Max Roser is one of those who are doing good work, The Lord’s Work even. He’s the brain behind Our World in Data. About which a couple of things - he sometimes posts jobs there. For someone interested in a life teaching the world about the real outcomes of politics and economics - tho’ at Max’s pay rates perhaps early to midcareer rather than falling off the long end like me - it could well be a stunning place to work. The other is that I had vague contact with him when he was starting out. I know that Marc Andreessen aided in financing the start up and that Max asking me if I knew of anyone else who might….well, yes. Even, yeeees. Askin’ me for money, or even people who have money is, umm well.
Anyway. Max has proposed a new poverty level. As I’ve said elsewhere I don’t think this is a poverty level at all. $30 a day is the petit bourgeois level. And to make the entire world petit bourgeois? Fine by me as long as it’s only a stage on the way to making it all bourgeois - $100 a day for all.
However, in his piece about this he says:
In the United States, for instance, despite U.S. poverty statistics not being directly comparable to the World Bank data, the estimates align closely. According to the line I am proposing, 16 percent of the U.S. population lives on less than $30 per day, while the official U.S. data indicates that 11 percent of Americans live in poverty.
Further:
Other countries have been even more successful. In Denmark, Switzerland and the Netherlands, between 7 percent and 8 percent of people live on less than $30 per day. In Norway, just 6 percent do.
And, umm, no. Partly it’s this.
That is - not wholly, not exactly, not properly, but a good guide to - the difference between measuring poverty in the US the American way and measuring the same incomes the European way. Or, US poverty by market incomes is 13%, by consumption it’s 3%.
Here’s what the problem is. Yes, the US is more unequal than most individual European countries (tho’ less unequal than the EU as a whole). It’s also richer than the EU and than near all EU countries individually. And Max is using an - adjusted for local prices - absolute poverty level. That is, not one that is relative to other incomes in the same place, one that’s an absolute amount of money.
But. In most of Europe we use a *consumption* definition. It’s cash income, market income, plus all the stuff that government does to alleviate poverty. All the benefits, the effects of the tax system, count as income for the poor.
The US system does not. The standard numbers come from Census and they’re cash income only. But near all US poverty alleviation is through the tax system (not counted) or services and goods in kind (not counted). So, US poverty levels are before the effect of the EITC, Snap, Section 8, Medicaid and so on. European ones are - largely - after.
So, for example, working tax credits in Britain are a copy of the EITC in the US. When we measure the incomes of the poor in the UK we include the working tax credit income as income. In the US what comes through the EITC is *not*, in the usual numbers, counted as income to the poor.
Now, there are some adjusted figures. But they’re very rare. Not fully adjusted either. And when you look at the usual international databases - Luxembourg Income Study, World Bank so on - they use the *unadjusted* figures.
Now, this is only suspicion on my point. Driven by something I did a couple of decades back in part. The median income of the bottom 10% of Americans is - including all those usually uncounted redistributions - about the same as the median income of the bottom 10% of Swedes. The bottom 5% do worse, the bottom 10% about the same. Which, obviously, insists that the 5 to 10% do better.
Which, you know, makes it difficult to believe that 16% of Americans are below a poverty level that only 7% of Danes suffer. Yes, I know that Denmark and Sweden are different places. Yes, I know the US is a more unequal place but it’s also, on average, much richer.
Also, I’ve lived there. Couple of times in fact. $30 a day - in, recall, consumption value, including rent and all the rest - is under $12,000 a year. Hmm, no. Really, not seen many living that way. Really. Now, my gut feel about income levels isn’t useful as evidence. My knowledge of that problem about the usual US income statistics might be - that they’re measuring cash, market, incomes not consumption levels - might be. That is, while gut feel from personal experience might not be that useful gut feel from having worked through the statistics at one point might be. You know, knowledge of an area might provide a smell test?
Now, I’m in contact with Max over this. I’m also fully aware that I’m not going to spend the necessary week trawling through footnotes to nail this down. So, I’ve asked a couple of people who do work in this statistical area to tell me what they think. We’ll see (“Who the fuck are you?” is a likely answer but we’ll see. Asking academics questions about their area of expertise can sometimes produce very pleasant answers. You know - “I’ve been waiting 20 years for someone to ask me that! Why d’ye think I spent two years doing the work?”).
My contention. 16% of USians on less than $30 a day is an artefact of the way that Census calculates market incomes, not consumption possibilities. We’ll see.
And now the real point here. Happenstance means that I know three or four things about economics. No, I’m not an economist. But I know - know - a few things that most miss. OK, mineral reserves. But one of those things is how the Census recording of incomes horribly biases the usual databases about incomes and poverty in the US. So, I see summat passing by that seems to not grasp the problem here and I’m the guy asking those questions.
And that point. We all know stuff in detail that gets blurred, missed, as that subject moves up to the people thinking about them. We all need to point out to those thinking our knowledge of the detail.
You know, civics. What we know is supposed to be fed into the system? How much better will the system be if our knowledge of reality is fed into it?
Do the UK statistics include all the NHS provision? If I paid for all my healthcare over my life I'd have needed twice the income I had. Or is NHS consumption tallied as zero 'cos that's the over-the-counter price paid?