Four income levels

Four income levels

Level 1.

You start on Level 1 with $1 per day. Your five children have to spend hours walking barefoot with your single plastic bucket, back and forth, to fetch water from a dirty mud hole an hour’s walk away. On their way home they gather firewood, and you prepare the same gray porridge that you’ve been eating at every meal, every day, for your whole life, except during the months when the meager soil yielded no crops and you went to bed hungry.

One day your youngest daughter develops a nasty cough. Smoke from the indoor fire is weakening her lungs. You can’t afford antibiotics, and one month later she is dead. This is extreme poverty. Yet you keep struggling on. If you are lucky and the yields are good, you can maybe sell some surplus crops and manage to earn more than $2 a day, which would move you to the next level. Good luck! (Roughly 1 billion people live like this today.)

Level 2.

You’ve made it. In fact, you’ve quadrupled your income and now you earn $4 a day. Three extra dollars every day. What are you going to do with all this money?

Now you can buy food that you didn’t grow yourself, and you can afford chickens, which means eggs. You save some money and buy sandals for your children, and a bike, and more plastic buckets. Now it takes you only half an hour to fetch water for the day.

You buy a gas stove so your children can attend school instead of gathering wood. When there’s power they do their homework under a bulb. But the electricity is too unstable for a freezer. You save up for mattresses so you don’t have to sleep on the mud floor. Life is much better now, but still very uncertain. A single illness and you would have to sell most of your possessions to buy medicine. That would throw you back to Level 1 again. Another three dollars a day would be good, but to experience really drastic improvement you need to quadruple again.

If you can land a job in the local garment industry you will be the first member of your family to bring home a salary. (Roughly 3 billion people live like this today.)

Level 3.

Wow! You did it! You work multiple jobs, 16 hours a day, seven days a week, and manage to quadruple your income again, to $16 a day. Your savings are impressive and you install a cold-water tap. No more fetching water. With a stable electric line the kids’ homework improves and you can buy a fridge that lets you store food and serve different dishes each day.

You save to buy a motorcycle, which means you can travel to a better-paying job at a factory in town. Unfortunately you crash on your way there one day and you have to use money you had saved for your children’s education to pay the medical bills. You recover, and thanks to your savings you are not thrown back a level. Two of your children start high school. If they manage to finish, they will be able to get better-paying jobs than you have ever had.

To celebrate, you take the whole family on its first-ever vacation, one afternoon to the beach, just for fun. (Roughly 2 billion people live like this today.)

Level 4.

You have more than $64 a day. You are a rich consumer and three more dollars a day makes very little difference to your everyday life. That’s why you think three dollars, which can change the life of someone living in extreme poverty, is not a lot of money. You have more than twelve years of education and you have been on an airplane on vacation.

You can eat out once a month and you can buy a car. Of course you have hot and cold water indoors. But you know about this level already. Since you are reading this book, I’m pretty sure you live on Level 4. I don’t have to describe it for you to understand.

The difficulty, when you have always known this high level of income, is to understand the huge differences between the other three levels. People on Level 4 must struggle hard not to misunderstand the reality of the other 6 billion people in the world. (Roughly 1 billion people live like this today.)

I’ve described the progress up the levels as if one person managed to move through several levels.

That is very unusual. Often it takes several generations for a family to move from Level 1 to Level 4. I hope though that you now have a clear picture of the kinds of lives people live on different levels; a sense that it is possible to move through the levels, both for individuals and for countries; and above all the understanding that there are not just two kinds of lives.

Human history started with everyone on Level 1. For more than 100,000 years nobody made it up the levels and most children didn’t survive to become parents. Just 200 years ago, 85 percent of the world population was still on Level 1, in extreme poverty.

Today the vast majority of people are spread out in the middle, across Levels 2 and 3, with the same range of standards of living as people had in Western Europe and North America in the 1950s. And this has been the case for many years.” – From this book “Factfulness”

Author

kinhluan

kinhluan

I love to travel and have taken time to experience life in many countries.

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