The Corner

Poverty: It’s More Complicated Than You Think

It’s not often I find the New York Times’s analysis of economic questions especially helpful or enlightening, but yesterday I was pleased to see some of the Gray Lady’s staff acknowledge that measuring material poverty is a difficult exercise, and that in many respects the standards we use are flawed — sometimes in very serious ways.

On Monday, the Census Bureau will release a new, alternative measure of poverty that seeks to provide more accurate information on (1) the resources at the poor’s disposal and (2) the financial obligations they have to meet. In anticipation of Monday’s release, the Times article listed a few of the flaws in the now 50-year-old official poverty measure.

Not only does the official poverty measure not account for the billions received by many of America’s poor through various welfare programs and tax credits, but it also fails to account for the full range of expenses incurred by the same people, including the taxes they pay. Nor does the official measure take into account the varying costs of certain fixed expenses (e.g., rent) in different parts of America.

After underscoring the inadequacies of the present official measure, the articles’ authors then explain how some of the fuller measures of poverty that already exist, but which the federal government has generally ignored, provide a somewhat different picture of poverty in America.

Some of the reports using these fuller measures — most of them produced by organizations with no particular ideological ax to grind — claim that black Americans are less poor than previously supposed and that some of the officially poor are, well, not poor. This doesn’t mean that these groups are necessarily well-off. But what is revealing is that, as the Times’ piece states, “virtually every effort to take a fuller view — counting more income and more expenses — shows poverty rising more slowly in the recession than the official data suggests.” And if that is not enough, the article goes on to state that “while the official national measure shows a rise of 9.8 million people, the fuller census measures show a range from 4.5 million to 4.8 million.”

There will be two rejoinders from the left to these observations. One is that any significant increase in poverty is unworthy of America. The second is that, whatever’s one’s quibbles about the ways material poverty is measured, they shouldn’t be used as excuses for simply doing nothing.

In a sense, both these points are true. The problem is anti-poverty policies based upon flawed, out-dated, misleading, and/or one-dimensional measurements are likely to be ineffective in helping to address poverty. They also constitute a misuse of the substantial portion of taxpayer money presently being used to fight poverty. Both the poor and taxpayers deserve better.

— Samuel Gregg is research director at the Acton Institute. He has authored several books including On Ordered Liberty, his prize-winning The Commercial Society, Wilhelm Röpke’s Political Economy, and his 2012 forthcoming Becoming Europe: Economic Decline, Culture, and America’s Future.

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