Arnold Kling  

Poverty and Income Distribution

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Robert E. Rector and Kirk A. Johnson offers some interesting facts concerning poverty in the United States, including


Forty-six percent of all poor households actually own their own homes...The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe...

Overall, the typical American defined as poor by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a
microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is
in good repair and is not overcrowded. By his own report, his family is not hungry and he had sufficient funds in the past year to meet his family’s essential
needs.


The take-away is not that America is without poverty. However, only a subset of the people classified as poor by the Census Bureau experience what most of us would think of as real poverty--crowded housing conditions, hunger, and the like.

As for the relative wealth of the rich and the middle-class Phil Bowermaster offers this perspective.


comparing the difference in lifestyle between the average person and the richest of the rich. If that delta could be quantifiable, it would almost certainly show a consistent downward trend over the past two hundred years.

Why?

Is it because rich just doesn't buy you as much as it used to? Just the opposite, really. Poor buys a lot more than it used to.

...I can declare myself richer than, say, William the Conqueror. Actually, that's a tough one. He had more land and horses than I do, and was much better off in the precious metals department. And in terms of being able to raise armed forces, I'll have to concede that my Posse might have a hard time with the Norman invading forces. Still, I sleep in a more comfortable bed, eat better food, and have Tivo.


For Discussion. The ratio of the highest income to the lowest income has widened in the United States. What has happened to the ratio of consumer goods and services enjoyed at the top to that at the bottom of the income scale?


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CATEGORIES: Income Distribution



TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/46
The author at Le blog de Polyscopique in a related article titled La pauvreté en Amérique writes:
    Arnold Kling a déniché des faits intéressants sur ceux qui sont définis comme étant pauvres aux États-Unis: Forty-six percent of all poor households actually own their own homes...The average poor American has ... [Tracked on January 31, 2004 5:08 PM]
COMMENTS (9 to date)
Tim Swanson writes:

Currently I'm not aware of any data or studies that could directly answer your question.

I did have my own question though: have the "poor" actually gotten "poorer" in the past decade in America? My guesstimate is that they have not and in fact, have a higher standard of living than their "counterparts" (isn't that term entirely relative and even artificial?) 10, 20 and 30 years ago did.

Eric Krieg writes:

I don't mean to harp on immigration, but I don't think that you can talk about poverty and inequality until you understand how immigration influences those numbers.

To what extent do the Europeans and Japanese have better numbers on inequality just because they have severe limits on immigration? To what extent is the US in the opposite situation?

dsquared writes:

Forty-six percent of all poor households actually own their own homes...The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe...

I hereby confirm that my flat in Covent Garden was indeed smaller than your average trailer, although a bit more expensive. This factoid is picking up population density and nothing else.

Eric: Europe does not have "severe limits" on immigration.

Eric Krieg writes:

From what I have read, as well as personal expereince, most European countries don't come anywhere close to having the shear numbers of immigrants as the US has. I mean, we are at the point where more than 10% of the US population is immigrants. From what I have read, (see the link for but one example) Germany is the only European country to come close to that level of immigration. Some of the European countries have trivial levels of immigration, which has been my experience in my travels.

Does anyone knows the background of German immigration. Is a lot of it just ethnic Germans being allowed in from Russia, Bosnia and other formerly Communist areas?

Anyway, It's not that the US has the highest levels of immigration. Canada has immigration levels that simply dwarf the US. A quick trip to Toronto will easily reinforce that fact, although the quality of Canadian immigration is quite different than that of the US. My experience is that their immigration is skewed towards India, China, and Jamaca, not Mexico. I wonder if that makes inequality less of a problem for them.

Anyway, if we are going to talk about inequality differences between, say, the US and France, we need to look at the level of immigration in those two countries, because it is going to have a huge influence on the numbers.

Lawrance George Lux writes:

Arnold,
I also know of no study for the data requested. I would suggest, though, that while Consumer Goods have spread to the Poor without outrageous Cost increases, the Poor actually suffer from huge increases in Complementary Goods price increases, most notably Utilities, Access Providers, Fuel, and Supportive Services. Such Costs have probably tripled in percentage of Income for all but the upper Ten Percent of Income Earners; who have found a decreasing percentage of this Cost per Income. lgl

Robert Schwartz writes:

At the begining of the science of Economics, John Locke (1632-1704) wrote "The Second Treatise of Civil Government" in 1690 In CHAP. V. Of Property, he gave his observation on this issue, which is still quite apt, despite the changes in America since then:

Sec. 40. . . I think it will be but a very modest computation to say, that of the products of the earth useful to the life of man nine tenths are the effects of labour: nay, if we will rightly estimate things as they come to our use, and cast up the several expences about them, what in them is purely owing to nature, and what to labour, we shall find, that in most of them ninety-nine hundredths are wholly to be put on the account of labour.

Sec. 41. There cannot be a clearer demonstration of any thing, than several nations of the Americans are of this, who are rich in land, and poor in all the comforts of life; whom nature having furnished as liberally as any other people, with the materials of plenty, i.e. a fruitful soil, apt to produce in abundance, what might serve for food, raiment, and delight; yet for want of improving it by labour, have not one hundredth part of the conveniencies we enjoy: and a king of a large and fruitful territory there, feeds, lodges, and is clad worse than a day-labourer in England.

Mcwop writes:

I lived in poverty for three years (< $9,000 in income for a single person) in the early nineties after college. I earned $200-225 per week, and worked about 8 months of the year. I spent the other months traveling. I owned my car, and never had trouble paying bills or rent. The whole time I never considered myself poor, nor did I ever partake in any government program. This is why I am always skeptical when it comes to poverty stats.

mcwop writes:

I lived in poverty for three years (less than $9,000 in income for a single person) in the early nineties after college. I earned $200-225 per week, and worked about 8 months of the year. I spent the other months traveling. I owned my car, and never had trouble paying bills or rent. The whole time I never considered myself poor, nor did I ever partake in any government program. This is why I am always skeptical when it comes to poverty stats.

Monte writes:

“What has happened to the ratio of consumer goods and services enjoyed at the top to that at the bottom of the income scale?”

I’m not certain, but I suspect the difference isn’t quite as glaring as the income gap. However, this is a politically incorrect question to ask and simply shows how insensitive you are to the plight of our nations’ poor in their struggle to emulate the rich. It is patently unfair that the affluent are in a position to squander their wealth in full view of the less fortunate.

Until need is eradicated from society through the noble efforts of our government to administer distributive justice, conspicuous consumption should be criminalized and vigorously prosecuted by the state until the agents of discontent (the rich) are permanently reduced in status to that of their fellow man.

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