Categories:
Income Distribution
Robert Lerman looks at how the sausage got made.
the SPM threshold is a relative concept. It equals what a family with two children at the 33rd percentile of spending devote to food, clothing, housing, and utilities plus another 20% of this amount. This threshold is then adjusted for family size and local housing costs.
Read the whole thing, as well as his earlier post.
I would note that to the extent you measure poverty as a relative concept, you ensure that no public policy can eliminate what you call poverty.
READER COMMENTS
Publius The Lesser
Dec 12 2011 at 9:39am
Isn’t that the point – to justify an ever-increasing state and secure government jobs for the credentialed elite, all in the name of helping the poor?
JoeFromSidney
Dec 12 2011 at 1:07pm
The late John W. Campbell used to remark that there is a group of people determined to see that one-third of Americans will always live in substandard housing, have below-average income, and have below-normal educational attainments. That group of people is the statisticians, who define things like average and standard. The new definition of poverty is one more example of how he was right.
Glen Smith
Dec 12 2011 at 3:19pm
Joe,
Not sure what you mean by average but you’ll likely always see at least 65% of Americans with below average incomes. Those years where more than 30% of Americans made average or more were usually recession years anyway. In fact, over the last 30 years, there has not been a year when at least 68+% of American’s had incomes at or below average.
Nathan Smith
Dec 12 2011 at 5:28pm
Strictly speaking, you can eliminate relative poverty by making incomes sufficiently equal. For example, nuclear holocaust would do the trick: everyone’s equally dead, so there’s no poverty. If what matters is *welfare,* though, reducing relative poverty shouldn’t be the target.
Richard W.
Dec 12 2011 at 8:40pm
Although it is a relative definition of poverty, this particular definition does not appear to preclude the elimination of poverty. As long as the percentage of total income spent on food, clothing, housing, and utilities is declining for the 33rd percentile (due to rising incomes and falling prices), then we’d expect poverty rates to decline for a given income distribution, even if it is not “sufficiently equal.” I don’t know whether this is in fact happening, but it doesn’t seem impossible.
Of course, I’d assume that, in practice, as fewer and fewer households were considered poor by this definition, the baseline set of “necessities” would grow (healthcare, transportation, education, …).
joeftansey
Dec 12 2011 at 9:18pm
If they defined poverty in absolute terms it would have been eradicated since the 70s.
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