US Poverty Rate

Tyler Cowen links to Lane Kenworthy Saying:

]Poverty comparisons across affluent nations typically use a "relative"
measure of poverty. For each country the poverty line "” the amount of
income below which a household is defined as poor "” is set at 50%
(sometimes 60%) of that country's median income. In a country with a
high median, such as the United States, the poverty line thus will be
comparatively high, making a high poverty rate more likely...

There is actually at least one study out there by a left-leaning think tank that sort of addresses this (though not exactly).  The study first shows US and European income of the bottom 10 percentile vs. the median income of that country.  Not surprisingly, since US median income is so high, the bottom 10 percentile have a low share.  BUT, they then do the numbers a second, time, showing the bottom 10 percentile income in each country all compared to US median income, ie all with the same denominator,  here, the US poor do at least as well as most European countries.  The comparison shows clearly that while the US has more income inequality, it is not because our poor are poorer but because our rich and middle class are richer.   Here is that second study:



  1. Tim Worstall:

    Worth noting one minor point. Tyler also points to Paul Krugman defending his point. Your graph and Krugman's point both come from the same researcher, Tom Smeeding, and the same information source, the Luxembourg Income Study.

  2. HTRN:

    Another point to make is how much further money goes in the US - Fuel, food and shelter are generally significantly cheaper. So while the poor here may not have any more income than the poor in Europe, they certainly live much, MUCH better.

  3. Brandon Berg:

    What HTRN said. If these numbers aren't PPP-adjusted, they should be.