about a recent New Yorker
article by John Cassidy on different methods of measuring US poverty.
Both links are well worth following. I'll concentrate on the latter
You might expect a New Yorker article to be a textbook case
in advocacy of "progressive" nostrums. And you wouldn't be wrong in this
But before he runs into that particular ditch, Cassidy actually does a
pretty good job of reporting how the current official
measure of poverty was
invented. He does a great job of demonstrating what's wrong with it:
(a) it's an income
measure, not a consumption measure; (b) it doesn't take into account
regional variations in the cost of living; (c) it's a pre-tax measure,
so doesn't take into account post-tax adjustments such as the Earned
Income Credit, food stamps, Medicaid, etc.; (d) it doesn't take into
account changing expenditure patterns since the measure was derived
over forty years ago; (e) it doesn't distinguish between people poor due
to a temporary downturn in their financial fortunes and those truly
stuck in chronic hand-to-mouth existence.
Cassidy also quotes conservative/libertarian critics
Eberstadt; Cox & Alm)
of poverty calculations briefly, which is good. Unfortunately, he
unfairly tars them with a bad-faith brush:
Conservatives would prefer a measure that reduces the number of poor
Winterspeak demonstrates that two can play that game:
… the Left wants "poor" to be defined in such a way that maximizes its
size, and so will bolster the case for government transfers …
That's fine, guys. Probably even par for the course. And it may, in fact, be
true that relatively few people are interested in an actual statistical
of economic hardship, except as a crutch to support their particular
political causes. Too bad.
Anyway, back to Cassidy's article. Since he's implied that conservatives
are wont to jigger the poverty numbers to support their policy positions,
he apparently feels that gives him the green light
to do the same. He proposes that poverty
not be defined by the current "absolute" measure that's (as
everyone admits, poorly) based
on a calculation of subsistence; instead, we should base it on "relative
deprivation", e.g., "classify a household as impoverished if its pre-tax
income was, say, less than half the median income".
Why? Well, because Cassidy's big bugaboo is dat old debbil, Inequality.
And by flawless logic, his redefinition allows a repurposing of the
forces of the "War on Poverty" into the "War on Inequality". This isn't
simply killing two birds with one stone; it's arguing that the two birds
are actually just one big bird anyway.
To support this thesis, Cassidy quotes a number of studies that purport
to show inequality causes social ills all by itself. The
"relatively deprived" are unhappy, no matter how good their
situation might be in an "absolute" sense. Their health is poorer, and they die
sooner. Even if they have color TVs and dishwashers, they "may lack
skills—such as how to surf the Web for help-wanted ads—that
could enhance their prospects in the job market."
Now this thesis is alarmingly easy to lampoon, and Winterspeak does so.
Let's take it slightly more seriously.
Probably the thorniest allegation is the alleged link between inequality
and poor health; frankly, in comparison, the other issues seem more like petty
Even this allegation tends to fall apart when looked at skeptically, however.
Probably the best refutation is by the aforementioned Nick Eberstadt
and the new-kidneyed Sally Satel in a short booklet entitled "Health and
the Income Inequality Hypothesis: A Doctrine in Search of Data." (PDF
available for free here).
[Via commenter 'Tex' in the Asymmetrical Information comment
thread.] Nick and Sally review the evidence, demolish
the thesis, and conclude:
How did it happen that a notion with such questionable
empirical documentation and such a limited relationship
to the testable proposition has come to acquire so much respect
within the academy and so much authority in policy circles?
As we have seen, the phenomenon surely cannot be explained
simply in terms of the quantitative persuasiveness of studies of
the inequality hypothesis. To the contrary, the ambitious intellectual
claims of this school of thinking have been undergirded
by research that has all too often relied upon limited or
data sets, hazily expounded causality, elementary econometric
fallacies, and results that cannot be replicated.
So Cassidy's strongest argument in support of his
poverty-as-inequality thesis probably isn't
true. Can anything be salvaged from his article?
Not much. It's almost certainly
true that the past few decades worth of expensive anti-poverty
measures haven't been all that effective in decreasing the
"absolute" poverty rate. Is it possible that the definition change
Cassidy advocates might (somehow) be more effective?
This isn't promising, for example:
Therefore, the way to reduce relative poverty is to reduce income
inequality—perhaps by increasing the minimum wage and raising taxes
on the rich.
Ah, "increasing the minimum wage and raising taxes
on the rich." Is there no social problem that these solutions cannot
cure? For minimum wage issues, see Jane
As for "raising taxes on the rich":
nothing in Cassidy's article supports the notion that reducing
inequality by chopping away at the "top end", decreasing the after-tax
incomes of the rich, will alleviate any social ills of the poor.
Knocking people off the top rungs of a ladder doesn't make the ladder
any easier to climb by those at the bottom.
And then we have handwaving:
Raising public awareness about relative deprivation could help to change
attitudes toward the poor, by showing how those at the bottom of the
social hierarchy continue to face obstacles even as they, along with the
rest of the society, become more prosperous. The Times recently
reported that more than half of black men in inner cities fail to finish
high school, and that, nationwide, almost three-quarters of black male
high-school dropouts in their twenties are unemployed. "It doesn't do a
poor person any good to say 'You are better off than you would have been
thirty years ago,' " [American economist Victor]
Fuchs said. "The pathologies we associate with
poverty—crime, drug use, family disintegration—we haven't
eliminated them at all."
… and, of course, nothing
in the article supports the
notion that changing the poverty definition will do anything to
alleviate, let alone eliminate,
the named social pathologies either
. Nor is it clear
why changing the poverty definition will raise "public awareness", or
why "public awareness" can't be raised without
Cassidy does make the valid point that the relatively-poor tend to be
"socially and geographically isolated" from other Americans. Since I've
read Mickey Kaus, I'm convinced that's a serious
however, Cassidy makes no convincing argument
that the problem is specifically due to relative deprivation,
nor that the social engineering he proposes is likely to solve or
He should take this Kaus quotation to heart:
We're Americans--we don't mind people getting rich. We do mind
people lording it over less rich people, or even thinking they're better
than less rich people.
This would involve abandoning the obsession with inequality
and economic resentment, which is a cherished position by some
on the Left. On the other hand, it might actually help.