Comparing economies and poverty is complex, as different measures can lead to different results. Olivier Sterck, associate professor of economics at the University of Oxford, has developed a new method of measuring poverty, which he calls “average poverty”.
He finds that “average poverty is significantly higher in the United States, even though average incomes there are higher than in most Western European countries.”
Comparing Gross Domestic Product (GDP) per capita between the United States and Europe reveals a striking result: the poorest state in the U.S. competes with Germany.
In the third quarter of 2024, the poorest state in America, Mississippi, had a GDP per capita of 49,780 international dollars ($53,872). In Germany, it stood at 51,304 international dollars in 2024, representing a difference of about only 1,500 international dollars.
In terms of Purchasing Power Parity (PPP), the United States is in a significantly more favorable position than most EU countries, except for Luxembourg and Ireland, as shown in a Euronews Business article.
What is “average poverty”?
Olivier Sterck emphasizes, however, that viewing poverty as a continuum changes the equation. This sheds light on the shortcomings of poverty thresholds and helps understand the importance of inequalities.
According to Sterck’s research published on SSRN, an online platform for academic publications, “average poverty” corresponds to the average time needed to earn 1 dollar. “This measure is inclusive, sensitive to wealth distribution, decomposable, and corresponds to how experts and the general public perceive poverty,” he explains.
This dollar is expressed in international dollars, which means it can buy the same amount of goods and services in any country as a U.S. dollar in the United States. It is often used in conjunction with PPP data. The “time” refers to a day in the life of any person, regardless of age and situation – not just the hours worked by an employed person.
Time needed to earn 1 dollar in international dollars
In 2025, the time needed to earn 1 dollar is 63 minutes in the United States. This is about twice as long as the average in Germany, France, and the UK.
In Germany, the top economy in Europe, it takes 26 minutes. In France, the time is 31 minutes, while in the UK, it slightly increases to 34 minutes.
These figures suggest that “average poverty” in the United States is about twice as high as in these three countries.
Using this measure, Sterck observes that global poverty has decreased by 55% since 1990. The time needed to earn one dollar has decreased from half a day to five hours.
Average poverty increases in the United States and decreases in Europe
The new measure also indicates that “average poverty” in the United States has been increasing almost continuously since 1990, despite a substantial growth in average incomes. In contrast, it has been decreasing over time in most other high-income countries.
For example, in 1990, it took 43 minutes to earn 1 dollar in the United States. This was similar to France (42 minutes) and shorter than in the UK (51 minutes). Germany had the shortest time, at 34 minutes.
“Take two random individuals from the populations of these countries: the expected ratio of their incomes is over 4 in the United States, but only about 1.5 in the three European countries. This shows that income levels are much more dispersed in the United States.
“As a result, there is a higher proportion of low-income individuals in the United States, and they take longer to earn 1 dollar,” explained Olivier Sterck to Euronews Business.
Average income growth compared to average inequality
According to this measure, the time needed to earn 1 dollar has increased by 20 minutes, or 47%, in the United States over the past 35 years. The three European economies have seen decreases, with the UK experiencing the largest reduction.
How does this happen? He points out that in all four countries, average incomes have been increasing by just over 1% per year in recent decades, according to World Bank GDP data. However, in the United States, average inequality has been increasing at about 2.2% per year, surpassing income growth.
“This explains why average poverty has increased in the United States: average inequality has been rising faster than average income,” he explained.
In contrast, in the UK, France, and Germany, inequalities have remained relatively stable, so income growth has resulted in a reduction in average poverty.
How growing economies become poorer
“How can the economy of a wealthy country grow while becoming poorer?” Sterck asks, referring to the United States in his article for The Conversation.
His answer is simple: inequality.
He notes that poverty can change for two main reasons: incomes increase or decrease, or income distribution becomes more or less unequal.
In the case of the United States, average poverty is increasing even in a growing economy because inequalities are growing faster than incomes.
“The United States has one of the most unequal economies in the world, and by far the most unequal among wealthy countries. In all 50 states, inequalities have increased significantly since 1990, regardless of political orientation, demographic composition, or economic structure,” he writes.
Income inequality, measured by the Gini coefficient, is higher in the United States than in the main European economies. Higher values indicate greater inequality.
