On one hand, a relative measure of poverty might seem silly. If the incomes of the poor double they’re obviously better off, but they would still be regarded as poor on a relative basis if median incomes also doubled. A relative measure of poverty is really a measure of inequality.
But the absolute measure of poverty has problems of its own, especially when applied over long periods. Living standards have risen over time, so things that were once luxuries are now considered near-necessities. The households of the most fabulous royals of ancient times might appear poor to a modern-day census-taker; they lacked running water, flush toilets, refrigerators, central heating, air-conditioning, automobiles and cellphones. Also, slight differences in the inflation rates that are used in poverty calculations create huge discrepancies when applied over decades, as the work by Meyer and Sullivan shows.
One solution is to build a hybrid definition of poverty that takes into account both absolute and relative poverty. “I would split the uprights on that one,” says Gregory Acs, vice president for income and benefits policy at the Urban Institute. “You can only understand poverty in the context of a point in time. He advocates using absolute measures of living standards from one year to the next, but “renorming” poverty once every generation to account for changing societal standards.
Americans are generous in aiding people hit by natural disasters and other calamities, but when the deepest recession on record hit last year, they did not seem to open their wallets. A survey conducted by Gallup in April 2020, when the Covid-19 downturn was at its worst, found that the share of Americans reporting they had donated money to charity over the previous year was 73 percent, the lowest since Gallup began asking the question in 2001. The previous low, 79 percent, was in another recession year, 2009. One possibility is that people pulled back because they were worried about their own finances: The biggest drop in giving was among people earning less than $40,000 a year, who were most endangered by the recession.
Quote of the Day
“I often say that when you can measure what you are speaking about and express it in numbers you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind: It may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science, whatever the matter may be.”
— William Thomson, Baron Kelvin, “Popular Lectures and Addresses: Constitution of Matter” (1891).
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