Michael Tanner looks at a lot of literature. His conclusion:
Looked at objectively, continuing the War on Poverty is unlikely to further reduce poverty, increase self-sufficiency, or expand economic mobility. More anti-poverty programs and more welfare spending are not the answer to continued poverty. Fifty years of failure is enough.
Of the many papers he refers to, I looked at one by Bruce D. Meyer and James X. Sullivan.
We find that consumption poverty, after adjusting for biases in price indexes, declined by 26.4 percentage points between 1960 and 2010
What they argue is that consumer prices rose less rapidly over the past 50 years than the official figures show. That means that real incomes were lower 50 years ago than the data would indicate. That in turn raises their measure of poverty fifty years ago.
I am not sure whether or not I agree. I
In any case, the poverty rate is one of the most messed-up statistics out there. You would think that poverty would be defined in absolute terms, as the ability to afford X amount of food, Y amount of medical services, Z amount of housing, etc. Instead, it is defined in relative terms, so that if you were to double everyone’s income, poverty would remain the same.
The poverty rate is a messed-up statistic, but not because its a relative measure instead of a absolute measure. Relative measures are typical of most countries, but the US actually uses an absolute measure. The main problem is the basket of goods the poverty rate is based on. The official poverty rate is based on the cost of a minimum food diet in 1963, scaled up to current dollars, with few other adjustments. Food was a much bigger share of household expenditures in 1963, so this measure may have made sense then. But now it clearly should incorporate other costs, such as housing. The poverty rate also uses the pre-tax income, without adjustments for taxes/benefits, and does not vary geographically by cost of living. The US Census Bureau and the Bureau of Labor Statistics have developed a Supplemental Poverty Measure to attempt to deal with these issues, but it isn’t widely used yet, in part because it is still under development. A recent blog post on the SPM can be found here: http://blogs.census.gov/2014/10/14/what-is-the-supplemental-poverty-measure-and-how-does-it-differ-from-the-official-measure-3/
“Instead, it is defined in relative terms, so that if you were to double everyone’s income, poverty would remain the same.”
The poverty thresholds are adjusted each year by the CPI, so if everyone’s income doubled and the CPI did not change, poverty would go down, unless I am missing something.
First, I don’t know what Micheal Tanner has been reading. I agree with him that continuing the War on Poverty is unlikely to further reduce poverty, increase self-sufficiency, or expand economic mobility. It strikes me that no further progress will be made because the problem is that we’ve won.
Johnson definition’s of poverty was deprivation. Since, then infant mortality is down, high school and college completion rates are up, women working is up, malnutrition has been virtually eliminated. There are none without food, roofs, heat, and schooling relative to 1963. There are safety nets for sickness, old age and unemployment.
My understanding is that those that really look find that four major anti poverty programs EITC, Social Security, Food Stamps (aks SNAP), and Meidcare/Medicaid have made the difference and the 100s of other programs are just noise. Though, I wonder if unemployment insurance should get a second look.
It also strikes me that the material reduction in goods, often more basic needs than services, declining as a % of consumption overall – for example food from 40% in 1959 to 22% and cars from 5.9% to 3.2% http://www.bea.gov/scb/pdf/national/nipa/2001/0301pce.pdf – would benefit the poor more significantly than the average, making them better off than consumption numbers indicate. Perhaps this is what Meyer and Sullivan are arguing when they argue with the CPI numbers.
AGW, it depends on who is measuring, but it is usually defined as some form of relative wealth. For example, France straight-up defines poverty as being half the median income. So by the French definition, doubling everyone’s real wealth wouldn’t change a thing.
If that seems unintuitive, perhaps consider what the American poverty rate is right now. The Census Bureau claims 45.3 million Americans were in “poverty” in 2013. However, a mere 3.5 million Americans are homeless–10% of the number of “impoverished”. Moreover, starvation is basically non-existent. Surprisingly, I’m even having trouble finding stats on death by exposure; it is apparently very low as a cause of deat for Americans. As such, the vast majority of these 45.3 million “impoverished” people are warm and well-fed and have some place to live. The reality is very different than the word “poverty” implies.
It seems unserious to define poverty this way. It’s as if the people doing so don’t care about actually solving any real problem, and rather are trying to push scary sounding statistics. If you want to really help our least fortunate citizens, then homelessness is probably the best place to start. If you can’t do anything about homelessness, then anything else is likely to be small change.