麦肯锡-人人都能负担得起的美好生活让25亿人获得经济赋权

May2024

Mcsey

GlobalInstitute

Abetterlifeeveryonecanafford:Liftingaquarterbillionpeopletoeconomicempowerment

Loweringthecostsofbasicgoodsandservicestoimprovelivingstandards

byKweilinEllingrud,MarcoPiccitto,TilmanTacke,RebeccaJ.Anderson,IshaaSandhu,andKevinRussell

Ataglance

—The“empowermentline”gaugesprogresstowardaworldinwhicheveryonecanmeettheiressentialneeds.Thisthreshold,setwellabovetheinternationalpovertyline,isthepointatwhichpeoplecanaffordastandardbasketofessentialgoodsandservicesandbegintosave.

—Economicgrowthisrapidlyimprovinglivingstandardsinlower-andmiddle-incomecountries,butthiseffectstallsoutinadvancedeconomies.Inwealthiercountries,highercostsandinequalitypreventabout20percentofthepopulationonaveragefromreachingfulleconomicempowerment.

—Strugglinghouseholdsbenefitfromhigherincomesonlywhenthosegainstranslateintogreater

purchasingpower.Comparingeconomiesateverystepoftheincomeladderrevealsthattheessentials

generallybecomemoreexpensiveascountriesbecomewealthier—andthesecostincreasestendtomatchorexceedincomegainsforthebottom20percentofhouseholds.Housingisthebiggestaffordabilityissueforhigher-andmiddle-incomeeconomies;foodcostsareanimportantdifferentiatorelsewhere.

—Ifallcountriescouldlowerthecostsofessentialgoodsandservicestomatchpeerswithbetter

affordabilityatthesameincomelevel,almostaquarterofabillionadditionalpeoplecouldreachtheempowermentline.Theseoutperformersshowthatitispossibletolimithouseholdexpendituresonbasicgoodsandservices.

—Whileaffordabilityisinfluencedbypolicyandthedeliveryofpublicservices,theprivatesectorhas

scopetoact.Inadditiontoeasingcostburdensfortheirownworkforcesandacrosstheirvaluechains,

businessescandevelopaffordableofferingsinhousing,energy,food,healthcare,andcommunication.Theycanfindopportunitiestopassonproductivity-drivensavingstoconsumersandexpandlow-costbusinessmodelsintounderservedregionsandpopulations.

Highcostsforthenecessitiesoflifehavemillions

feelingasiftheycan’tgetahead.Postpandemic

inflationhasgivenprominencetoastructuralissuethat’sbeenbrewingforyears:thecostofthebasicsisoutofreachfortoomanyhouseholds.

Theempowermentline,introducedinpreviousresearchbytheMcKinseyGlobalInstitute(MGI),

offersawayforpublic-andprivate-sector

leaderstomonitorthisissue.Itconsidersthedailyexpenditureneededtoaffordabasketofessentialgoodsandservicesthatconstituteafrugalbut

decentlivingstandard(seesidebar,“Whatisthe

empowermentline?”).Asharplyhigherstandard

thantheinternationalpovertyline,itisdesigned

toencompassthosewhoarenotformallycountedaspoorbutarestillunabletomakeendsmeet.Asof2020,9percentoftheglobalpopulationlivedin

extremepoverty,while60percentlivedbelowthe

empowermentline

.1

Thisanalysisextendsourearlierresearchby

analyzingempowermentoutcomesforcountries

ofdifferingincomelevels.Italsohighlightsamajor

issuethatneedstobetackledtounlockfurther

progress:affordability.Comparingcountries,wesee

thecostofthebasicsrisingintandemwithGDPper

capita.Thosecostincreaseslargelyorwhollyeat

uptheadditionalincomethatgoestothebottom

20percentofthepopulationwhenacountryattains

ahigherrungontheincomeladder.Thatpatternis

oneofthefactorspreventingwealthiercountries

fromachievinguniversaleconomicempowerment.

Muchofthedebateonhowtohelpstruggling

householdscentersonboostingincomesand

Abetterlifeeveryonecanafford:Liftingaquarterbillionpeopletoeconomicempowerment2

reducinginequality.Butthepuzzlecan’tbesolvedinfullwithoutaddressingthecostsideoftheledgeraswell.Indeed,ifcountrieswithmoreexpensive

empowermentbasketscouldlowerthosecoststomatchbetter-performingpeersofsimilarincomelevels,some230millionadditionalpeoplewouldbeabovetheempowermentlinetoday.Theglobalpopulationthatisfullyempoweredwouldgrowbyaboutthreepercentagepoints.

Inadvancedandemergingeconomiesalike,thehigh

costofhousingisoftenthebiggestfactorkeepingadecentstandardoflivingoutofreach.Inlower-

incomecountries,foodcostsarealsoapressing

issue.Thiscreatesrealstress,sincethecostsof

essentialgoodsandserviceshavebeenrising

fasterthanoverallinflation—andlower-income

householdsdevotealargershareoftheirbudget

totheseitems.

2

Puttingessentialswithinreach

foreveryonewouldrequireaddressingstructural

issues,includinglowproductivitygrowthinsectorssuchaseducationandconstruction,constraintsonaccessandsupply,andlowlevelsofcompetition.

Abroad“affordabilityagenda”couldrelieveat

leastpartoftheburdenforhouseholdsonthe

margins.Policiesandpublicinvestmentwould

needtobepartoftheanswer—buttheprivate

sectorcanmakearealdifference,too.Intacklingthisissue,companiesmayfindopportunitiesto

boostemployeeproductivity,gainalaborcostadvantage,andfindnewsourcesofrevenueinunderservedmarkets.

Economicempowermentriseswithincome,butonlytoacertainpoint

Mostcountriesgaugeprogressinlivingstandards

bylookingatGDPpercapitaorhouseholdincome,butthatdoesn’tfullyreflectwhatittakestogetbyinagivenplace.Progresstowardeconomicinclusionrequiresfactoringinbothwhathouseholdsbringinandwhattheymustpayout.Theempowermentlinecapturesthoseoutlays.Itcanshedlightonwhetherpeoplehavesufficientspendingpowertomeetall

theirfundamentalneeds(seesidebar“Whatistheempowermentline?”).

Globally,growthfuelseconomicempowermentInperhapsthegreatestachievementofmodern

times,morethanabillionpeoplehaveexited

extremepovertyoverthepastthreedecades.Mostwereinthefastest-growinglower-andmiddle-

incomeeconomies,includingChinaandIndia.

3

Thishasproducedsubstantialglobalprogressinhumandevelopmentoutcomessuchaschildmortalityandaverageyearsofschooling

.4

Apoint-in-timeviewof120countriesshowsthatthosewithhigheraverageincomestypically

havelargersharesofthepopulationabovethe

empowermentline.Climbingtheincomeladderis

critical:onlyabout20percentofthepopulation

isfullyempoweredinlower-incomeeconomies,

butthatshareincreasestoroughly50percentin

middle-incomeeconomiesandabout80percentinhigher-incomeeconomies.Atthegloballevel,thisisthecruxofthematter,sincemorethan4.7billionpeoplehadnotyetreachedtheempowermentlineasof2020.

5

Notethatouranalysisusesasnapshotof2022

dataanddoesnottracktherelationshipbetweenGDPpercapitaandempowermentovertime.Butacademicliterature,aswellasourownanalysisofrelatedmetrics,indicatesthatthepoint-in-time

resultsacrosscountriesalsoapplytoindividual

countriesastheygrow.Economicgrowthishow

acountryreachesahigherrungontheincome

ladder—anditisthemostpowerfulmechanismforimprovinglivingstandardsinlower-andmiddle-

incomeeconomies

.6

MGI’spreviousresearchshowshowfaster

productivity-drivengrowthcouldliftincomes

andtransformlivesonamassivescale.Rampingupgrowthisnoeasyfeat,however.Itinvolves

notonlymaintainingbaselinegrowthinthefaceofheadwindsbutalsoboostingproductivity,

whichrequiresgreatercompetition,innovation,

andlabormobilization.7

Whilegrowthincreases

incomesonaverage,ensuringthatthosebelowtheempowermentlineshareinthebenefitsdependsonemployerscreatingbetterjobsandtrainingworkerstostepintothem.Thisdynamicdoesnothappen

withoutintentionalandwell-coordinatedeffort.

Ineconomieswheregrowthhascollapsed,the

consequencesforvulnerablehouseholdsare

immediatelyapparent.Withitslong-termeconomicchallengesunresolved,Argentinahasrecently

experiencedbothstagnationandskyrocketing

Abetterlifeeveryonecanafford:Liftingaquarterbillionpeopletoeconomicempowerment3

Whatistheempowermentline?

TheempowermentlineisMGI’sestimateoftheexpenditurerequiredforevery

individualinagivencountrytoaccess

nutritiousfood,housingandenergy,safe

water,transportation,healthcare,education,clothing,andcommunication,withsome

minimumspendingonrecreationor

communityactivities.Itimpliesafrugallifebutenablespeopletofocusonmorethanmeresurvival.

Thisisthepointatwhichpeoplecanbegin

tomeetsomeoftheirmaterialwantsand

exercisemorechoicesaboutwhereandhow

theylive.Critically,theempowermentline

alsoincludesasmallmarginforsavingstoreducetheriskoffallingbackintopoverty;

onlybeyondthispointcanpeoplestart

tobuildwealth.Atasocietallevel,liftingpeoplemeaningfullyabovepovertyis

correlatedwithimprovedmetricsrangingfromreducedchildhoodmortalityand

longerlifeexpectancytoadditionalyearsofschoolingandexpandeddigitaland

financialinclusion.1

Empowermentextendsandcomplementsthe“livingwage”conceptthathasgainedtractionforemployersandworkersto

evaluatewagesagainstlivingcosts.Becauseitisbasedonconsumption,however,itcanapplytotheentire

population(includingchildren,theelderly,andpeoplewithdisabilitiesorcaregivingresponsibilities),notonlyworkers.Itis

agnosticastothesourceofspendingpower;inadditiontoreflectingearnedwages,it

capturesspendingbypeoplerelyingon

governmenttransfersandretireesspendingdownaccumulatedlifetimesavings.

Tocalculatetheempowermentline,weusedetailed2022and2023cost-of-livingdatafromtheWageIndicatorFoundation,whichconductssurveystounderstandspendingonadefinedbasketofessentialgoodsandservices(nottheeconomy-widebasket

usedinmeasuresofpurchasing-power

parity,orPPP).Forexample,housingcostsareforarentedtwo-bedroomapartmentinanaverageurbanarea,whilefoodcostsareforabalanceddietmakingup2,100caloriesperday(accountingforfooddifferences

acrosseconomies).Wealsolayerinbuffersforsavingsandsocialparticipation.2In

higher-incomeeconomies,housingtends

tomakeupthelargestshareofthebasket(about40percent),whilefoodmakesupthelargestshare(approximately35percent)inlower-incomecountries.

Thesedataalreadyreflectthein-kindservicesprovidedinagivencountry.

Educationorhealthcarethatisfully

providedbythegovernment,forexample,

lowerstheempowermentline.Because

thedataarebasedonhouseholdsurveys,

theperceptionofasafetynetalsoplaysa

role;publicprogramsthatdonotfullyreachtheirintendedpopulationsmaynotbefullyreflectedinempowermentlinefigures,andhouseholdsmaynotconsiderrebatesortaxcreditswhenprovidinganestimateoftheirout-of-pocketcosts.

Empowermentcostsmaydifferacross

countriesbecauseofvaryingproductioncostsofessentials,profitmargins

forproducers,andtheextent(and

effectiveness)ofsubsidiesandotherin-kindsocialbenefits.Becausedetailsabout

thosecomponentsoftheempowermentlinecannotbediscernedfromsurveydataalone,itisbeyondthescopeofthisresearchto

disaggregatethem,althoughthatwouldbeapromisingareaforfutureresearch.

Inthisresearch,theterm“affordability”

describeswhetherittakesrelativelyhigh

orlowexpendituresbyhouseholdsto

acquiretheessentialgoodsandservices

intheempowermentbasket,basedon

comparingcostsacrossallcountriesinthesameincomeband.Inadditiontocapturingdifferencesinproductioncosts,this

approachcapturesdifferencesinwhether

householdsmustpayforgoodsand

servicesoutoftheirnetincomeorwhether

theyarepubliclyprovided.Forexample,fully

tax-fundededucationsystemsaremore

“affordable”thanalternativemodelsthat

chargefees.

Notethatforasubsetof20verylow-

incomecountries,ouranalysissetsthe

empowermentlineatastandard“floor”of

$12perpersonperdayinPPPtermsrather

thanusingabottom-upcalculationoflocal

costs.Althoughtheempowermentbasket

mayactuallycostlessthan$12inthese

countriestoday,thischoicereflectsthe

aspirationtosetanambitiousglobaltarget

forminimumlivingstandards,andthis

requiresahigheradjustmentinthepoorest

countries,enablingqualityimprovements

whereneeded.

Havingestablishedtheempowerment

line,wecanthencalculatetheshareof

populationbelowitineachcountry,using

consumptiondatafromOxfordEconomics

anddistributiondatafromWorldData

Lab,whichgetsustoadailypercapita

spendingfigureforeachcountry.Likethe

empowermentlineitself,dailyspending

figuresreflectimpactsfromcashtransfers

andpublicincome-assistanceprograms.

Thereisbroadagreementthatlivingwage

dataqualityandmethodology(whichour

researchbuildson)couldbeimproved,

andweacknowledgetheselimitations.3In

addition,weestimatetheempowermentline

atthenationallevel,whichdoesnotreflect

substantialvariationswithincountries;

economicempowermentrequireshigher

levelsofconsumptioninaboomingcity

thaninasmallruraltown,forexample.The

estimatesarecalculatedonapercapita

basis,butatthehouseholdlevel,spending

patternswillvarywiththenumberand

characteristics(suchasworkstatus)of

householdmembers.

1

2

Frompovertytoempowerment:Raisingthebarforsustainableandinclusivegrowth,McKinseyGlobalInstitute,August2023.

Wecalculatesocialparticipationas10percentofbasicneeds,basedonWageIndicatorFoundationdata.Thatincludesthecostofrecreation,hobbies,orenrichment

activities.Italsoservesasabuffertoaccountforanyexpensesspecifictoindividualcountriesthatmaynotbereflectedintheglobalframework.Wealsoincludeasavingsbufferequalto5percentofthetotalempowermentbasket.

3

CarlottaBalestra,DonaldHirsch,andDanielVaughan-Whitehead,Livingwagesincontext:AcomparativeanalysisforOECDcountries,OECDPapersonWell-beingandInequalities,workingpapernumber13,OECD,2023.

Abetterlifeeveryonecanafford:Liftingaquarterbillionpeopletoeconomicempowerment4

inflation,pushingmanymiddle-andworking-

classfamiliesintoprecariouscircumstances.

8

A

serioushungercrisishasdevelopedinPakistan,

wheregrowthgroundtoahaltin2023amida

similarinflationaryspiral.

9

Thisunderscoresthelinkbetweengrowthandlivingstandards.

Higheraverageincomesdon’ttranslateintoeconomicempowermentforeveryonein

wealthiereconomies

Whilehigherincomelevelscorrelatewithbetter

empowermentoutcomes,thatrelationshipdissolvesatthetopoftheincomeladder,oncecountries

exceedabout$20,000inGDPpercapita(Exhibit1).Reinforcingwhatweseefromthisstaticview,

researchhasfoundasimilarpatternovertimein

Europe.Inthecontinent’slower-incomeeconomies,thereisapositive,statisticallysignificant

relationshipbetweengrowthandlowermaterial

deprivation,butthatrelationshipdoesnotholdforitshigher-incomeeconomies

.10

Inshort,veryhighlevelsofgeneralprosperityare

notaguaranteeofbaselinesecurityforeveryone.

Forexample,althoughGDPpercapitaismorethanthreetimeshigherinSwitzerlandthaninSpain(in

USDterms),theirsharesofthepopulationbelowtheempowermentlinearesimilar.Eventhewealthiest

economieshavenotliftedthelast20percentorsoofthepopulationabovetheline.

Exhibit1

Betterempowermentoutcomesandhigherincomestendtogohandinhand,buttheefectplateausafteracertainpoint.

GDPpercapitagrouping:¹

44lower-income

countries(<$5,000)

50%ofsamplepopulation

40middle-income

countries($5,000–$20,000)35%ofsamplepopulation

36higher-income

countries(>$20,000)

15%ofsamplepopulation

100

75

Population

abovethe

50

empowerment

line,2022,%

25

0

0520406080100120

Countrieswith

empowermentlinesetat$12PPPloor

○Othercountries

GDPpercapita,2022,$thousand

¹Totalsample=120countriesrepresenting~90%oftheworld’spopulation.

Source:WageIndicatorJune2022,October2022,andJanuary2023datasets;WorldDataLab;OxfordEconomics;WorldBank;McKinseyGlobalInstituteanalysis

McKinsey&Company

Abetterlifeeveryonecanafford:Liftingaquarterbillionpeopletoeconomicempowerment5

85

43

95

Boostingincomesisthebiggestdeterminantof

empowermentformuchoftheworld,butnotin

wealthiercountries.Infact,differencesinGDPpercapitaaloneexplain79percentofthevariations

inempowermentoutcomesacrosslower-incomeeconomiesand43percentacrossthemiddle-

incomesegment.

11

Forthesetwogroupsof

countries—whichhappentobehometomorethan85percentoftheworld’spopulation—reaching

thenextrungontheincomeladderiskey.Thatisachievedthrougheconomicgrowth,whichcreatesjobs,increaseshouseholdincomes,andgenerallyexpandsaccesstogoodsandservices.However,differinglevelsofGDPpercapitaexplainlessthan

15percentofthedifferencesinempowermentoutcomesacrossthewealthiestcountries

(Exhibit2).

Globally,countrieswithsimilarlevelsofGDP

percapitahavequitedifferentsharesoftheir

populationsabovetheempowermentline;the

variationsareonaverage20percentagepoints.

Thesedifferencesmatter:keepingincomelevels

constant,ifallcountriesmatchedtheempowermentoutcomesoftheirbest-performingpeers,

360millionmorepeoplewouldbeabovethelinetoday.

12

Whatelseisatwork?Inshort,inequality(thewaynationalincomeandwealtharedistributed)andaffordability(howfaritgoes,especiallyforthoseatthebottom).Inequalityofwealthandincome

leavesthepoorestsegmentswithoutthemeanstofullymeettheirneeds,evenincountrieswheretheaverageincomeishigh.

13

Beyondwhether

Exhibit2

Incomegainshaveagreaterinluenceonempowermentoutcomesinlower-incomeeconomiesthaninwealthiereconomies.

Extenttowhichincomegains,afordability,andinequality

factorintopeople’sabilitytoreacheconomicempowerment¹

GDPpercapita

44lower-income

40middle-income

36higher-income

grouping²

countries

(<$5,000)

50%ofsample

population

countries

($5,000–$20,000)35%ofsample

population

countries

(>$20,000)

15%ofsamplepopulation

100

Factors’

explanatory

power,%

GDPpercapita

alone

50

GDPpercapita,

afordability,

andinequality

combined

Shareof

0

populationabove

empowermentline,⁵

%

79

23

90

49

14

78

Inwealthier

economies,

factorsof

aiordability³andinequality⁴havegreater

explanatory

power.

¹ResultsdeterminedbyrunningalinearregressioninwhichGDPpercapitaistheindependentvariableandtheshareofpopulationabovetheempowermentlineisthedependentvariable.ValuesrefertotheR-squaredvaluesassociatedwitheachregression,ortheshareofthevariationinempowermentoutcomesexplained

byGDPpercapita.TheincrementalexplanatorypowerofinequalityandafordabilityisdeterminedbyrunningamultivariableregressioninwhichGDPpercapita,inequality,andafordabilityaretheindependentvariablesandtheshareofpopulationabovetheempowermentlineisthedependentvariable.²Totalsampleis120countries,representing~90%oftheglobalpopulation.³Thecostoftheessentialgoodsandservicesintheempowermentbasket.Acountrywithhigher

afordabilityhasalowerempowermentlinethanalessafordablecountry.⁴Inequalityinprivateconsumptionexpenditure(asdeinedinGDP).⁵Basedonasimpleaverageacrosscountrieswithintheincomeband.

Source:WageIndicatorJune2022,October2022,andJanuary2023datasets;WorldDataLab;OxfordEconomics;WorldBank;McKinseyGlobalInstituteanalysis

McKinsey&Company

Abetterlifeeveryonecanafford:Liftingaquarterbillionpeopletoeconomicempowerment6

peoplehavespendingpower,wealsohavetolookathowmuchtheyneedtopayout.Weusetheterm“affordability”todescribewhetherthehouseholdexpendituresneededtoobtainthegoodsand

servicesintheempowermentbasketarerelativelyhighorlowforagivencountry’sincomelevel.

Forhigher-incomeeconomies,affordabilityand

inequalitytogetherexplainanadditional80

percentagepointsofthevariationinempowermentoutcomes.Bothofthesefactorsindividuallyhave

greaterexplanatorypowerthanGDPpercapita

alone.Whileit’simportanttofocusonwhatpeople

atthebottomearn,whathouseholdsneedto

spendtoacquirethebasicsmeritsattention,too.Inlower-andmiddle-incomeeconomies,growthstillmattersaboveall—butthecostofthebasicsisevenmoreimportanttoempowermentoutcomesthan

distributionaleffects

.14

Twocountriesatthesameincomelevelmayhavedifferentempowermentcostsforavarietyof

reasons,startingwithpolicychoicesaboutwhich

servicesarepubliclyfundedandtowhatextent,andhoweffectivelythoseservicesreachtheintended

recipients.Someofitcomesdowntolocalcontext.

Insomeplaces,peoplemayneedtheirowncarsto

getaround,forinstance;inothers,two-wheelersor

publictransitmightsuffice.Additionally,thesame

itemmighthavedifferentqualitystandardsfrom

placetoplace—forexample,apartmentsincold

climatesneedextrainsulationandglazedwindows.

Finally,costscanvaryforidenticalitemsduetoissuessuchastraderestrictions(seesidebar“Estimating

theempowermentlineacrosscountries”).

Forthebottom20percentof

households,highcostsforthe

essentialspreventlivingstandardsfromrising

Economicgrowthliftshouseholdincomes—even

forthoseatthebottom.Ourpoint-in-timeviewof

countriesacrosstheincomeladdershowsthatan

incremental$100ofGDPpercapitaisassociatedwithanadditional$18to$22ofconsumptionby

householdsatthe20thpercentileofincome.If

thisstaticviewholdsovertime,incomegrowth

shouldtranslateintohigherspendingpoweracrossapopulation.

Buthigherincomelevelsarealsoassociatedwith

highercostsforlife’snecessities,includingfood,

rent,energy,andtransportation.

15

Asacountryaddsthatincremental$100inGDPpercapita,affordingthebasicstakesanadditional$18(Exhibit3).

Incomegainsforahouseholdinthebottomquintilearealmostfullyeatenupbyhighercosts.Thiseffectismostpronouncedinwealthiereconomies,wheremanyhouseholdsonthemarginssimplydon’tsee

theirlivingstandardsimprove.

16

Moreprosperous

householdsfeelthesecostincreases,too.Buttheirincomegainsarelargeenoughtoabsorbthemwhilestillcomingoutahead.

Postpandemicinflationhasgreatlyexacerbatedthesqueezeonhouseholdbudgetsworldwide;thepastfewyearshavebroughtsupplychaindisruptions

aswellasglobalspikesinfoodandenergyprices

stemmingfromthepandemic,geopoliticalconflicts,climatechange,andblockagesofshippingroutes.

Butit’simportanttoemphasizethattherising

costoflivingisnotonlyarecentortransitory

development.Thepricesofcertainessentialgoodsandservices,suchashousing,healthcare,and

education,tendtoincreasemuchfasterthanoverallconsumerpriceindexes.

17

Theaverageconsumer

benefitsfromlowerrelativepricesforitemssuch

ascommunicationtechnologiesandclothing,whilefacinghigherrelativepricesforhousing,healthcare,andeducation.Forlow-incomehouseholds,this

issueismagnified,sinceessentialitemsaccountforadisproportionateshareoftheirexpenditures.

Therearestructuralforcesatplayinthis

phenomenon.Labor-intensivesectors,suchashealthcareandeducation,andotherlow-

productivity-growthsectors,suchasconstruction,competeforlaborwithmuchhigher-productivity

sectors;theythusmustraisewagesatahigher

ratethantheirproductivitygrowth.Although

high-productivitysectorssuchastechnology

maypayhigherwageswhileloweringprices,low-productivity,labor-intensivesectorstendtopasshigherproductioncostsontoconsumers

.18

Beyondproductivityandwagedynamics,inefficientmarketsoftendriveupthecostofthebasics.This

couldberelatedtotheextentofcompetition(andtradeopenness)inagivensector,regulation,or

potentialsupplyconstraints.Mostimportantis

Abetterlifeeveryonecanafford:Liftingaquarterbillionpeopletoeconomicempowerment7

Exhibit3

Athigherincomelevels,householdshavegreaterabilitytoconsume—buttheyalsofacehighercosts.

Householdspendingincreasecorrespondingtoa$100increaseinGDPpercapita

44lower-income

countries(<$5,000)

50%ofsamplepopulation

40middle-income

countries($5,000–$20,000)35%ofsamplepopulation

36higher-income

countries(>$20,000)

15%ofsamplepopulation

80

60

Household

spending

increase,¹

40

$

20

0

Generalpositionofempowermentlineforeachincomegroup

20th

80th50th

spending

Percentileofhousehold

$18goestoward

increasedcostof

empowermentbasket²

Note:Analysisbasedoncross-sectionaldataacross120countriesasof2022.Samplecountriesrepresent~90%oftheworld’spopulation.

¹CalculatedusingaseparateregressionforeachincomegroupinwhichGDPpercapitaistheindependentvariableandspendingateachofthedeined

percentilesisthedependentvariable.

²CalculatedusingasingleregressionacrosscountrieswithGDPpercapitaabove$2,500inwhichGDPpercapitaistheindependentvariableandempowermentcostsarethedependentvariable.

Source:WageIndicatorJune2022,October2022,andJanuary2023datasets;WorldDataLab;OxfordEconomics;WorldBank;McKinseyGlobalInstituteanalysis

McKinsey&Company

thathousingsupplyisoftenrestricted(byzoninglaws,forexample)andthusnotabletorespondtoincreasingdemandrelatedtopopulationgrowth,migration,orchangingpreferences.

Thesetypesofissuesadduptodailystress

andmissedopportunitiesforbillionsofpeople

worldwide.Manyareunabletosaveortoexercisechoiceaboutwhereandhowthey’dliketolive.

Forexample,moreyoungadultsinhigher-incomeeconomiesarelivingwiththeirparents,delaying

theirindependencebyyears;othersarenothavingchildrenbecausetheyfeeltheycan’taff