The Electric Commentary

Saturday, September 10, 2005

We suck at measuring poverty.

I say this all the time, because clearly we're better off today (even our poor people), than we were x years ago, where x is any positive number. Nicholas Eberstadt has an op-ed in the NYT that explains why this is true:

The profound flaws in our officially calculated poverty rate are revealed by its very intimation that the poverty situation in America was "better" in 1974 than it is today. Those of us of a certain age remember the year 1974 - in all its recession-plagued, "stagflation"-burdened glory. But even the most basic facts bearing on poverty alleviation confute the proposition that material circumstances in America are harsher for the vulnerable today than three decades ago. Per capita income adjusted for inflation is over 60 percent higher today than in 1974. The unemployment rate is lower, and the percentage of adults with paying jobs is distinctly higher. Thirty years ago, the proportion of adults without a high school diploma was more than twice as high as today (39 percent versus 16 percent). And antipoverty spending is vastly higher today than in 1974, even after inflation adjustments.

In the face of such evidence, what do you call an indicator that stubbornly insists that the percentage of Americans below a fixed poverty threshold has increased? How about "a broken compass?"

The soundings from the poverty rate are further belied by information on actual living standards for low-income Americans. In 1972-73, for example, just 42 percent of the bottom fifth of American households owned a car; in 2003, almost three-quarters of "poverty households" had one. By 2001, only 6 percent of "poverty households" lived in "crowded" homes (more than one person per room) - down from 26 percent in 1970. By 2003, the fraction of poverty households with central air-conditioning (45 percent) was much higher than the 1980 level for the non-poor (29 percent).

Besides these living trends, there are what we might call the "dying trends": that is to say, America's health and mortality patterns. All strata of America - including the disadvantaged - are markedly healthier today than three decades ago. Though the officially calculated poverty rate for children was higher in 2004 than 1974 (17.8 percent versus 15.4 percent), the infant mortality rate - that most telling measure of wellbeing - fell by almost three-fifths over those same years, to 6.7 per 1,000 births from 16.7 per 1,000.

The poverty rate is out of step with all these other readings about deprivation in modern America because it was designed to measure the wrong thing. The poverty rate has always been derived from reported household income. (Exigency played a role here: at the start of the war on poverty 40 years ago, those income numbers were already available from the Census Bureau.) But a better gauge of a household's material deprivation is not what it earns, but what it spends. When we look at spending patterns, we immediately see a huge discrepancy between reported incomes and reported expenditures for low-income Americans.


There's more. Read it all.

2 Comments:

  • In the Labor Department's latest Consumer Expenditure Survey (2003), the average reported income for the bottom fifth of households was $8,201, while reported outlays came to $18,492 - well over twice that amount.

    I wonder how much of this is revolving debt.

    By Anonymous Rashid, at 11:10 PM  

  • Oh! Thanks for the linkage ;-)

    By Anonymous Rashid, at 9:27 PM  

Post a Comment

<< Home


 
Search:
Keywords:
Amazon Logo