Tuesday, December 13, 2011

The New and Improved 'Poverty Line'


How is New Poverty like New Coke? Richard Bavier, a respected policy analyst with the OMB for many years, reams the Obama administration’s new bait-and-switch poverty line. … Bavier argues the new line is “carefully designed so that the public will think it is one thing when it is really something else.”


Specifically, he notes, the New Poverty Line line isn’t really a measure of what people “need.” For one thing, it starts its calculations at “the 30th to 35th percentiles of spending on food, clothing and shelter by two-adult, two-child families,” who are among the most prosperous families, compared with say, one parent, two child families–indeed, even at the 33d percentile their income is apparently above the median income for all families of all types. (There seems to be some complicated fiddling with this measure to bring it a little more back in line with reality, which only adds to the New Poverty Line’s incomprehensibility.) …

The New Poverty line is (most importantly, to my mind) not an absolute measure like the familiar Old Poverty Line. It is a moving goal post that rises as others in society get richer–a measure of inequality, in this sense, not poverty. …

P.S.: I’m still amazed that the New York Times editorial page got away with opining about “Census data showing that 49.1 million Americans are below the poverty line” without telling its readers it was using the unfamiliar just-concocted New Poverty Line and not the poverty line that they thought was “the poverty line,” namely the one that has been used since the 1960s. I can’t tell if this was conscious fraud on the part of the Times or just incompetence (the editorial also seemingly misstates what the New Poverty Line is for a family of four). I suspect a mixture of both. …

courtesy of Mickey Kaus





Steve Cook earned an MBA at Harvard and did post graduate work in economics and financial analysis at New York University. He earned his Chartered Financial Analysts designation in 1973. Steve has 40 years of investment experience including institutional portfolio management at Scudder Stevens and Clark and Bear Stearns. He managed a risk arbitrage hedge fund and an investment banking boutique specializing in funding second stage private companies. Steve now manges Strategic Stock Investments which focuses on wealth building through strategic investments.