Consider the Evidence

Paul Krugman suggests, using calculations by Tim Smeeding (see table 2), that the United States is second-worst among affluent countries on absolute poverty. I don’t think that’s quite right.

Smeeding calculates absolute poverty rates as of 2000 using two poverty lines — the official U.S. line and 125% of that line. The U.K. is higher than the U.S. using either line. Krugman suggests that the U.K. rate may be lower than ours by now due to the Blair government’s anti-poverty initiatives. That is possible — we won’t know until more recent data are available — but the U.K. rate as of 2000 was significantly higher than ours, so the progress would need to have been dramatic.

Sweden and Finland have lower absolute poverty rates than the U.S. using one of Smeeding’s lines, but higher rates using the other.

According to my calculations, using the same Luxembourg Income Study data, five additional countries that Smeeding does not include — France, Australia, Ireland, Italy, and Spain — have higher absolute poverty than the U.S.

Here are my calculations. They’re from this paper. I use absolute income levels at the tenth percentile of the income distribution (so higher is better) rather than poverty rates. I prefer P10 incomes because poverty rates ignore the depth of poverty, but the two approaches yield very similar results.

This is not to suggest that we should be satisfied with our absolute poverty ranking. Given our nation’s economic wealth, incomes for Americans at the low end of the distribution are far lower than they could be. And as Krugman rightly points out, and I discuss in detail here and here, an exclusive focus on income overlooks the relevance of work hours and of public services such as health care, schooling, and child care for the well-being of the poor.

Addendum: Contra Tyler Cowen’s suggestion, the data for the U.S. used here do include the Earned Income Tax Credit and Food Stamps (though not Medicaid).

No, it isn’t.

Poverty comparisons across affluent nations typically use a “relative” measure of poverty. For each country the poverty line — the amount of income below which a household is defined as poor — is set at 50% (sometimes 60%) of that country’s median income. In a country with a high median, such as the United States, the poverty line thus will be comparatively high, making a high poverty rate more likely. Measured this way, the U.S. does indeed have the most poverty among the rich nations. That leads to statements such as Paul Krugman’s in his otherwise insightful op-ed in Monday’s New York Times: “Poverty rates are much lower in most European countries than in the United States.” (See also here and here.)

Though widely used, and not without merit, a relative measure should not be the principal basis for poverty comparisons. It focuses too heavily on the distribution of income and too little on the absolute income level of those at the bottom. Using a relative measure, the U.S. poverty rate is higher than Romania’s and only slightly lower than Mexico’s (see here). Similarly, Mississippi’s relative poverty rate is the same as Connecticut’s.

I’ll say more about this in a future post. For now, if you’re interested there’s more in this paper and in this one (both pdf).

The Center for the Study of Poverty and Inequality at Stanford University has begun publication of Pathways: A Magazine on Poverty, Inequality, and Social Policy. The full contents are available here. The inaugural issue includes, among other interesting articles, brief but substantive statements by Hillary Clinton, John Edwards, and Barack Obama on their proposed strategies for reducing poverty.

Particularly helpful is a piece by Rebecca Blank assessing the three candidates’ proposals. Blank is one of the country’s most careful and sensible analysts of poverty and social policy. Her conclusion:

“Obama, Edwards, and Clinton all have multifaceted and serious anti-poverty plans. Anyone concerned with poverty issues could happily vote for any of them. Edwards has made poverty a centerpiece issue for his campaign from the beginning; Clinton has the best early childhood proposals; Obama is the most thoughtful on jobs for disadvantaged youth and urban change and (for my money) the most creative in putting new policy ideas on the table, such as low-cost Internet service in poor neighborhoods.”

She also emphasizes that while each of the three favors multiple worthy policies,

“it is hard to tell how they would prioritize their current list of proposals. Presidents face limited resources and hard choices once they actually enter the White House and have to decide where to place their political chips.”

Read the full piece to see Blank’s own priority list.