March 04, 2005
The Ugly
At the risk of being a pedant, allow me to respond in full length to a blurb in David’s center-column post News: The Good, the Bad, and the Ugly. I do not fault David for citing the BBC; nor do I blame the Beeb for citing UNICEF. The way that UNICEF presented its data, however, is an irresponsible, value-laden way of sticking its worldly fingers in America’s eye.
Let me explain. First of all, UNICEF's own public relations people wrote a downright misleading piece. The first sentence says "The proportion of children living in poverty, or on less than $1 per day, has risen in most of the world's developed countries since the early 1990's". Wow. That's a serious allegation. Then, a few paragraphs later, they write,
At the top of the child poverty league are Denmark and Finland with child poverty rates of less than 3 per cent...At the bottom are the United States and Mexico, with child poverty rates of more than 20 per cent.
No mention of a poverty measurement has been made other than the dollar-a-day figure at the top. Then, after a quote about how wonderful government spending is, comes the qualifier:
The figures refer to relative poverty, which is defined as having an income below 50 per cent of the national median. What they show is that 40 to 50 million children living in some of the world's wealthiest countries, are growing up in poverty.
Aha! Twenty-two percent of American kids are not growing up on $1 a day. No, they are growing up in families which earn less than 50% of the median income. That "poverty" line is $21,763 per family. Of course, if you measured each state separately, their "poverty" lines would stretch from $27,610 in New Jersey to $15,605 in West Virginia, a discrepancy of almost 80%. With a population and physical area comparable to all the European OECD members together, a comparison that includes the whole of the U.S. is simply unfair. If OECD Europe were considered as a whole, almost the entire nations of Greece, Hungary, and Poland would be considered impoverished, and their perceived advantage over us would disappear.
Stepping back even further, I would call the percent-of-median-income-method into question altogether. Take for example Maryland and West Virginia. While I don't have hard data on either, anyone who has driven through the two states would agree that West Virginia has a higher proportion of people they would describe as poor. Maryland, however, contains both large wealthy communities and large working-class ones. Thus, according to the method used by UNICEF, Maryland has higher poverty than West Virginia. In fact, a family in Sharpsburg, MD, earning $27,000 per year would be considered poor, while a family earning $16,000 across the river in Shepardstown, WV, would be considered non-poor.
This is ridiculous. Yet this is precisely how Europe is treated in the OECD survey. Hungary, which has a cost-of-living-adjusted per-capita income about one-third the size of America's, is considered by UNICEF to have 9% child poverty while the U.S. has 22%. Ridiculous. Likewise North Korea, where virtually everyone is poor and many are starving, would have very low poverty by this measure. Ridiculous.
Why is UNICEF publishing these irresponsible numbers? Any economist can tell you at a glance that these numbers are a measure not of poverty but of income inequality. The UNICEF press release uses the semi-deceptive term "relative poverty" once; but uses the word "poverty" 18 times. Poverty is a separate concept from relative poverty or income inequality; UNICEF confuses these two radically. The relative poverty numbers are a dumbed-down version of the Gini Coefficient, which is the measure economists use amongst themselves to measure income inequality, using the same basic methods, but measuring the degree of inequality at the top as well as the bottom.
The only conclusion I can draw is that UNICEF is pushing a socialist agenda. If what they really cared about was the number of children whose basic needs are unmet, they would have published the numbers they alluded to in that first sentence. Remember? "The proportion of children living in poverty, or on less than $1 per day, has risen in most of the world's developed countries since the early 1990's". That's serious. That should be addressed. I believe that we as a society should meet the needs of our weakest members. UNICEF, however, seems to be more interested in finding a statistical club with which to bash the U.S., while covering up the widespread poverty on "their own" continent.
U.S. data source: http://www.census.gov/hhes/www/income03.html
Great post, Chops, and I couldn’t agree more. Most Americans have no concept of what poverty in the third world is like. Where I lived in Goa, India in 1996, even Americans working at McDonalds would be considered to have at least an upper-middle class standard of living. I’m sure you’ve seen plenty of poverty in the Middle East and Rwanda. Even today, those who have $1 a day for food are considered darned lucky in some places. My dad comes from a middle class Indian family, and he still ate lentils three meals a day in boarding school.
Posted by: Gandhi at March 4, 2005 11:29 AMI am glad you caught and explained this, Chops.
We become of inured to the UN statistics being wrong that we often don’t even react to them. Their goals are very different than ours. As Gandhi points out, in absolute historical or international terms we have conquered poverty in the U.S.
Think of how your W. Virginia statistic could change if we measure by the village. We identify a small trailer park where everyone is equally poor and unemployed. There is no relative poverty. But if one guy gets a good paying job, the poverty rate jumps astronomically. The best thing to do, from the UN point of view, is keep everyone poor.
Indeed. We should only get our data from the Heritage Foundation and Fox News. Heaven forbid that we should trust a corrupt organization like UNICEF. They only feed millions of children per day, protect kids from the Sex Trade and encourage Child’s Rights for no profit. Biased Bastards.
Posted by: Aldous at March 4, 2005 04:53 PMTheir feeding children and their studies of poverty are not the same things.
I know you don’t believe everything the U.S. says, even though it provides 57 percent to the budget of the World Food Program to help feed 104 million people in 81 countries. By your standard, we should also be above criticism. Just because an organization does good in one area, does not mean they don’t make mistakes or are biased in others.
Besides, Chops didn’t say the numbers were wrong. He just pointed out why they were irrelevant.
Posted by: Jack at March 4, 2005 05:09 PMChops,
It seems to me like you’re trying to disprove a point the article is NOT trying to make. It said right in the excerpts you posted that these are relative measurements of poverty. This does not mean they are trying to define poverty by these measurements but to measure the growth of poverty. The key points I got from the article were that the level of poverty has grown in developed countries relative to past measurements made in the same way, and that the US has one of the highest rates relative to other developed nations when using the same method of measurement for all countries. Also, your West Virginia/New Jersey analogy is simplistic and flawed at best, because both places are within the same country.
Gandhi,
I hope you’re not trying to say that someone should be able to survive on $1/day in the US just as easily as they could survive on $1/day in Goa? Using the $1/day reference was probably a mistake in the article, because it distracts from the point (as demonstrated in this thread). I was able to get a hotel room in Goa for $2 (and probably would have been less if I could have looked like a local), but that barely buys me a meal in Chicago—and lentils are about all it would get me.
It seems to me like you’re trying to disprove a point the article is NOT trying to make.
I agree.
Robert - correct on the $1; you’re referring to purchasing power parity. (Some 20 years ago, one could make/buy a decent meal for $1 in the U.S., but we’ve had inflation.) For general living expenses, the ratio today between the U.S. and rural India is somewhere between 10:1 and 30:1. This ratio breaks down when Western goods are added into the equation.
Aldous, it’s not enough to merely feed the same people long-term. They need to be helped to feed themselves. (Or in the case of children, enable their parents to provide for them.) Tsunami relief has devastated local economies, bringing short-term relief and long-term problems. Labor rates are up (since the relief orgs are hiring), killing local businesses; rent is WAY up, and produce prices have crashed. We’re creating economies dependent on foreign aid. No one here is saying that helping children is a bad thing; we all support that. What we don’t like is this ends-justifies-the-means approach used to expand the activities of a group beyond its goals and area of influence.
As to news sources, I sometimes get the feeling that liberals watch more Fox news than we conservatives do, just to enjoy the sensation of getting themselves riled up. I don’t watch much TV; my mainstream sources are CNN and WSJ. Chops’ favorite is the NYT (I think). FYI Chops just got accepted into Rochester’s Ph.D. program of economics, so his posting on such subjects is not only for political reasons. He’s also done enough community service in foreign countries to earn a right to his opinion.
Posted by: Gandhi at March 5, 2005 12:55 AM
Congratulations, Chops.
Good luck for you journey into the belly of the liberal academic beast. I believe you can’t fool all of the people all of the time and that the days of liberal ascendancy in academic are numbered. Help them see the truth that much sooner.
You are competely misleading in how your are using data. let’s just look at what published US Labor Stats say: Avg. wage is about $16.00/hr. However, with min. wage at $5.50, even a skilled worker is lucky to find a job at $11/hr. If you work 40 hrs a week, at $11/hr you annual salary is a little over $20K. After taxes, take home is more like $16K/yr.
That means for just a single person, let alone a family of 2 or 4 lives on about $1.3k/mth. However, fixed costs like rent, car, utilities, insurance (even in a cheap state like W. VA) would be at least $1K/mth. That leaves $300/mth to buy food, clothes, etc.
On a daily basis that is less than $10/day. So yes, a family of four in the great, prosperous USA is living on less than $2 a day per person.
The math isn’t rocket science, but it is the stark reality. And I haven’t even included medical bills, credit card bills, etc. I suggest you try and live on $10/day and just see how hungry you get.
Posted by: acetracy at March 5, 2005 10:14 AMYou are also mixing statistics and extrapolating from a single wage earner to a family of four. Income, for many families does not include only wages. So let’s take a family of four and the real income they have.
The median income for a family of four in the U.S. was $65,093 according to census figures dated March 3, 2005. http://www.census.gov/hhes/income/4person.html
The math here is really simple. It is not the average, it is the median so half the people in the U.S. make more half less. I think that $65k is enough to live on in most places; so half of American families are doing very well and most others are doing okay.
The poverty rate for a family of four is $18850. This is much closer to the example you are using (single wage earner would have to make about $10 an hour to achieve this level) to give the poor people $2 a day. Living in poverty is hard. That is why we call it poverty. But it is a different argument.
It’s nice to see everyone throwing numbers around; numbers mean a lot more than words. Unfortunately, they’re also harder to grasp. Let me a address a few of the above comments:
American Pundit said (numbers mine):
This does not mean they are trying to define poverty by these measurements but to measure the growth of poverty. The key points I got from the article were that (1) the level of poverty has grown in developed countries relative to past measurements made in the same way, and (2) that the US has one of the highest rates relative to other developed nations when using the same method of measurement for all countries. (3) Also, your West Virginia/New Jersey analogy is simplistic and flawed at best, because both places are within the same country.
(1) Relative poverty is not actually poverty; it’s a measure of low-end income inequality. If you went to the Hamptons, relative poverty would tell you that some folks making $200,000 a year are poor because their neighbors are even richer. The data showed that things became more unequal since the early 1990’s. This could happen because the rich got richer or the poor got poorer; the data is inconclusive, and thus irrelevant to a discussion of child poverty.
(2) The U.S. was one of the few countries where income inequality (aka relative poverty) decreased since the early ‘90’s. I won’t repeat all my arguments from the post, but suffice it to say that the numbers are not suitable for international comparison.
(3) Again, without repeating the statistical arguments, this was designed to show that the US and Europe are a more comparable unit than the US and Belgium. My family has lived in both Belgium and Holland; Holland is a far wealthier nation, top to bottom. The last member of the Benelux, Luxembourg, is wealthier still. If these three countries, which share labor markets, have language overlap, share a currency, etc, were measured by UNICEF as a lump, their inequality would have shot up drastically. Anytime you take a smaller unit, you’re going to find less inequality within it.
By comparing the relative poverty America’s 280 million with Denmark’s 5.8 million, UNICEF is engaging in two flavors of perfidy. First, they are unfairly comparing countries using a measurement that is sensitive to changes in unit size. Second, they are using a measurement irrelevant to their mission, when many other, appropriate measurements exist. The U.S. measures poverty based on how much it costs to live at a certain base level, where food is 1/3 of your budget. Not perfect, but much more applicable. If this were published by the International Labour Organisation or the World Bank, I wouldn’t have blinked an eye: part of their mission is to look at labor market structures. UNICEF should be making sure kids are fed and clothed, not making sure that their parents elect good socialists.
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Jack: Rochester’s economics department is a bastion of free-market thought. Other conservative departments include UCLA, George Mason U, and the mother ship, U of Chicago.
