David Brooks: The truth about poverty stats
... In “The Mismeasure of Poverty” in Policy Review, [Nicholas] Eberstadt notes that the percentage of Americans living under the poverty rate has been stagnant for 30 years, suggesting that antipoverty efforts have failed, and that life has not improved for the nation’s poor.
The problem, Eberstadt continues, is that there are anomalies in the official statistics. Why does the poverty rate tend to go up as unemployment falls? Why hasn’t it budged while the amounts of money the government spends on the poor have more than doubled in constant dollars?
Eberstadt goes back and looks at how the poverty rate is calculated, and finds that it is based on idiosyncratic assumptions about how the economy and family budgets worked in 1965. He then observes two realities that are masked by our current statistics, one heartening, one disheartening. The first is that people living under the poverty line are materially much better off than they were three decades ago. They live in much bigger homes. Three-quarters own at least one motor vehicle. They spend roughly twice as much as they report as income, and not because they are going into debt. (Net worths have not declined.) In general, poor people today live at about the same standard of living as middle-class people did in the 1960s.
On the other hand, they live with great insecurity. In fact, relatively few people live permanently in poverty. But nearly a third of the U.S. population dips into poverty from time to time. Building on the work of Jacob Hacker, Eberstadt paints a picture of great volatility at the bottom end of the income scale — a different image from the one portrayed by the immobile statistics, with radically different policy implications....
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The problem, Eberstadt continues, is that there are anomalies in the official statistics. Why does the poverty rate tend to go up as unemployment falls? Why hasn’t it budged while the amounts of money the government spends on the poor have more than doubled in constant dollars?
Eberstadt goes back and looks at how the poverty rate is calculated, and finds that it is based on idiosyncratic assumptions about how the economy and family budgets worked in 1965. He then observes two realities that are masked by our current statistics, one heartening, one disheartening. The first is that people living under the poverty line are materially much better off than they were three decades ago. They live in much bigger homes. Three-quarters own at least one motor vehicle. They spend roughly twice as much as they report as income, and not because they are going into debt. (Net worths have not declined.) In general, poor people today live at about the same standard of living as middle-class people did in the 1960s.
On the other hand, they live with great insecurity. In fact, relatively few people live permanently in poverty. But nearly a third of the U.S. population dips into poverty from time to time. Building on the work of Jacob Hacker, Eberstadt paints a picture of great volatility at the bottom end of the income scale — a different image from the one portrayed by the immobile statistics, with radically different policy implications....