Reminder: if you have one penny, your net worth is equal to the combined wealth of the world's poorest 40%

Every year, Oxfam publishes a headline number about global wealth inequality that takes this form: "The richest X people own more than the poorest Y billion people on Earth" (some examples: 2014, 2016, 2017, UK edition).

Oxfam's not lying, but they're also not saying what you probably think they are.

Oxfam's accounting works like this: your net worth is your assets minus your debts. If your debts equal or exceed your assets, your net worth is negative. By this method, the poorest ten percent on Earth have a combined wealth of minus one trillion dollars. Indeed, the bottom 40% of the world own, in total, nothing (according to this method).

That means if you are debt-free, and have one penny, you are richer than the poorest 40% of the Earth: 2,800,000,000 people.

Debt is a complicated subject, and there's plenty to be suspicious of in a debt-driven economy. But when you hear that 8 people own more than 50% of the world you probably don't think, "the 8 richest people's net worth exceeds that of the fifth decile of people, because on balance, the bottom four deciles have no wealth" -- you probably think, "These people are richer than 3.5 billion poor people."

At the bottom end, wealth is way down the list of priorities. What Oxfam is measuring here, after all, is saved and unspent money. For most poor people, if and when they do come into a sum of money, there’s a long list of things that they can and should spend it on, from food to shelter to healthcare to education. It would be wrong for them to save it rather than spend it. Even if that would send them up the net-worth deciles.

Remember too that Oxfam’s report is global, and covers many countries where saving money is difficult, expensive, and risky. The implication of the report—that it would be better were these people to have saved extra money, rather than spending it on things they desperately need—is both unrealistic and distasteful.

What Oxfam’s misleading stat gets wrong about inequality [Felix Salmon/Fusion]