Arnold Kling  

Improvements for the Poor

PRINT
Long Tail Podcast... What, Me Worry?...

Nicholas Eberstadt writes


Perhaps not surprisingly, adults without a high school diploma had significantly higher age-standardized death rates than the general population: In 2002, the differential was over 50 percent among both men and women. Despite the relative magnitude of this disparity, however, in absolute terms death rates in 2002 for this educationally disadvantaged group were lower than they had been among the general public some years earlier. The overall age-standardized death rate for women 25 to 64 years of age in 1970, for example, was slightly higher than the 2002 rate for their counterparts who had not completed high school. Among adult men, death rates for the general public in 1970 were about 10 percent higher than among high-school dropouts in 2002.

Cox and Alm, in Myths of Rich and Poor, point out many types of durables goods that are more likely to be owned by poor households today than the average household in 1970. One comeback of critics is, "Yes, but durable goods do not matter as much as, say, health care." Eberstadt answers that comeback. Read the whole thing.

My co-blogger recently wrote


- at least in the First World - ordinary prudence is enough to keep almost anyone out of poverty.

I agree. Every honest analysis of the problem of poverty sounds cold-hearted. The more pleasing description of poverty as a villains-and-victims story fails to match reality.


Comments and Sharing


CATEGORIES: Income Distribution



TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/545
The author at amcgltd in a related article titled Drawing the (Poverty) Line writes:
    One of the biggest paradoxes folks who think the US is doing just fine must face is that in spite of growing anecdotal evidence that America's poor are actually far from it, the leading indicator of poverty says they've... [Tracked on August 9, 2006 12:50 PM]
COMMENTS (20 to date)
Randy writes:

Rich liberals and the young fall for the "disadvantaged" theory of poverty. The middle class knows that it isn't that hard to be middle class - and so they strongly suspect that most of the poor deserve it.

I've been homeless, and it's terribly difficult to get OUT of that culture. The programs we have don't work, largely because they're created by people who have never been homeless. The programs we have for the poor suffer the same general fate.

Essentially, we don't have a clear roadmap for these people. There's a massive leap you have to take from lower class to lower middle class, and nobody is really sure how to do that. All we have is the anecdotal experiences of others, and we've never narrowed those down to the fundamental principles necessary for a general case.

On another note, I see this is yet another blog that simply can't comprehend an https:// URL.

Randy writes:

Caliban,

Re; "There's a massive leap you have to take from lower class to lower middle class, and nobody is really sure how to do that."

C'mon dude, everybody knows how to do that. Study hard, work hard, and avoid stupid behaviors. And straight up, barring some physical or mental deficiency, a person who can't do this doesn't deserve to be in the middle class.

Jim writes:

"Every honest analysis of the problem of poverty sounds cold-hearted."

I wouldn't say it's cold-hearted so much as entirely inadequate. Background and environment clearly matter, otherwise you're left trying to explain why black people, for example, are inherently so imprudent or lacking in 'conscientiousness' than those clever white folk. Here's an example - black students on average have poorer outcomes at school, but that's because they're more likely to grow up in poverty or inadequate housing: "when socioeconomic and housing conditions are held constant, African-Americans actually demonstrate an educational advantage over their non-black counterparts of almost fourtenths of a grade".

Jim writes:

In case the link in the above comment isn't highlighted for you (it is in IE, not in Firefox), here it is again: http://homepages.nyu.edu/~dc66/pdf/soc_forum_housing.pdf

Randy writes:

Jim,

Re; "Background and environment clearly matter..."

Yes, they do. But it still comes down to study hard, work hard, and avoid stupidity. Observe them all and achieving the middle class is almost certain. Violate any and the probability of poverty increases. The emphasis on environment is a fog - and often, unfortunately, a deliberately created fog.

liberty writes:

jim,

You seem to be insinuating that if black households are more prone to poverty and an economic analysis suggests that hard work, drive and prudence are enough to get one of poverty that hence anyone who believes this economic analysis must be ... racist.

This is not the case.

In fact, the reason that black families might find themselves stagnating in poverty might be that their situation makes it difficult to cultivate hard work, drive and prudence.

In fact this is exactly what isolated communities of impoverished households and government dependence / poverty traps tend to do.

The answer is to remove this causal factor: end social programs.

The end of social programs will tend to lift this poverty trap, release trapped people (stuck in ghettoes) into a desegregated community where they can become more inspired and have incentives re-aligned; lower taxes and create jobs; allow private solutions to thrive.

Jim writes:

Randy,

""Background and environment clearly matter..."

Yes, they do. But it still comes down to study hard, work hard, and avoid stupidity."

You seem to be saying that as long as people don't make any decisions that eventually turn out to be wrong, they should be fine. I don't think that's particularly helpful - after all, most people make mistakes now and again, but it seems to me if you come from a priveleged background you can make as many as you like and still be fine, while if you come from a poor background, one or two misjudgements can finish off your prospects or even leave you homeless. And we shouldn't be basing our policies on how they will effect only the brightest pennies in the pond. I skimmed Bryan Caplan's 'class autobiography', and to me he seemed to be saying that anyone as clever and industrious as he is would have no problem being a success. Perhaps, but most people are never going to be as clever and industrious as he is - what about them?

'liberty',

I don't know whether people who subscribe to that theory are racist, but it's certainly one possibility. More probable, I think, is that they haven't thought it through properly.

"In fact, the reason that black families might find themselves stagnating in poverty might be that their situation makes it difficult to cultivate hard work, drive and prudence."

I've no doubt that's a factor - indeed, it's one of the environmental factors I had in mind.

"The answer is to remove this causal factor: end social programs."

What makes you think that's the only causal factor? We had ghettoes and concentrated poverty before public housing, you know. And while voucher schemes to aid mobility have had some limited success, poor people will still tend to gravitate towards the same areas because - amazingly - those areas are cheaper, and rich folk pay good money to live in the most expensive partly because they know they won't have to live near poor folk. In order to overcome that, you'd have to pay some top-dollar vouchers to a lot of poor people - something I'd like to see, but don't expect to.

SheetWise writes:

The higher the level of support given to people who are not earning -- the higher the effective tax rate if they begin earning. Here's a common bargain; Be on schedule 5 days a week, arrange transportation for 10 unpaid commutes, work 40 hours a week, lose all benefits. Net change to income? Maybe $100 a week. Wouldn't any rational person give up $100 for 5 days off?

For a lot of people, it's just not worth the change -- since the level of support they have isn't that bad. Being poor has got to be a lot more painful or inconvenient before there's going to be any big change in behavior.

Randy writes:

Jim,

By "stupidity", I mean things like criminal activity, substance abuse, etc. The kind of stupidity there is little chance of recovering from - not the minor mistakes we all make. Even the most "privileged" can and have ruined their lives with this stuff. But I don't care how "unprivileged" a person is, how many mistakes he or she may have made, or how deep the hole they've fallen into, the way out is still the same.

liberty writes:

jim,

before public housing it was less concentrated and there were fewer problems that held people down, and less "poverty trap."

There were fewer unwed mothers for example; the poor tended to go to the same schools as the rich; many poor neighborhoods were semi-mixed with wealthier neighborhoods near by (across the railroad tracks) instead of all the poor being stacked in tall isolated buildings, etc.

The poverty trap includes the marginal tax rates mentioned by SheetWise and also remember the cost of these programs is paid for by tax dollars which inevitably take from wages and jobs which affect ALL PEOPLE including the poor, not only those taxed directly.

There was a lot of poverty before welfare but that is because the standard of living was lower because we were in an earlier stage of growth; but the poverty trappings were much less. If we got rid of the social programs today we would be RICHER not poorer and the poor would be better off.

Dezakin writes:

"The higher the level of support given to people who are not earning -- the higher the effective tax rate if they begin earning. Here's a common bargain; Be on schedule 5 days a week, arrange transportation for 10 unpaid commutes, work 40 hours a week, lose all benefits. Net change to income? Maybe $100 a week. Wouldn't any rational person give up $100 for 5 days off?"

You really believe that most poor don't work and receive nearly 300 dollars a week in support from the state? This sounds like a contrived example.

"If we got rid of the social programs today we would be RICHER not poorer and the poor would be better off."

Ah the call of blind ideology. The reason the poor are poor is because they're given money. If only we followed ideology X (communism, socialism, anarchism) all the ills in the world would be solved. We could shoot the poor instead, then the poor would be richer because we eliminated the poorest.

I would suggest that social programs are less destructive than government pork in general, if they are destructive at all.

SheetWise writes:

"You really believe that most poor don't work and receive nearly 300 dollars a week in support from the state? This sounds like a contrived example."

No. Yours is a strawman. Read again.

If you want to add up all payments/PIK available to unemployed poor, and transfer that situation to full time minimum wage -- I think you'll find I was generous.

Dezakin writes:

"No. Yours is a strawman. Read again."

Show me what I burn. You certainly weren't clear, and I asked a question.

"If you want to add up all payments/PIK available to unemployed poor, and transfer that situation to full time minimum wage -- I think you'll find I was generous."

I was unemployed poor at one point, and I certainly didnt have even 50 per week in support, let alone 200 or 300.

liberty writes:

"Ah the call of blind ideology. The reason the poor are poor is because they're given money. If only we followed ideology X (communism, socialism, anarchism) all the ills in the world would be solved. "

No... as I explained, the reason is because taxes and the incentive effects taking the poor out of the workforce combine to drag wages and employment lower. This has been shown with empirical data as well as theory. It is not blind ideology.

"I would suggest that social programs are less destructive than government pork in general, if they are destructive at all."

You would suggest without proof - blind ideology? At least I gave reasons for my belief.

Rick Stewart writes:

First - why do questions of poverty always have to start with race? Let's forget race and think about something that might actually contribute to poverty. How about IQ? Is it wildly irrational to hypothesize that a person with a lower IQ might be more likely to either 1) be born to poverty, 2) be unable to escape poverty, or 3) sink into poverty? Is it wildly irrational to hypothesize that 'helping' a lower IQ person with money, vouchers, education, etc. might not have such a positive effect on their poverty level as if the same 'help' were given to a higher IQ person?

Second - why must the question of 1) should there be income transfers for the purpose of wealth sharing/equalization? always be mixed up with 2) given a reality of income transfers, is there a way to do it so that it creates the most good and the least bad?

I find the tendency, in the comments on this blog, to continually mix up these two/four questions to be most disconcerting. After all, if race is too poisonous a topic to discuss objectively, surely IQ is not. And surely - even though we might disagree on whether or not income transfers should take place - we can hopefully agree that spending XX,XXX dollars per recipient for the greater good and the lesser bad is what all of us would prefer, no?

So - I believe IQ matters. And I believe we can measure with relative precision how well a specific income transfer scheme works, compared with a different income transfer scheme.

Dezakin writes:

"I would suggest that social programs are less destructive than government pork in general, if they are destructive at all."

You would suggest without proof - blind ideology? At least I gave reasons for my belief.
----

So you think its less destructive to pay agribusiness to grow dirt than it is to provide medicaid for children in poverty? Or college tuition support?

Social programs are far less destructive than most other government pork because they generally have means testing, have a rationale for societal benifit. But the most important reason social programs are less destructive is because poor people are politically unimportant. If it turns out to be a bad idea, the program is axable, unlike the entitlement programs of the middle class such as 'social security' or programs that have powerful political lobbies, such as the farm bills or the prescription drug benifit plan.

liberty writes:

Dezakin,

Social security *is* a social program. I would are farm subsidies are as well; but farm subsidies are less destructive because less is spent on them. How can you justify saying that social programs for the poor are axed as soon as they don't work when it took several decades to begin to *reform* welfare, let alone axe it and it has been a disaster from the start. They are destructive because they *don't* help those that they were created for -- be they poor, middle class or farmers.

But at least you began to give a reason for your beliefs this time.

aaron writes:

"As long as people don't make decisions that that eventually turnout to wrong..."

This is an incorrect condition. A more correct condition is "As long as people don't make decisions of which they can't afford to be wrong, they will be fine."

A. PERLA writes:

Caplan: "One comeback of critics is, "Yes, but durable goods do not matter as much as, say, health care." Eberstadt answers that comeback. Read the whole thing."

I read the answer, and I am still scratching my head. It is statistical gibberish.

The one statistic that I find poignant is simple: At any given time between a fifth and a quarter of the American workforce has no insurance coverage.

That is shameful for a modern economy.

So, with this clue in mind, let’s ask the AEI to do some regressive analysis of the correlation between "shame" and "medical coverage" of employed workers living below, at or just above the poverty level.

Comments for this entry have been closed
Return to top