Is the fight against poverty still worth fighting? In the past eight years, the end of "extreme" poverty -- those living on about $1.25 a day, when purchasing power is factored in -- has gone from a possibility to a prediction. If it does come to pass, it will not only prolong hundreds of millions of lives but could also be considered humankind's greatest achievement. Okay, then what?
Even if extreme poverty is eradicated, a lot of people will still look very poor to residents of high-income economies. There may be a few places in rich countries where you'll be able to get by on $1.25 a day, but not many. And plenty of people will still feel poor even after they escape extreme poverty -- especially when they're bombarded by ads, television series, and movies showing how the other half live.
Moreover, the most recent research on income and happiness suggests that fighting non-extreme poverty may be just as important to the world's wellbeing as fighting extreme poverty. The link between income and happiness is strong in countries around the globe, and it persists through fairly high levels of income -- above $100,000 a year in the highest-earning countries measured. Perhaps most importantly, the link follows a logarithmic-linear function that is remarkably consistent across countries: the amount of happiness added by increasing incomes by a fixed percentage stays constant as incomes rise.
So, even if the lives of poor farmers and sweatshop workers are improved beyond the level of mere subsistence, further boosts in their material living standards would continue to make them feel better off. Put another way, absolute increases in income will always make people happier, even if their incomes still compare unfavorably to those of their fellow citizens.
All of this sounds like good news for the aid industry. Tens of thousands of people work for the World Bank, the United Nations Development Program, and countless smaller organizations in the fight against poverty. In the past, they have asked governments of rich countries to devote 0.7 percent of gross domestic product -- about $200 billion a year in the United States and European Union alone -- to fight poverty. For comparison, the global industry for manufacturing automation is worth about the same amount. But if money can make people happy at all income levels, is fighting poverty really the best way to spend it?
Consider a simple comparison. An increase of 10 percent in American incomes would be roughly $5,000 a year per person. In the Democratic Republic of Congo, the same 10 percent raise would amount to just $25 a year. The population of the United States is roughly four times that of the Democratic Republic of the Congo, however, so in principle the world should work four times as hard to achieve the higher incomes in the United States. In either case, a 10 percent raise could, on average, increase happiness by the same amount. The difference is that such an increase in the United States would affect four times as many people.