Views of Poverty – Optimism and Stinginess

February 25, 2011
Posted by Jay Livingston

Ask Americans how much income a family needs to “just get by” – to be not poor – and the answers will generally be a number that’s 50-55% of the median income. That’s not how we compute the official poverty line, though. That number is based the price of food. The poverty line is three times the amount a family would need to spend to provide the minimum adequate nutrition.

In European countries, as Daniel Hamemersh at Freakonomics has learned, the poverty line is based on relative income, usually about 50% of the median. (When the US poverty formula was created, that three-times-food formula did work out to about 55% of the national median. Now it’s closer to 40% of the national median. The family at the poverty line can still feed itself, just as it could fifty years ago. But it’s much farther away from the average US family.)

Hamemersh says that this choice of how to calculate poverty reflects two American characteristics:

• optimism – if low incomes go up just a little, and food prices remain stable, nobody will be “poor.”
• lack of concern about inequality

Hamermesh contrasts this with the view from across the pond.

In Europe, even with income growth, unless inequality decreases, the fraction of households in poverty won’t change. How pessimistic, yet how concerned about equality!

Optimism goes with stinginess towards the poor; pessimism with generosity.

Here are some charts that I used in a post last month about the belief in the the efficacy of work (the first two bars). But the last two questions support Hamermesh’s ideas about the difference between the US and other countries on the question of inequality and welfare. (The data come from a Brookings survey.)

(Click on the chart for a larger, readable view.)

Your Money's Worth

February 24, 2011
Posted by Jay Livingston

My grandfather was in the retail business – furniture. When he and my grandmother went shopping – for other things, not furniture – she was sometimes stunned by the prices. “What makes this so expensive?” she would ask. My grandfather, pretending a careful examination of the item, would nod his head thoughtfully and say, “Profit.”

I remembered Grandpa Jack when I saw this graph posted by Aaron Carroll at The Incidental Economist. It shows healthcare expenditures per capita plotted against GDP per capita.


As you would expect, the richer a nation is, the more it spends on healthcare, just as it spends more on food, entertainment, or anything else.

Carroll adds:

Notice two things however. The first is that Norway and Luxembourg (the two countries farthest to the right), fall below the line. This is because – presumably – at some point you can spend more money, but what’s the point? The drugs won’t work better,* the advice is still the same, and the doctors can’t do any more. At some point, spending more is just waste, because the outcomes don’t get any better.     The second thing to notice is the US. You can’t miss it. It’s the big red dot that’s way at the top. We’ve chosen to ignore what I just said.

It may be “waste,” but that money has to be going somewhere.

-------------------------------------
* A while ago I posted (here) some charts comparing the US and several other countries on the costs of various aspects of healthcare – standard procedures, office visits, widely-used drugs. I included the line, “Since . . . you get what you pay for, our Lipitor must be four to ten times as good as the Lipitor that Canadians take.” It was my only post ever to get Boinged, and for a day the number of visits here climbed to about 2600, doing my heart much more good than would any prescription meds.

Race to the Bottom?

February 23, 2011
Posted by Jay Livingston

Scott Lemieux passes along this information from his friend Ken Sherrill:

Only 5 states do not have collective bargaining for educators and have deemed it illegal. Those states and their ranking on ACT/SAT scores are as follows:

• South Carolina – 50th
• North Carolina – 49th
• Georgia – 48th
• Texas – 47th
• Virginia – 44th

If you are wondering, Wisconsin, with its collective bargaining for teachers, is ranked 2nd in the country. Let’s keep it that way.

A convincing study of the effects of unionization on student performance would have to take into account a host of variables – demographic, budgetary, etc. – and their interactions. It should also have more sensitive measures of union strength and perhaps of outcome variables as well. But this is a start.

The message seems to be that if you are going to argue that the absence of teachers’ unions brings educational benefits to schoolchildren, you’re starting out down by about five runs in the first inning.

A complete list of the states is here. (And what’s up with South Carolina? It seems to be intent on making itself the punch line to a variety of jokes. See this previous post, for example.)

Lies and “Defacto Truth”

February 22, 2011
Posted by Jay Livingston

Some wacko Teabagger (is that a redundancy?), one Mark Williams, posted an appeal encouraging his comrades to pose as union members at a Wisconsin SEIU rally and act outrageously so as to discredit the union. They would have signs ‘that say things like “screw the taxpayer!”’ Then “we will echo those slogans in angry sounding tones to the cameras and the reporters.” (After the post went viral, Williams took it down, but you can still see a cached version here.)

Williams added

Even if it becomes known that we are plants the quotes and pictures will linger as defacto truth.

Has Williams been searching the PoliSci literature? A couple of years ago, Brendan Nyhan and Jason Reifler published their research about the effect of responses to political lies. What should you do when a poltician says something that is just not true? Providing accurate information would seem like the logical way to go. But Nyhan and Reifler did experiments showing that providing the relevant facts doesn’t work. It can have even a “backfire” effect. Those whose political views are in tune with the lie become even stronger in their beliefs. (Links to the paper and to a WaPo article about it are on Brendan’s blog – here.)

The examples Nyhan used were conservative lies (e.g., Bush saying that his tax cuts increased revenues), so we don’t know whether liberals might be more rational about facts. Also, Nyhan’s sample was hardly random – 130 students at a Midwest, Catholic university. But given the tenacity of the belief, especially among conservatives, that Obama is a Muslim born outside the US, these 130 might not be all that different from the general population.

It doesn’t matter if the “defacto truth” is not factual. What this research shows (and what Williams intuitively senses) is the futility of refudiation.


HT: The Political Carnival.