I got a better job this year, though, so this time round I’ll actually have to PAY taxes. Add it all up and it only comes to about ten grand more in my pocket than when I was underemployed, snif snif.

The cite is 2003. “Rethinking the Sociological Measurement of Poverty”. Social Forces 81:3. I know I’ve seen some others as well, but can’t seem to find them at the moment.

A couple of asides—it would be very hard to convince anyone in the US of the utility of a 60% of median measure of poverty. The current US measure corresponds pretty closely to a 40% of median measure (assuming proper household adjustments). Which means the new measure classifies a much larger number of people as in poverty than the old. Also, while it’s certainly not a common procedure, it’s possible to account for the effects of the EITC and taxation. The workaround isn’t perfect (calculating the EITC is easy, income tax not so much—and it’s also pretty inaccurate) but it can certainly be done.

Of course, I agree that it’s a bad measure and that it distorts discussion of EITC in particualr.

I have no data to support this argument, but I’m right.

John, it’s there on the Census site. US Federal Poverty Line is calculated before tax (thus, the EITC, which works through the tax system is not included) and before benefits in kind, but after direct cash transfers (ie, traditional welfare).

“standard European numbers don’t include benefits of public health care or public housing”

UK numbers do include housing benefit, but not social housing. So, no, they’re not perfect either.

“Mr Worstall seems to have accidentally overloooked that what statistics say depends opn the reason why they are collated and the reason those particularly statistics are collated is to determine which people are eligible for the benefits he describes. Other statistics which differ in kind may be collated for somewhat different purposes.”

I agree. But the thing is, the US does not collect the statistics (on a regular basis, the last set were from 2004, when they looked at alternative measures of poverty) on what is the incidence of poverty after whatever redistribution there has been.

My complaint is not that the Fed Pov Line is drawn so as to identify those who need help. But that it is used politically to argue for more help: it may well be that the poor need more help (I certainly think so) but the correct numbers used to measure this would be those after the influence of the current poverty amelioration efforts.

At the risk of boring people with statistical details: this is, at least to my mind, important re the John Edwards poverty plans. He argues for more housing vouchers, a higher EITC amongst other things. He claims this will reduce poverty. I think he’s probably right. However, given the way that poverty is measured in the US (and JE uses this definition himself, the number below the FPL) it will have no effect whatsoever on the number recorded as being in poverty. Because neither the EITC nor housing vouchers are included in that FPL calculation.

We can go further: as many have noted, there’s not been much reduction in poverty in the US in recent decades. As others have also noted, Federal spending on poverty reduction has risen strongly in recent decades. We thus have from the one side, those stating that see, spending money on reducing poverty doesn’t work. On the other, we have people pointing to extant poverty and claiming that much more needs to be done.

However, since the early 1970s there’s been a (bipartisan) move from direct cash payments of welfare to payments in kind and the EITC as poverty alleviation methods. So spending on poverty alleviation has gone up: but the headline poverty number hasn’t moved because we don’t include that spending in our calculations of the poverty numbers.

Quoting oneself is of course horribly egotistical but from last year:
http://www.tcsdaily.com/article.aspx?id=072506B

“My apologies for working with old numbers but that cash assistance in 1979 was $35 billion, in 1986, $32 billion. The non-cash part was $97 billion in 1979 and $136 billion in 1986 (figures in 1986 dollars). The craziness is that the 32 and 35 numbers are included in the incomes before we calculate those who are in poverty. The 97 and 136 are not. So we’ve actually had a rise of $36 billion in spending upon the poor but (that portion of their incomes that come from the Feds anyway) the incomes of the poor have fallen by $3 billion. Given the way these numbers are calculated, the way the official figures work, no wonder we haven’t been able to eradicate poverty.”

I’m not arguing (here, anyway) for either more or less support for the poor. Only that any decision either way should be taken after we look at the effects of current spending: which current statistics do not do.

He might respond to the effect that yes, this may be so, but doesn’t that mean that having received these benefits the people in receipt are no longer to be considered poor? To which the answer is yes, of course, in the sense that people whose poverty entitled them to a place in the workhouse were, on arrival in the workhouse, no longer poor.

AFAIK, standard European numbers don’t include benefits of public health care or public housing, even though health care at least is much better than what’s available for the poor in the US. I’m also surprised by the claim that US numbers exclude EITC. Assuming the numbers are net of tax and benefits, how does this work?