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I’ve discussed the problems with using relative poverty before, but given that a lot of political measures come about with arguments concerning poverty, it’s worth doing again. Tyler Cowen has an excellent post on Marginal Revolution on the topic.

It’s also worth noting that poverty rate numbers do not take into account food stamps, housing subsidies, the Earned Income Tax Credit, and Medicaid, among other benefits. Not to mention black market income and underreported income (often for EITC reasons); yes it is worth referring back to consumption data which show that the poor do quite a bit better than income data alone would indicate. That said, a very good case can be made that we overinvest in fighting the poverty of the elderly and underinvest in fighting the poverty of children.

Overall the problem is not just one of description, though that is a major problem too. It is also a problem of the efficiency (or lack thereof) of the political measures to combat poverty, both in the rich world and globally. Globally, the policies and aid programs in use often appear to be designed so that we can feel good about taking care of the poor, rather than to achieve results. At home the programs, unsurprisingly, often end up hurting the poor for the benefit of middle income earners (Friedman makes this case convincingly in Freedom to Choose). That is probably unlikely to change.

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