Last month, the National Insurance Institute (NII) published its annual report measuring quality of life, poverty, and income inequality in the State of Israel, also known as the “poverty report.” For the first time ever, NII changed its method of poverty measurement to ensuring that it would report the maximum number of poor, raising important questions on how we assess and treat poverty in Israel.
NII usually measures poverty based on income gaps, meaning that the definition of poverty is relative. But in a year like 2020 when everyone suffers economically, the gaps get smaller. Many people who were previously defined as poor are suddenly defined out of that category.
And so, counterintuitively, NII initially found fewer Israeli poor in 2020 than they had in 2019 applying its traditional method of assessment. Unsatisfied with this result, NII modified its analysis to ensure that it could report a higher number of Israeli poor. It carried over the poverty line it had set in 2019, applying it to 2020.
What are the implications of this change for the way in which we measure and address poverty in the State of Israel? In the article below, published in May 2018 in Hashiloach Magazine, I explain why the “poverty” index does not measure poverty, why it does not help address poverty, and how it harms the real poor who need help.
Is it true that a third of Israel's children are poor?
The frequent discussions about poverty in Israel often rely on erroneous and biased data - designed to promote a public atmosphere that will push for further government involvement. On real and imagined poverty lines
Let's start with the good news: more than half of the recipients of welfare stipends in Israel are probably millionaires - or close to it. No, this is not a mistake. According to the Central Bureau of Statistics (CBS), 57% of income support recipients own an apartment.  Can a dependent person who owns property worth millions of shekels be considered poor? The surprising answer is: yes. According to the National Insurance Institute (NII), which publishes poverty indices every year, there is no connection between the amount of a person's assets and their definition as being poor; in fact, their definition as poor has nothing to do with even their standard of living.
In other words, the poverty indices misrepresent the number of people in serious financial need, often increasing the amount dramatically. These reports measure only a certain type of income - and its distribution across society. They do not measure material deprivation and therefore do not provide any measure that would allow for the formulation of a policy to eradicate poverty. They also do not measure social status and mobility, meaning that they do not provide any indication as to the socio-economic stratification of Israeli society.
The poverty report abuses public sentiment. The word "poverty" connects our minds to severe material hardship, bordering on images such as rummaging through garbage bins, malnutrition, or being covered in rags. But such images must be anchored in a concrete and absolute reality, rather than a relative statistical index according to which a significant number of those included in the definition of "poverty" enjoy a higher standard of living than those living above the "poverty line." For many, the word "poverty" is associated with a lack of opportunity – with poor education, being distant from employment and cultural centers and social neglect. It certainly does not include the well-connected and educated destined to accumulate the most wealth such as students in prestigious professions or high-tech entrepreneurs at the beginning of their careers. Nor does it include the wealthy who benefit from storing their wealth in investment funds. And yet, these sorts of individuals could easily fit within the NII’s assessment of poverty. 
Journalists who put images of neglect and unhappiness in articles on the poverty reports mislead the public since the NII definition of poverty is based on a statistical fiction, radically different from the reality. The same is true of social activists who passionately use the poverty index to illustrate disparities Israeli society. The poverty index does not, in any sense, chart the socio-economic stratification in the State of Israel.
Because the official poverty indices are flawed, government welfare policy based on these statistics does not and cannot provide a proper solution to real poverty. Under the heading “War on Poverty,” the government of Israel invests huge sums, much of which are wasted. They make only marginal contributions to those who are truly poor and suffering from severe material deprivation.
What's below the line?
To build a more accurate picture of Israeli poverty, we must, first understand the “poverty line” in the aforementioned reports, and clearly examine the measurement methods they apply.
The measurement of poverty in Israel is based on the relative approach, according to which poverty must be determined in relation to the standard of living that characterizes society. A family is defined as “poor” when its living conditions are significantly inferior to the living conditions typical of society as a whole - even if the family has the economic means to purchase basic living needs: food, shelter and clothing. According to the same principle, the definition of poverty used by the NII (the official and accepted definition of the poverty line) is "half of the median income per standard person." This definition is assumes a correlation between income and standard of living.
To better understand this definition we must divide it into four components.
"Income" - Income is the monthly (or annual) salary that a person (or household) earns on a regular basis. The NII relies on a household income survey conducted by the Central Bureau of Statistics, which distinguishes between income before and after government intervention (ie income that includes allowances, minus tax payments). In practice, we have two main pieces of data on annual income.
"Median" – This is one of two tools used to find the mid-point of statistical data. In contrast to an average – the sum of all figures in a data set divided by the number of figures – the median is simply the middle figure of all the figures in a data set. Unlike the average, the median is less affected by extreme values in the data set. And so, for example, while a tycoon adds huge sums to the average, he adds only one listing to the median. Today, the median income in Israel is NIS 5,216, while the average is NIS 6,152.
Using the media figure, the NII finds that any “standard person” earning under 2,608 NIS per month is poor.
The term "standard person" also requires definition. It is intended to enable a reasonable distribution of income according to the number of persons in the household. For example: a family of six does not spend twice as much as a family of three; as the family grows, the expense for extra members of the family is relatively low. To match the number of persons and the actual (estimated) cost of living, the term "standard person" was coined. In this calculus, a single-person household is equal to 1.25 standard persons. But, for instance, a household of 4 people is considered to have 3.2 standard persons.
This definition of “standard person” differs from that used by OECD countries, and makes it difficult for families with children to find themselves above the poverty line. II In Israel in 2016 there were no fewer than 463,300 families living below the poverty line, comprising 1,809,200 people of which 842,300 are children.
It is very disturbing to think that one in four children in Israel is poor. If all these children were gathered in one city, its population would be double that of Tel Aviv and six times that of Ramat Gan. Indeed, these and similar numbers are very prominent in the media and give impetus to increases in welfare budgets or various "social" pieces of legislation.
But quite a few of these "poor" children, and possibly even most of them, are not living in serious financial need. The poverty line tells us nothing about real poverty. All we really know is that the reported income of the households in which these children live is arbitrarily lower ("half" to be exact) than another point, artificially defined by the authors of the report.
It can of course be argued that the poverty line does say something even if it is a relative rather than an absolute measure. But a simple look at the ways in which this index is formulated shows that it is almost meaningless, giving an overview of inequality rather than allowing us to understand who is really in distress.
Even the proponents of the relative measurement method must also acknowledge the deep and significant distortions of the measurement method used in Israel. As a result of these distortions, the Israeli poverty index defines entire groups as "poor," which common sense would not define as poor.
Measuring poverty by income is misleading because there are period in many people’s lives – students, soldiers, investors – where they are not earning a fixed income but still live well. Measuring on the basis of revenue is also potentially misleading. The poverty report is based on self-reporting of expenses and income among families, but a lot of self-reporting is either incomplete or inaccurate, especially because there are incentives to under-report. Evidence of the unreliability of the reports is evident when examining the expenses: According to the table in the CBS report, a household in the bottom quintile earns an average of NIS 7,002 per month,  and spends NIS 8,194. The average amount of expenses (other than a one-time expense) cannot be greater than the average income, and it is therefore clear that there is a gap between the actual income and the reported income.
The poverty index also completely ignores property ownership. Imagine that with hard work and good luck you pulled off an "exit," and you have a huge fortune of $10 million in your bank account. Thanks to this great fortune you have allowed yourself to go on a one-year vacation. During this year, you do not have a regular income. Well, according to the poverty index of the CBS and the NII - at this moment you, the rich as Croesus, are considered "poor."
One can also make the point with a more mundane example. There is a significant wealth gap in the case of two families earning even similar incomes, where one owns a house and the other does not. Why is a person whose salary places him above the poverty line, but who does not own an apartment, "worth" more than a person who owns an apartment worth a million shekels but earns a current salary at a lower rate? Yet according to CBS data, about 35% of the people in the lower decile have an apartment with an average value of NIS 1 million or more. 
The distortion created by this approach can be illustrated easily. Ultra-Orthodox and Arab households are highly represented among households defined as poor (52% of ultra-Orthodox families and 54% of Arab families are classified poor). But his is at a time when the percentage of ownership of real estate in these two populations is much higher than the percentage of ownership among the general Jewish sector. Some 69% of the ultra-Orthodox own an apartment (whose average value is over NIS 1.5 million) and among the Arabs 76% own an apartment (whose average value is over NIS 1 million).
Moreover, the poverty index makes no reference to ownership of companies, businesses, and other assets. So long as the owners of the company do not draw a salary from it, their ownership is excluded from the assessment of their wealth. It is not just about assets: the poverty index ignores an important economic factor, known in professional parlance as "income in kind." This term refers to any income or lack of expenditure that is not provided in the form of a money transfer. Young adults living with their parents; discounts on property taxes, day care centers, transportation and medicines; gifts from parents; housing in public housing and more - all of these provide many of us with economic well-being but are not defined as "income" in the NII indices. Had these "incomes" been embodied in the NII indices, they would presumably raise many households above the poverty line.
Furthermore since these discounts are given primarily to low-income earners, the resulting measure produces statistically larger gaps than ones that may truly exist. In fact, people with an average salary who do not get as many benefits may find themselves in real financial distress compared to their low-income friends who do get those benefits. Despite this, according to the poverty indices, the former is located above the poverty line and the latter below it.
Another failure of the relative model is that it is oblivious to the purposeful choices made by entire communities to engage differently with the general economy. A relative model can only help us draw conclusions so long as there is some degree of homogeneity in the population: people pay the same currency and share a similar view of the desired standard of living. In Israeli society, on the other hand, there are two substantial sectors, the ultra-Orthodox sector and the Arab sector, which run a different economy on the basis of different values than those shared in the general population. Different perceptions of value lead to a choice of a different sort of lifestyle, and a prioritization of expenses and income of a different kind. To understand this better, consider the following graph from the NII report, describing the likelihood of poverty in a family with two breadwinners.
In the general Israeli society, the chances of a family being classified as poor where both parents earn a living are less than 5%. But if it is an Arab or ultra-Orthodox family, the odds jump to 25% on average. There are two ways to account for this difference. One explanation is the distortion created due to the uniform measurement: the level of wages and prices in these sectors is very different from that in the rest of the Israeli economy, and it is possible to live within them with dignity, within a budget that the Israeli majority would consider meager. Another explanation relates to values and preferences: in ultra-Orthodox society - at least in its conservative wings - the family prefers to live in austerity, housing three children per room in a bunk bed and a mattress on the floor, while the father teaches Torah in a heder or a yeshiva, earning minimum wage, and studying Torah with his children in the afternoons. For them, that is the true measure of their quality of life – and not the number of vehicles owned by the family (usually zero), the cable TV packages, or how many times they fly abroad.
Another point to keep in mind is the very choice to check poverty according to income and not according to expenditure. Examining this closely may indicate more accurately the extent of the gaps in the standard of living in Israel. The table shows that the income of the top quintile is 5 times greater than the income of the bottom quintile: NIS 34,448 per month compared to NIS 7,002 per month; and this is indeed a very large gap. However, a look at the expenditure column reveals a completely different story: a family from the bottom quintile spends a little less than half (!) of a family in the top quintile: NIS 8,194 per month compared to NIS 17,889 per month (indeed, as mentioned, the reliability of measuring income must be questioned). It is clear that the families from the top quintile are able to save, while the families from the bottom quintile are not keeping up. But the gap between income differences and expenditure differences shows that the differences in living standards are not very large. The standard of living is a function of expenses and not of income, . If the poorest spend (per capita) only half or a third of the expenses of the top quintile every month, then the gap between them is not five times but less than twice as much. Measuring the distribution of expenditures (by households and a "standard person") may therefore yield a clearer and more credible picture of poverty in Israel.
Who enjoys intimidation?
We have touched on a series of deep failures that underlie the poverty index, but owe must also point to a difficult problem that is found in any relative measurement of poverty: blindness to economic growth. Suppose the State of Israel earns $100 billion in revenue following the discovery of gas reserves in the Mediterranean, and it decides to give each of its citizens $10,000 every year. Such a decision would substantially change the standard of living of the citizens of the country. However, it would not fundamentally change the dimensions of poverty measurement under a relative rubric.
This is the place to mention that in the State of Israel, 99% of the families have a refrigerator,  94% of the lower decile have a mobile device, and about 70% of them have an air conditioner. In Mexico, on the other hand, where the percentage of people below the poverty line (of course) is lower than in Israel, only 10% of households have air conditioning. And no, it's not less hot there. Mexico is simply more egalitarian: instead of relative poverty, there is absolute poverty. I wonder how many of the "poor" would be interested in replacing the "bad" Israeli society with the "just" Mexican society.
From now on, the NII’s report should be called an inequality index and not a poverty index, for that is what it is. Its relative measure paints a scenario in which the wealth of the rich is the cause of the "poverty" of the poor. This formulation also naturally leads to the support for an inflated welfare mechanism to help resolve the gaps and perceived injustices inflicted by inequality. But such an index is not suitable for a world in which people are trying to eradicate true poverty in a slow and constant process, by raising the standard of living of the entire population. It is a measure appropriate to a world where poverty is an ongoing provocation - a measure designed to promote a society of equal outcomes despite the costs.
If the report was truly aimed at eradicating of absolute poverty, one could expect progress from year to year - as can be seen, for example, in UN reports. The international organization defines absolute poverty as one dollar of income per day per capita (in recent years the index has been updated to $1.9). According to UN reports, between 1970 and 2006, absolute poverty rates worldwide (excluding Africa) dropped to the lowest range on a historical scale (single-digit percentages). But compared to such indices, relative indices leave the picture stable and will remain so in the future - unless the State of Israel degenerates into widespread poverty like that of Mexico. A government policy that seeks to reduce disparities instead of fighting poverty is ineffective in every sense. It justifies extensive tax collection and multiple distribution of benefits, but does not create any significant change in reality itself. In the parallel, extra-governmental reality, it is economic growth that causes the consistent a
nd systematic eradication of poverty - the real type, of course.
In order to eradicate real poverty - that is, to improve the situation of the individual who cannot endure the struggle of existence - the sources of poverty must be understood and measured correctly and to adjust the ways of solving the problem. The degree of socio-economic mobility, for example, is of central importance in such a measurement. On the other hand, the relative poverty index deals with another matter - measuring gaps, and it is aimed primarily at justifying an endless government investment in solving the wrong problem.
It is these threatening poverty indices that cause the State of Israel to continue to invest fantastical sums, over many years, in welfare budgets. The State of Israel invests about NIS 80 billion in welfare:  about NIS 81 billion in various transfer payments (old-age and survivors' benefits [26.7], general disability benefits [13.5], section 9 and miscellaneous  [10.5], child benefits [9.5], mothers , long-term care allowance  work-related injuries [4.8], and unemployment benefits ); and an additional NIS 7 billion in the maintenance and operation of the welfare services themselves through the Ministry of Welfare. The NII mechanism costs an additional NIS 10 billion (!, and to them must be added a variety of discounts and benefits budgeted through other ministries. Just for comparison, the annual Israeli defense budget is NIS 62 billion, including the pensions of all career soldiers to date).
These huge outlays can be seen as a joyous expression of the spirit of grace and charity that is characteristic of the Jewish people. Here, in establishing a state, the Jews were able to continue the values of mutual care and to tend to the poor and the lonely, the convert and the orphaned, through vigorous action to eradicate poverty. But a simple examination of the data reveals that the legacy copied here, straight from the shtetl, is actually Chelm's legacy of folly: year-on-year poverty reports show that these budgets do not change anything. The number of "poor" in the country remains almost constant throughout the years.
We have before us, therefore, ministries and organizations that receive the largest budget in the country, and fail time and time again in handling their responsibilities. It can of course be argued that without the actions of the NII and the Ministry of Welfare the situation would have been much more serious, but the result at the macro level cannot be ignored. If the situation has remained stable over so many years, despite a huge investment aimed directly at it, we have a problem. 
Instead the problematic measurement methods are an excellent tool for preserving the power of the NII and for preserving the power of politicians. The way in which poverty rates are measured in Israel allows authorities to "play" with the data and move (through welfare distributions) families below the poverty line to be above it, without contributing to their social mobility and without improving their real earning capacity. Unlike other in-kind income, the benefits are included in the calculated income and thus "results" can be easily achieved.
This is the familiar combination of populism and socialism: public representatives want to prove to their constituents that they are correcting problems. For this to happen there must always be problems. Besides the desire for grace and compassion speak strongly to the Israeli heart. To express care, the logic goes, one has to increase government spending and in fact distribute money to the public to buy its votes. 
As for NII, it is to be expected that the body that manages huge sums of money will not soon relinquish them. And yet this body is the one that produces the poverty report that serves as a basis for its budget.  Moreover, the NII is not an ordinary state organization; it dominates the country's largest budget and in fact is the only body other than the government that collects taxes from the citizens. As was recently published,  the NII is managed by a committee of 56 anonymous members and its deliberations are conducted without minutes. Its board of directors includes all the bodies that systematically benefit from the NII: the Histadrut, the disabled people's organizations, the employers' representatives, local government organizations and women's organizations. It's also lead by the minister of welfare, whose incentive is to always show he is waging the good fight. But it is clear that he has no political interest in reducing the dimensions of poverty.
Brief history of the line
Is the poverty index in its current form necessary? Well, it turns out that such a measure was not used in the past, and even today it is not uniformly accepted, as the example of the UN shows. In fact, Israel once intended to measure poverty according to absolute indices, and even established a committee to determine such an index in the 1960s. However, the committee was dissolved and from the 1970s onwards, the problematic relative measure was adopted in Israel.
The "poverty line" is a relatively new concept, the result of the modern era of Western affluence. Like abundance itself, it also came to us from late 19th-century London - where it was first thought that the problem of poverty should or could be solved and the rate of poverty measured. Until this time, it seemed self-evident that human society was composed, in the language of Benjamin D'Israeli, of "two separate nations," of the wealthy and the destitute. Poverty was perceived among all the peoples and cultures known to us as a necessary and permanent companion, and even asthe natural fate of the human race. Years of drought leading to mass famine were perceived as a plague of heaven, which must be accepted The same was true of pandemics and wars.  There was no point in measuring or fighting poverty until this mentality changed.
At the end of the 19th century, when Western prosperity rose and also trickled down past an elite class, conceptions of scarcity and poverty changed. In England the standard of living rose and the number of the needy sharply declined (i.e. people who, for various reasons, were unable to take care of themselves and relied on the public coffers). From then on, the working poor – the people whose employment just barely saved them from extreme poverty – - moved to the forefront of public consciousness. For the first time, their poverty was a social problem, one that could be addressed and perhaps even solved, rather than accepted in resignation.
The struggle against poverty morphed from tending to the absolute poor to ensuring a "basic" standard of living for the working classes who could stand on their own, difficult though it may be. Against the background of this dramatic change, two English social activists, Charles Booth and Seebohm Rowntree, conceived of the "poverty line," according to which there is an objective and measurable standard by which those who have low living conditions are defined as "poor." The standard was first applied and published in 1887. 
Booth and Rowntree made poverty measurement a common practice. They adopted an absolute approach as to the definition of the poverty line, and their findings revealed for the first time the difficult living conditions of the working population in London. These findings justified the advancement of the welfare policy in the years to come. Forty years after their work, during World War II, the Beveridge Report was submitted to the British Parliament which effectively established the British welfare state. A historical compromise was struck between conservative liberalism and socialist liberalism. It was agreed that the order of capitalist society would not change but that every citizen of the country would be guaranteed a “floor” of social security. This arrangement lasted until the 1970s.
The Beveridge Report's poverty line sought to ensure a sufficient minimum standard of living and included five components: food, clothing, housing, other household expenses and "some room for maneuver in the budget"  (and here we have some resemblance to what Jabotinsky already called in 1934 "The Five Memim": food (mazon), residence (ma'on), clothing (malbush), education (moreh) and medicine (marpeh)). The absolute conception expressed by Beveridge's plan was also adopted in the United States during the 1960s. In the era known as the "War on Poverty" led by President Johnson, the US Department of Social Security adopted the definition that poverty is a state of "nutritional inadequacy."
The first attempts made in Israel to measure poverty were in fact based on the model used at the time by British and American researchers. From the founding of the state until the 1960s, Israel saw poverty primarily as a lack of essential needs – that is, as an absolute distress. In light of this, the state sought to address the basic material needs of its citizens, and support was minimal.
In 1963, the then-minister of welfare, Yosef Burg, was appointed by the Katz Committee to establish a poverty line that would serve as a basis for determining aid quotas, determine an appropriate consumption basket, and set the aid quota accordingly.
However, for various reasons, the committee was dissolved in 1967, and since the 1970s the relative index has been adopted in Israel. Rafi Roter and Nira Shammai, from the Research and Planning Division of the NII, were the first in Israel to seek to treat poverty as a phenomenon based on the distance of income from a point defined by the distribution of income of the entire population; and to that end, they chose the model now in use, first proposed by the American economist Victor Fuchs.
On this determination and the relative approach, Prof. Abraham Doron wrote the following:
The poverty line of Roter and Shamai was supposed to be only temporary and provide an initial orientation on the patterns of poverty in Israel. Since the early 1970s, however, it has become the standard for measuring poverty in Israel… 
The relative approach reigns supreme to this day.
Towards another measurement
In another article, Abraham Doron stated that: All these attempts to establish an 'objective' 'scientific' poverty line, which give an unequivocal answer to the definition of the phenomenon of poverty, and which will be valid anytime and anywhere, have not been crowned with success. These attempts were doomed to failure because their implementers sought to achieve an unattainable goal. There was a false magic in these attempts, since science cannot answer a question that is fundamentally social-value based. 
Doron is partially right. Indeed, there is no "objective" line of poverty, and science cannot answer a values-based question. Still we can prefer more successful measurement methods over the less successful measurement methods. The shortcomings of the current measurement method are too severe to be used as a meaningful measure. The relative poverty index of the NII does not allow us to seriously answer the question that is so important: how many real poor live in the State of Israel? In any case, it does not have the power to create a welfare policy that will really help those in need. The huge welfare budgets -- and perhaps one might say, the blatantly ineffective ones – are not reflected in the poverty indices.
It is possible and essential to correct the series of distortions mentioned at the beginning of the article: to include on the income side both "income in kind" and property ownership, to weigh the reported income according to expenses, and calculate the "standard person" in a way that does not make all large families "poor." Such changes will fundamentally change the picture and allow us to know, for the first time, what the actual relative poverty rate in Israel is.
And yet, even a more realistic poverty index would not at all reflect economic growth and rising living standards but only inequality. It will also probably include distortions related to the inclusion of different sub-societies under one umbrella. A relative index may therefore paint a picture according to which nothing has changed in the situation of the poor in the last two hundred years - while the truth is miles away from such a picture. Irving Kristol wrote in one of his articles about the problems associated with the relative poverty index:
The reality in which the more a society becomes more affluent, the higher the concept of the "poverty line" will rise, is inevitable and even worthy. But the idea that the concept of poverty must be consistently and vigilantly redefined so that twenty percent of the population will always remain 'poor' is a product of ideology, not of sociology, economics or the social sciences. 
It seems that to advance our understanding of poverty and proper welfare policy, we must return to the absolute poverty indices (where the relative indices will continue to be measured, but as inequality indices) or combine them with relative indices. Even an index that defines a basic basket of essential commodities will be relative: it will not be satisfied with basic food securityand it will express the contemporary moral conception of society - but that will be all of its relativeness.
The adoption of an indefinite scale for measuring poverty assumes that we can never solve the problem of poverty— and problems that cannot be solved properly are abandoned, even for pragmatic reasons. Beyond that, a society sometimes reaches such a high level of propserity that it is inaccurate toto call lower-income strata “poor”. In the case before us we also find the unsolvable tension between equality and freedom, and it is worth considering it in the discussion as well.
There have always been gaps between human beings and there always will be. The bottom decile will remain forever. A corny phrase goes: "The latter are always at the end." If we do not believe in a dogma focused only on equality, we must ask: What is the absolute state of the latter? Do they have a chance to live with dignity? Is there social mobility that may open a path to rise for them?
A final word on the big picture
Thanks to the capitalist system, the absolute situation of the inhabitants of the globe has improved drastically and will continue to improve. Calculate how many goods and services a person can purchase with an income of about NIS 2,608, defined as the "poverty line for a standard person" and compare this to the situation of the poor in other historical periods.
Matt Ridley, in his great book “The Rational Optimist,” reminds us of the "big picture" and describes how different the present is from the past, and how good the future is likely to be. In Victorian England, life expectancy in 1800 was less than 40, diseases took a heavy toll, drunkenness was a common phenomenon, fruits and vegetables were in short supply, the price of candles was high, and leisure culture was for the upper classes only. Above all, the amount of goods and services that could be purchased in exchange for a wage of an hour’s work was meager compared to our day. “A carriage ride from Paris to Bordeaux,” Ridley reminds us, was worth a clerk’s monthly salary at the time. This period did not include running water, telephones, cars, refrigerators, washing machines, televisions and more. Imagine the implications of a toothache during this period!
Let us not forget that the main beneficiaries of the tremendous changes that have taken place in the last two hundred years are the lower classes, in the words of Ridley:
It is true that the rich became richer, but the situation of the poor improved more. Between 1980 and 2000, the poor in developing countries increased their consumption twice as fast as the rest of the world… although the world population doubled, even the absolute number of people living in severe poverty has declined since the 1950s, and the proportion of people living in severe poverty has dropped by more than half, to less than 18 percent of the world’s population. Of course, this number is still appallingly high, but the trend does not justify despair: at the current rate of decline in poverty, in 2035 approximately the number of poor will reach zero, although this is unlikely to happen. According to a UN estimate, in the last 50 years poverty has decreased more than it has in the 500 years preceding it. 
I am not arguing that the world’s economic progress has allowed us to rest on our laurels and put the problem of poverty behind us. After all, life in the modern world not only offers a degree of wealth but it also demands it. In a country like ours, you cannot fence off a plot of land and build a house out of trees that you have cut yourself, and so, for example, housing, a fairly simple matter in the past, becomes a real economic challenge in the present. Modern society expects you to own a cell phone, without which you will not have access to many services nor a chance to find a job. In other words, a contemporary person may be in severe economic distress even if by the parameters of the 18th century he was considered rich.
Still, the "big picture" should not be forgotten, and it should be remembered that the term "poverty" today, certainly in Israel, differs entirely from its meaning in hassidic or Dickensian stories. So there is definitely a good reason to be optimistic.This article is sponsored content.