Poor -- Better Off Here Than in Scandinavia?

June 10, 2010
Posted by Jay Livingston

Like many liberals, I had always thought that the poor in the US, those at the bottom of the income ladder, were worse off than their counterparts in Europe, especially the Scandinavian countries.

Wrong, says economist Price Fishback in a guest post a couple of weeks ago at Freakonomics. He argues that the standard measures of social spending are inadequate, and that if you do the math his way, the US, Denmark, and Sweden are very similar.
Is the U.S. safety net a better system than the universal Nordic programs? Many Nordic people seem to prefer theirs, and many Americans seem to prefer ours. Despite the difference in approaches, the striking feature here is that the amounts spent per person in the population are not that different.
OK, forget the fatuous comment about what people prefer. People don’t know enough about foreign systems for these preferences to mean much. And even if the amounts spent are similar, the important question is who gets what? Are we liberals totally wrong about how these countries treat the poor?

No. Lane Kenworthy has an excellent analysis too long to summarize here. If you’re interested in this sort of thing, take a look at both articles. (Kenworthy has links to more formal versions of Fishback’s work). The short answer is that in the US, a much smaller net portion of social spending actually benefits the poor. Also, a standard measure of deprivation finds 13% of people in the US reporting deprivation, more than twice the percentage in Sweden and Denmark.

2 comments:

Anonymous said...

I love the "prefer" comment. Years ago, when I was studying how racial inequality was worse in some U.S. cities than others, an economist friend of mine was skeptical: If it were really worse for Blacks in some cities than others, obviously they would move to the better cities.

PCM said...

Any economist who "proves" that the poor are just as good off here as they are in, say, Sweden, only proves why we should listen to economists. It's like abortion causing the great crime drop... except when it doesn't.

So many flaws... so little desire to think too much about such a stupid study.

But I'll just mention that one of the reasons being poor (and rich) is better in socialist countries isn't because of direct welfare payments (and in this study, our inefficient and expensive health-care spending absurdly ends up counting helping the poor), it's because everything else works pretty well and is cheap or free: housing, school, and transportation come to mind.

I bet Fishback never talked to an actual poor person in either country. Or taken a trip to a "bad" part of Stockholm and compared it to the US. I have. Because that is what curious sociologists do.