4
I N T RO D U C T I O N
FIGURE 1.1:
Average Incomes in the United States and Brazil, 1950–2014
Average incomes in Brazil are lower than those in the United States and have grown more slowly over the past three decades.
Income ($ thousands)
60 50
1.8%
40 30
2.3%
20 1.0% 10 0 1950
4.4% 1960
1970
1980 Year
1990
Income ($ thousands)
64
2000
2010
1.8%
32
2.3%
16
1.0%
8 4.4% 4 2 1950
1960
1970
1980 Year Brazil
1990
2000
2010
USA
Notes: Both panels of the chart show the same set of data, but the bottom panel uses a log scale, which economists prefer when the data cover a wide range of values. Incomes are adjusted for the effects of inflation; that is, the data shown are for “real” incomes. The percentages 2.3% and 1.8% are the average rate at which U.S. real incomes grew over 1950 to 1980 and 1980 to 2010, respectively; the percentages 4.4% and 1.0% are the corresponding values for Brazil. Source: Based on data from Penn World Table 9.0.
figure show the same set of data, but the bottom panel is on a logarithmic scale, which is often used when the data cover a large range of values. Two things stand out from the figure. First, the average Brazilian is clearly much poorer: in 2010, for instance, the average income was about $10,000 compared with around $50,000 in the United States. Second, U.S. average incomes have grown at a more steady pace than Brazil’s. U.S. incomes grew at 2.3 percent a year