Poverty Measure Proposals

Last month, New York City Mayor Michael Bloomberg announced the findings in the city's Center for Economic Opportunity's proposal for a new poverty measure to replace or supplement the measure used by the Federal government.  The Federal poverty measure was originally based on the cost of the U.S. Department of Agriculture's economy food plan that detailed the minimum nutritional requirements for a family in need.  The poverty threshold was calculate as three times the annual cost of the food plan, based on the average composition of family spending when the measure was developed in the 1960s.  Since its development, the measure has been updated only based on increases in the Consumer Price Index.  Advocates for the poor claim that the forty-year old measure is now out of date, and thus does not accurately represent the level of poverty in America.  To support this, the advocates claim that food spending now makes up only one-eighth (not one-third) of family expenditures, due to increases in other necessary spending such as shelter and health care.  Moreover, although the Federal poverty measure is used uniformly throught the nation, cost of living varies dramatically by location---for the cost of renting a studio apartment in New York City, one could buy a small house in a less-urban location.

In response to this, the NYC CEO has proposed adopting a more detailed measure developed by the National Academy of Sciences in 1995.  The new measure sets a threshold just under median family expenditure on food, clothing, shelter, and utilities in a particular geographic location.  Additionally, instead of counting only pre-tax income, the new measure includes both post-tax income and the value of near-cash benefits such as food stamps and housing subsidies, minus work-related expenses (such as child-care and transportation costs) and out-of-pocket medical expenses, which reduce a family's resources available for meeting its basic needs.

While this new measure makes significant strides in providing a more accurate picture of poverty in the United States, it suffers from at least two particular weaknesses.  First, the poverty threshold's calculation of expenditures for basic needs is based on the median expenditure among all families, and not on a family's actual needs for survival.  Over time, as the real income of median families increases, a significant number of these families are bound to choose to purchase more-expensive food items or more-expensive clothing.  As a result, median expenditures will increase beyond the cost of minimally adequate goods to meet basic needs.  Although establishing a budget of minimally adequate goods does depend on the judgement of experts, as the NAS panel points out, the solution to expert bias is to include more and varied voices in the deliberation of what constitutes minimally adequate.  Instead, the multiplier approach the panel recommends is based not on what consumers' needs, but simply on how consumers choose to spend their money, whether those choices are motivated by wants or needs.

Second, the new measure's proposal to include welfare receipts among a family's resources gives a misleading picture of the family's ability to support itself.  While it is certainly true, as the panel notes, that welfare services have "have made important contributions to reducing material hardship in the United States," the fact that families must rely on these services to make ends meet is itself an indicator of poverty, thus it makes little sense to reduce poverty figures based on the input of social services.  These services, while highly valuable and eminently necessary to relieve immediate suffering, merely treat the symptoms of poverty---they cannot and do not reduce it.

Bloomberg is not the only public official to recommend use of the new NAS-proposed poverty measure: Representative Jim McDermott has also drafted a bill based on the NAS panel's findings, though the bill has yet to be introduced in Congress.  While the new poverty measure is a step in the right direction, I believe more work is necessary before we arrive at a high-quality picture of poverty in the U.S.

More On Global Problems

After lamenting yesterday about the paucity of wealth to go around on a global scale, I ran across a BBC report about a pilot Basic Income Grant project in Namibia. The program, organized by a civil society coalition, gives US$13 per month to every member of the community under pension age. Now, $13 certainly doesn't sound like much ($20 PPP, ICP 2005, though I wonder exactly what kind of market basket they used)---and it isn't, in absolute terms; but in relative terms, $13 can be quite a lot. After all, that comes to more than a quarter of monthly income for half of the country's population (HDR 2007/2008, Table 3); and even if it isn't "living large," a 25% bump in income surely can do a fair amount to propel one toward improving quality of life.

And anecdotally (according to the BBC article), many program participants are using the grant for little things that can do just that. For example, some have used the money to buy clothes for their children and pay school fees. The former helps children focus on their studies without worrying about their appearance, and the latter gives parents the confidence to engage school officials on the quality of their children's education. Others have used the funds to supplement their food budget, and the local clinic has seen a drastic reduction in cases of seriously malnourished children. The grants have also provided capitol to allow the establishment of a new grocery store, a hairdresser, a barber, and an ice-cream vendor. Of course, none of these things means poverty has been solved in this village by only $13/person, but each of them has the potential to contribute to a virtuous cycle in the gradual ascent toward a more equitable society.

On Global Problems

Sometimes I get overwhelmed thinking about global-scale problems. There are so many people in the world and utter poverty is so rampant that it can seem insurmountable, and every once in a while I wonder if it's worth even trying (usually I convince myself that it is).

Take food, for example. The world food-cost crisis has been in the news a lot recently, and there are millions of people throughout the world who suffer from hunger and malnutrition. This makes me wonder: Is there even enough food in the world for all these people? Fortunately, there is: According to the UN Food and Agriculture Organization, global average food consumption is 2800 kcal/person/day, which is greater than the USDA recommend caloric intake for all but the most active young adult males. So, there seems to be enough food out there---it's just a matter of getting it to the right people, which feels like a much more tractable problem than increasing global food output (though I'm not quite sure why, given the resistance too many people have to sharing).

Generalizing from food to wealth in general, the picture isn't quite so rosy (if millions of hungry people could be called rosy): If we were to take the roughly $1.6 trillion of the richest 100 people in the world and divide it equally, everyone would receive only $270---not even a nucleus, much less a "nest egg." According to the CIA World Factbook, the gross world product (GWP) per capita is only $10,000 (PPP). In other words, unlike food, poverty in terms of lack of financial wealth isn't merely a distribution problem. Now, unfortunately, I'm not an economist, so I'm not quite sure where to look for possible solutions to this little (or not so little, rather) quandary. But, I imagine that increasing human capacity (through education) will play some vital role.

In order not to get too depressed when I think about how big the world's problems are, I usually have to scale down my perspective to think about where I am currently and what I can do on my own in the present. If you're looking for a way to help in the redistribution of food resources, may I recommend Food for the Poor. They "provide food, housing, health care, education, water projects, micro-enterprise development assistance and emergency relief to the poorest of the poor," and their budget is composed of 96% program expenses, placing them among the most efficient of charities.

Because We Were Slaves

When you are harvesting in your field and you overlook a sheaf, do not go back to get it. Leave it for the alien the fatherless, and the widow, so that the Lord your God may bless you in all the work of your hands.

When you beat the olives from your trees, do not go over the branches a second time. Leave what remains for the alien, the fatherless, and the widow.

When you harvest the grapes in your vineyard, do not go over the vines again. Leave what remains for the alien, the fatherless, and the widow.

Remember that you were slaves in Egypt. That is why I command you to do this. (Deuteronomy 24:29-22)

What would people say if you were to ask them why they should give to the needy? "It's their human right to have adequate food, shelter, clothing, and education," some might say. "It's your social responsibility," perhaps. Or maybe, "What goes around comes around."

Do you think anyone would say, "Because we were slaves"?

I find it striking that God gave precisely this reason for his command of charity to the Israelites as they were poised to cross the Jordan into the Promised Land. Why, of all things, would God ground his command in their former slavery?

Some might suggest that God was calling the Israelites to recall their former meager estate in order to identify with the poor, and thus to give out of empathetic pity. And, while this certainly could be part of it, I think there's something much more to God's reasoning here.

Not only were all the riches the Israelites possessed--from the spoils of Egypt to the land they were soon to inherit and its abundant fruit--gifts directly from God, but the Israelites would be in no position to enjoy any of these material goods if not for God's mighty deliverance of them from the bondage of slavery in Egypt. In recalling for them their former slavery, God is saying, "Remember how it is you got the land for your fields and vineyards; remember why you are free to cultivate and harvest. The only reason you live in comfort is because I have saved you and given you all you have." God commanded the Israelites, therefore, to give of their goods (which were really God's to begin with) to the poor among them in thanksgiving to God for his provision and liberation, providing a kind of miniature liberation in turn for the poor from the bonds of poverty.

"Now that's all well and good for the Israelites," you might say, "but I worked hard for my own riches, and have been enslaved to no man." Not so fast. Whatever work you have done to earn your income you would not have accomplished without the gifts of God--even the gifts as basic as your latent abilities and drive for hard work. But more importantly, you, as well, were also a slave--a slave to sin and death. By trusting in Jesus Christ, you accept the gift of liberation from the bondage of the slavery to death. And in thanksgiving for this salvation, God calls you to share his gifts with the poor.

So, when asked why charity is important, you too can say, "Because we were slaves."


For more Biblical insights on poverty, I commend to you the sermon series on poverty given at Blanchard Alliance Church, in Wheaton, Illinois:
The Dignity of Potato Eaters, 1/7/2007
Stopping Our Oppression of the Poor, 1/14/2007
Living on Less to Share with Others, 1/21/2007
Helping the Poor Regain the Dignity of Self Support, 1/28/2007