it being more than a decade old or other reasons, but I found it extremely useful in directly and concisely explaining that such values are taking into account PPP and are based on consumption.
As that relates to the readings in the EA intro program, I just went back to check, and what I missed was that the analysis and comparisons are based on “international dollars” which account for PPP.
As mentioned though having a dedicated post in the handbook referring to this would be recommended. It would certainly answer some of the confusion I’ve had understanding some of the points before y’all took the time to respond here!