From: DGS4@psuvm.psu.edu
Newsgroups: alt.politics.clinton,alt.politics.bush
Subject: Re: Poverty
Date: 4 Sep 92 14:02:27 GMT
 <DYQBr*2W0@caleb.UUCP> <186sbjINN10f@agate.berkeley.edu>
 <1992Sep4.130143.12988@tamsun.tamu.edu>
Distribution: usa
Organization: Penn State University

<<<Statistics deleted>>>

Most of the content of this thread came from the Census Bureau report
on poverty and an editorial page article in the Wall Street Journal.
Someone else has started a similar thread in sci.econ, I think (maybe
talk.politics.misc).  I want to make a couple of points about the article
in the WSJ.

First, the author castigates the Census for not counting noncash benefits
as income.  That ignores the fact that Census has had a major research
effort into this issue for at least the last 7 years with two publications
on the effect of benefits on poverty.  The results from this research
are well-known and have, in fact, been the subject of front page articles
in the WSJ (I think, maybe editorial page).  Draw your own conclusions
about the article in the WSJ.

Second, the author uses a statistic which he admits is fatally flawed to
conclude that the War on Poverty has not succeeded.  To truly examine this
we would have to look at the adjusted poverty rate from 1950 to 1990.
The author, instead, uses the unadjusted rate to illustrate that as welfare
spending has climbed, poverty has not declined.  What he really shows is that
as welfare spending has climbed, poverty excluding the welfare spending portion
of income has not declined.  The best solution would be to have the adjusted
poverty rate for 1966 and 1990.  The Census Bureau has not yet been able to
calculate those figures, though I think they were planning to do it.

We do have some useful information.  In 1966 the unadjusted poverty rate was
14.7% and welfare spending was about 50 million dollars (1990 dollars).  In
1989 adjusted poverty was 8.9%.  So, if you believe that the 50 million
in 1966 reduced poverty by 5.8% (10-15 million people, roughly) then
maybe you can conclude that the increased welfare spending hasn't reduced
poverty rates. (Note that I'm not talking about the dynamics of poverty
which is an additional important issue).

In addtion, there is the following information.  From 1987 to 1989 welfare
spending increased by about 25 million dollars.  The adjusted poverty rate
declined from 9.4 to 8.9 percent.

At the very least, the graph in the WSJ article is misleading.  I'll
certainly be using it to illustrate the abuse of statistical data in
some of my classes.

Finally, I wanted to comment on the idea in the WSJ article that
poverty "plummeted" from 1950 to 1966, while not declining since then.
First, simple economics implies that as you lower the poverty rate you
get diminishing returns from welfare spending.  Second, much research
suggests that both income grwoth AND increases in Social Security led
to declines in poverty in this earlier period.  It looks to me like
the article excludes Social Security from welfare spending, misleading
readers about the role of government in the earlier poverty declines.


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.
Newsgroups: alt.politics.clinton,alt.politics.bush