Factfulness – A Book Review
Factfulness: Ten Reasons We’re Wrong About the World-And Why Things Are Better Than You Think, by Hans Rosling, Ola Rosling, and Anna Rosling Ronnlund
This is a book written by Hans Rosling (and his son and daughter-in-law) who was a physician in a third world environment in Africa and who studied an outbreak of a paralytic disease across rural Africa. He devoted the rest of his life following Africa to studying global health and the statistics around global health. In Factfulness, he describes the state of the world today and why we have such misconceived views on how the world is doing as far as economic development, agriculture, poverty, and health.
Rosling begins by dividing the entire population of the world into 4 different levels of income. Through his research, he found consistencies in overall health by what level of income people were living in.
Level 1 – This is extreme poverty with people living on less than $2 each day. They probably walk on bare feet, sleep on dirt floors, fetch their water, and cook over an open fire. Children work to help survive. 1 billion people today live in this category.
Level 2 – People live on $2 to $8 each day. Life is typically a little easier than Level 1, as people have shoes, sleep on a mattress, may have a bicycle to make transportation easier, still fetch water, and might have a gas stove to cook with. Children are able to go to school instead of work. 3 billion people today live in this category.
Level 3 – People live on $8 and $32 each day. These people have running water, a refrigerator, a hot plate or some sort of multi-burner cook stove, and maybe some sort of motorized transportation. Children may be able to finish secondary school. 2 billion people today live in this category.
Level 4 – People spend more than $32 each day. These people have indoor plumbing, stove (gas or electric) with more than 2 burners, and they can afford a car or truck for transportation. All have at least a high school education and can take a vacation once in a while. 1 billion people today live in this category.
It may not surprise you that 6 of the 7 billion people in the world live in what most of us would consider poverty. However, people are moving up on a worldwide basis over the last 50 years. The author gives us facts that (worldwide) girls are going to school, children are getting vaccinated, people live in two-child families, etc. It is projected that the trend of moving up levels will continue worldwide. Things in the world still aren’t great, and some of us would consider them bad. However, the authors point out that conditions can be bad and better at the same time. Overall conditions worldwide are better than what we perceive them to be.
My parents and I discussed the 4 Levels and my dad pointed out that in the 1940’s and 1950’s growing up in rural Iowa that he possibly could have been on the verge of living in Level 3, and they were a happy middle-class family. If rural Iowans lived in, or on the verge of, Level 3 today it would definitely NOT be considered middle-class. This is just an example that not only are things getting better in other parts of the world, but living conditions and income are getting better everywhere.
The author describes to us the reasons why we have such misconceptions of what is going on in the world. He describes 10 human instincts that keep us from seeing the world as it is…factfully. With each of these instincts, he gives us advice on how to overcome our biases and how to use factual data to be able to realize that “yes, indeed living conditions worldwide are improving!” His advice will also help you in seeing other things that we care about realistically (factfully) without falling to our human instincts – such as the following, to name a few of the ten:
- the fear instinct (frightening things get our attention, but may not necessarily be the most risky)
- the size instinct (standalone large numbers are more shocking/impressive than they really are)
- the gap instinct (we categorize things as black or white, A or B, liberal or conservative, wealthy or not wealthy, developed and developing, etc…when most of the world falls somewhere in between)
Here is one last bit on investing (since we’re investment advisors). In the chapter that he describes the size instinct and why it leads us to misconceptions, he also talks about the PIN Code of the World. This code today is 1-1-1-4. It represents today’s world population. 1 billion people live in North and South America, 1 billion people live in Europe, 1 billion people live in Africa, and 4 billion people live in Asia. If the United Nations’ forecasts for population growth are correct, by the year 2100, the PIN Code of the world will be 1-1-4-5. Keep in mind that income levels are migrating to the better on a worldwide view. Today, 11% of the world’s population makes up 60% of the Level 4 consumer market…basically the countries surrounding the North Atlantic. By 2040, if personal incomes keep growing as they are doing now, then 60% of the world’s Level 4 consumer market will reside outside of the North Atlantic and more around the Indian Ocean.
A fairly bright Ballast Capital Advisors client suggested this book to me. I’m glad he did. I hope it forever changes the way I process data that is given to me.