Wednesday, January 8, 2014

A thoughtful post on the War On Poverty

With math and everything:
Yet, there is a deeper problem with the official poverty thresholds. We might ask why is the poverty rate (for an individual in this case) set at $11,720 in 2013? Why is that number the demarcation of being "in poverty."

The answer is pretty remarkable.


Orshansky came up with a threshold based on how much it cost to feed a family (this history is detailed in this paper in PDF by Fischer). Quantification of how much it cost to feed a family was based on a survey done by the US Department of Agriculture, initially in 1933 and extended in 1961 based on data from 1955 to include an “economy food plan.” Orshansky assumed that a family would spend one third of its income on food. The poverty threshold was then determined to be that point at which family income was low enough such that the amount spent on food equaled that determined to be necessary under the “economy food plan” calculated based on food prices of 1964.


Since the introduction of the original poverty thresholds used by the US government (which were formalized in 1969) they have only been adjusted for inflation based on the Consumer Price Index (it's true, I did the math). In other words, to be in poverty in the United States means that you have income three times greater than that determined necessary to consume an adequate diet as assessed in 1955. Today, that same multiplier would be closer to 8 as food represents a much smaller share of consumer spending.
RTWT, including the comments.  It's almost like these wise, disinterested Harvard technocrats that we're told should run everything aren't actually trying to solve the actual technical problem.  The problem for Progressives is that as cynicism like this grows, support for grand technocratic projects withers.


Alan said...

That's one reason they're pushing relative poverty these days. Since
"poor" people in the US aren't very poor (epidemic obesity + Cell phones and big screen TVs.) they had to come up with a new definition to save their phoney baloney jobs.

By using relative poverty they guarantee there will always be poor people.

Graybeard said...

I note they say Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty.

That has the interesting effect of not counting "non cash benefits" (food stamps, food, housing subsidies, donations of items) as income, so we could spend an infinite amount of money on these and not raise anyone out of poverty.