Organization: Penn State University
Date: Thu, 3 Sep 1992 17:17:14 EDT
From: <DGS4@psuvm.psu.edu>
Newsgroups: sci.econ
Subject: Re: Poverty Over-estimated in America ?

In article <1992Sep3.202746.18500@tandem.com>, kenr@orleans.storage.tandem.com
(Ken Rose) says:
>
>In today's Wall Street Journal, an article entitled
>"America's Poverty Myth" by Robert Rector
>appeared on the Editorial Page (Sept. 3, 1992 issue).
>
>~~~~~~~~~~~~~ excerpts follow  ~~~~~~~~~
>
>"There are two important mistakes in the way the Census
>Bureau measures how many American households fall below the
>official poverty threshold, which was $13,942 for a
>family of four in 1991.  First, the bureau ignores family
>assets, which can make a huge difference. Second, it ignores
>almost the entire impact of U.S. anti-poverty programs on
>individual income."

The Census Bureau has an experimental program to test alternative
methods of measuring poverty, including alternative valuations of
non-cash sources of income, assets, and other factors.  They have
published 2 or 3 research reports on it.  The experimental methods
generally reduce poverty among the old by a great deal (down to
about 5%, I think) while having less of an effect on poverty among
the old.

>"In its official poverty estimate, the Census Bureau undercounts
>cash welfare aid and entirely excluded food, housing, and
>medical assistance.  The bureau ignores whole programs,
>such as food stamps, Medicaid, and public housing. ... Out of
>a total of $184 billion in welfare spending on the non-
>institutionalized population in 1990 ... Census counted only
>$32.5 billion as income.  The funds that are spent on low-income

 The Census also undercounts income from assets, with conservative
 estimates indicating that they miss half to two-thirds of asset
 income.  Studies indicate that this income flows primarily to
 those with high incomes, raising estimates of inequality in the
 U.S.  Did the article in the Wall Street Journal choose to mention that?
 I'll have to check my copy tomorrow.

>people but not counted by the Census Bureau amount to ...
>$10,499 for every "poor" household in America."
>
>"... In 1989 40% of all households identified as poor by the
>Census Bureau owned their own homes.  The average home owned
>by a "poor" person is a three bedroom house with a garage
>and a porch or a patio."
10
>
>"The average American poor person has twice as much living
>space as the average Japanese citizen and four times as much
>as the average Russian."
>
>"Contrary to media misconceptions about chronic hunger among
>poor children, Agriculture Department studies show that the
>average consumption of protein, vitamins, and minerals is
>virtually the same for poor and middle-class children in
>America."
>
>"Adjusted for inflation, per-capita exenditures of the
>lowest one-fifth of U.S. households in 1990 exceeded the
>per-capita income of the median American household in 1960."
>
>~~~~~~~~~~~~~~~~~~~~~ end of excerpts ~~~~~~~~~~~~~~~~~
>
>
>If accurate, this raises some troubling questions about how
>poverty is perceived in America.  I wonder, though, if the
>terminology used in the article is consistent.  When Rector
>talks about "households identified as poor" is he refering
>to those under the poverty line or some other line?  If the
>latter, this would make the 40% owning homes figure easier
>to understand.  And the $184 billion he identifies as
>welfare spending is a lumped figure; dividing that per-family
>seems to ignore the spending on the welfare apparatus itself
>(the workers, etc that run it).  Also, why did he compare
>per-capita expenditures in 1990 to per-capita income in 1960
>instead of per-capita expenditures in 1960?
>
>Discussion, anyone?  (flames -> bit.bucket)
>
>
>____________________________________________________________________
>Ken Rose    (kenr@storage.tandem.com)
>The Usual Disclaimer:  Any opinions expressed above are mine alone, not
>those of my employer (who is kind enough to allow me Usenet access).
Dennis G. Shea, Penn State
<<DISCLAIMER>>
Ain't nobody's bizness but my own. I'll be happy to accept all
the credit for anything I've written.  It's funny, however, how
employers only acknowledge the profitable ideas.