Bruce Meyer discusses how better measurements might help show the progress that’s been made.
by Dan Paley | January 23, 2019
Narratives on both the left and right get America’s efforts to reduce poverty wrong, according to University of Chicago economist, Bruce Meyer. On the right, many believe that the trillions of dollars spent trying to reduce poverty had no effect and was counterproductive. On the left, there is little acknowledgement that we’ve reduced poverty over time, perhaps because conceding such might undermine support for anti-poverty policies and programs.
But poverty has come down over time and the programs at work have been effective. So why has the conventional messaging gotten things so wrong? In the following video, Bruce Meyer points to three reasons.
The first is that our official measure of poverty doesn’t count most of the things we’ve done to reduce poverty. The official poverty measure uses pre-tax income, so it excludes in-kind transfers and tax credits like the Earned Income Tax Credit, food stamps, and housing benefits. In other words: we don’t include in our measurement the main things we’ve done over time to reduce poverty.
The second major reason is that we adjust for prices using an inflation adjustment that overstates inflation and doesn’t incorporate the vast improvements in goods over time.
A third reason is that the survey that’s used to collect the information on people’s incomes is increasingly under-reporting those incomes. The information we get dramatically under-estimates incomes at the bottom and makes it seem like people are much worse off than they are.
These indicators of progress-over-time are excluded from the official poverty measure, which leads many to believe the rate today is almost the same as what it was in 1970. But using these indicators, says Meyer, the bottom 20% looks a lot like what the middle class looked like 20 years ago.
To learn more about ESSPRI visit esspri.uci.edu.