Everything’s relative

Yesterday Arts & Letters Daily linked to a New Yorker article suggesting that poverty is a relative, not absolute, condition. Which is to say, an attempted rebuttal of the “How poor can you really be if you own a car, a color TV and a microwave?” argument. While I think there’s some merit to this position, I have issues with several aspects of the article.

First, there’s the evidence provided to support this claim: the article cites a British study which found that mid-level civil servants die sooner than their bosses, research by Amartya Sen which found that Indians live longer than African-Americans despite being absolutely poorer, and animal studies suggesting that low-status monkeys are more stressed than their high-status counterparts.

Of course, you can’t directly compare the health or mortality of rich/high-status to that of poor/low-status people and animals; the rich and powerful typically eat better, smoke less, etc. In the case of the British study, the New Yorker article claims that a follow-up study demonstrated that “less than a third of the difference in patterns of disease and mortality can be ascribed to behavior associated with coronary risk, such as smoking or lack of exercise”, which would be a relatively easy thing to check with some regression. Straightforward as that sounds, though, it’s misleading. The one third only applies (assuming the paraphrase is accurate) to coronary risk, but what about other health risks that might correspond to poverty? For example, does the coronary risk associated with smoking also take into account the increased lung cancer risk? What about non-coronary nutritional issues? What about the increased environmental toxicity (and thus cancer risk) of low-income neighborhoods relative to their high income counterparts? What about the (presumable: I know virtually nothing about British health care other than that a lot of people I know say it sucks) lower access to preventative and emergency health care that poor people have? If volitional coronary risks account for one-third of the difference, mightn’t these other factors explain a good chunk of the remainder?

The above isn’t relevant in the case of African-Americans versus Indians, since in that case the richer group dies sooner. The article suggests that African-Americans are dying younger because, although they’re absolutely richer than the Indians they’re compared to, they’re poorer relative to the society that they live in. But the direct comparison is misleading here as well. Being richer in an absolute sense, African-Americans are more able to indulge in a number of activities that are bad for you but (in a global sense) quite expensive: Yes, I’m aware of the disjunction in simultaneously claiming that poor British people engage in more health-antagonistic activities than rich British people and that poor Indians might have healthier lifestyles than the (absolutely) richer African-Americans. But this is at least plausible if not definitively true: vice is, coarsely speaking, a luxury good and both the poor British and African-Americans are, on an absolute scale, quite wealthy and so likely to consume more vice than Indians who are poorer. So why don’t rich Brits consume even more vice? Because, as with many luxury goods, income inelasticity of demand isn’t constant; for the super-rich, vice (maybe) takes on more of the qualities of a normal or even inferior good. Plus, it has to compete with the whole health food/healthy lifestyle thing, which seems to follow a complementary trajectory. drug and alcohol abuse, smoking, a sedentary lifestyle and eating high-lipid foods, among others (only one such, recreational homicide, is addressed in the article). Dietary issues are of special interest, since the majority of people in Kerala (the region of India used for the comparison) are Hindus, meaning that vegetarianism was probably much more prevalent among the Indians in the study (especially since vegetarianism is particularly prevalent among South Indian Hindus) than among the Americans.

That’s not to say the argument that relative status is an important component of wealth (in the broad sense of that word) is completely dead: the animal studies cited are (presumably; I haven’t read them) compelling counter-evidence, as is the argument that you need more than color TV and microwaves to be able to navigate the modern job market. That being said, I also take issue with the statistic cited to cap this section of the article:

Research by Tom Hertz, an economist at American University, shows that a child whose parents are in the bottom fifth of the income distribution has only a six-per-cent chance of attaining an average yearly income in the top fifth. Most people who start out relatively poor stay relatively poor.

This is one of those statistics that sounds impressive but is, absent significant context, almost worthless. First, note the misdirection in the statement: by using “fifth” rather than percentages to describe the income levels, the above encourages a subconscious comparison of 6% to 100% rather than the 20% one would expect in a perfectly meritocratic society in which everyone had completely equal access to education and the job market (a.k.a. fantasyland). Also, counting the numbers of poor who make it to the top fifth is misleading in and of itself, since comparing top and bottom is guaranteed to give the least encouraging picture of income mobility; another measure might test what percentage of the children of the poor end up in poverty themselves: is it 20% (the utopian ideal)? 30%? 50%?

Anyway, these statistical quibbles aside, my more serious objections are to the “solutions” section of the article. The author suggests calculating poverty on a relative basis (set the poverty line at half the median income) rather than–as currently calculated–absolutely (the purported minimum necessary to afford food, clothing, housing, etc.). I don’t necessarily have a problem with that (other than to the extent that setting a poverty line is only relevant if you’re going to give tax-funded benefits to the poor), but his refutation of objections is weak. For example:

Many Americans are skeptical about government anti-poverty programs, because they believe that the impoverished bear some responsibility for their plight by dropping out of high school, taking drugs, or committing crimes. Raising public awareness about relative deprivation could help to change attitudes toward the poor, by showing how those at the bottom of the social hierarchy continue to face obstacles even as they, along with the rest of the society, become more prosperous. The Times recently reported that more than half of black men in inner cities fail to finish high school, and that, nationwide, almost three-quarters of black male high-school dropouts in their twenties are unemployed. “It doesn’t do a poor person any good to say ‘You are better off than you would have been thirty years ago,’ ” Fuchs said. “The pathologies we associate with poverty—crime, drug use, family disintegration—we haven’t eliminated them at all.”

It may just be me, but responding to the notion that many of the poor bear responsibility for their plight by saying that half of inner-city blacks drop out of high school and that three-quarters of those end up unemployed seems pretty non-sensical. I mean, if you drop out of high school despite the fact that three-quarters of the guys in your neighborhood who did the same are unemployed, then it seems to me that your probable future unemployment is, in large measure, your own fault. That’s not to say that a high school diploma (especially from an inner-city high school, where, based on my own limited experience, it seems like you only need a pulse and a willingness to get out of bed every morning to get a diploma) is a guarantee of employment, but neglecting to expend even that minimal amount of effort to make yourself employable seems to almost perfectly embody the responsibility argument that the author so casually dismisses.

Next paragraph:

The conservative case against a relative-poverty line asserts that since some people will always earn less than others the relative-poverty rate will never go down. Fortunately, this isn’t necessarily true. If incomes were distributed more equally, fewer families would earn less than half the median income. Therefore, the way to reduce relative poverty is to reduce income inequality—perhaps by increasing the minimum wage and raising taxes on the rich. Between 1979 and 2000, the inflation-adjusted earnings of the poorest fifth of Americans increased just nine per cent; the earnings of the middle fifth rose fifteen per cent; and the earnings of the top fifth climbed sixty-eight per cent.

The third sentence in the above is only partially true; really, only incomes below the median are relevant to the argument being advanced here. It’s easy to visualize a hypothetical income distribution with vast wealth differentials between the richest and the median, but with nobody earning below half the median: simply cluster the bottom half near the median.

With this picture in mind, it’s immediately apparent that raising taxes on the rich has absolutely no effect on poverty as defined in the article (other than insofar as those tax revenues on the one hand fund welfare programs and, on the other hand, reduce the ability of the rich to employ the poor). In fact, this definition of poverty makes an entirely different tax strategy orders of magnitude more effective: repeal all taxes on everybody who makes more than the median (since their income is irrelevant to what the median actually is) while aggressively taxing those who make between 50 and 100% of the median. Implement this tax regime and pretty soon there will be no poverty under the given definition (of course, as typically happens in such scenarios, the definition would be changed). Sound ludicrous? I guarantee that, if this new definition of poverty becomes the governmental standard, you’ll see more subtle implementations of similar strategies within five years.

But that’s not even the dumbest part of the sentence in which it’s suggested: that honor goes to the suggestion that raising the minimum wage would reduce relative poverty. It’s unbelievable to me that there still people who think raising the minimum wage helps the poor. Of course, some people still believe the earth is flat; what’s really unbelievable is that the belief that minimum wages are negatively correlated to poverty is a common, probably majority view. As pointed out by Matt MacIntosh on Wednesday, it’s common knowledge among economists that raising the minimum wage is bad for poor people. As with many economic truths, this is self-evident if you just think about it. If raising the minimum wage really helps the poor, why not just raise the minimum wage to, oh, $500/hour? In fact, mandating a “living wage” of, say, 50% of the median would, most likely, increase the number of households below that threshold.

Finally, a more general objection: while I do think there’s some merit to the idea that poverty is a relative (as opposed to purely absolute) phenomenon, the argument (especially in context of the dodginess of much of the supporting evidence and, especially, of the purported solutions) strikes me as superfluous (or, perhaps, self-aggrandizing) in much the way that modern Western feminists have made themselves largely superfluous. In both cases, a lesser domestic evil is being subjected to the minutest scrutiny while a greater global evil is largely ignored. After all, no matter how bad relative poverty is, absolute poverty still exists in the world and is unquestionably worse.

8 Responses to “Everything’s relative”

  1. Curt Says:

    I’m not sure that it’s “unquestionable” that absolute poverty is worse than relative poverty. The whole premise of the article is that lack of status is at least as important to people’s psychological sense of well-being as absolute prosperity. I’m not saying that the argument is proved, but if it is than it would seem to indicate that people in positions of relative material deprivation are in even worse shape than those who are absolutely poorer in a more equitable community. And if you think of it from a Darwinian standpoint, it makes sense; absolute poverty is important in terms of staying alive, but relative status is probably the most important factor in determining mating opportunities. Instead of arguing that relative prosperity is unimportant, a better argument against rampant redistributionism is that societies that ostensibly take that as an overriding priority tend to have even larger income disparities than liberal societies. The Soviet Union is a an excellent example, where it has been calculated that the upper 10% economically controlled about 45% of total wealth, compared to around 30% in the U.S. and Europe. The Chinese government itself estimates that China has the largest economic disparity in the world, although China is admittedly not a paragon of Marxist economic thinking anymore.

  2. shonk Says:

    It’s unquestionable in the sense that starving to death is worse than living in a state of “relative material deprivation”.

  3. Curt Says:

    I mean, there are some intermediate states.

  4. shonk Says:

    Sure, I’m not denying that. More broadly, it should also be noted that there are plenty of people living in absolute and relative poverty.

  5. Curt Says:

    I think the more crucial distinction is that if relative poverty is primarily a psychological condition, then people have more of an ability to control it mentally than absolute material deprivation.

  6. shonk Says:

    I don’t think that’s precisely the argument being propounded. Certainly physical health problems like heart disease may have partially psychological causes, but it’s not at all clear how to ameliorate this effect. And the point about relatively deprived people having less access to and ability to navigate the job market isn’t psychological. That’s why I’ve tried not to pursue that particular line of reasoning, at least not solely.

  7. Curt Says:

    I don’t really care whether it’s the argument being presented or not. The interesting point to me is the extent to which one can compare the effects of simple material deprivation to the more complicated damage of low social status. It may be true that heart disease, low educational opportunities etc. are characteristic of relative poverty in Western societies, but it’s not clear how that is distinct from absolute poverty except insofar as it can be distinguished from pure material deprivation. In other words, I don’t think anyone would deny that there is a spectrum of material well-being in even the wealthiest society, but merely broaching the possibility that American blacks are in some sense worse off than much objectively poorer villagers in rural India suggests that there may be some sort of behavioral or emotional factor tied to occupying a low status within the group. It’s possible that it’s simply a matter of less affluent Americans making poor lifestyle choices, eating bad food, not excersing, etc. But a) I have a hard time imagining that in sum this is worse physically than the conditions rural Indians face, what with malaria, unsanitary water supplies, hazardous occupations etc. and b) even if it is a lifestyle issue presumably the relatively poor, having greater access to material goods than the absolutely poor, have an ability to choose a healthier lifestyle which is greater than those who are more deprived of material goods.

  8. Dave Says:

    Let’s postulate that differences in longevity are largely due to social inequality. That could be good news for the taxpayer. This would mean that the dysfunction of the underclass it is not primarily due to health care disparities, dietary factors, differences in levels of substance abuse, domestic violence, lack of interest in education, a meaningless life caused by an entitlement mentality, victimization by local thugs and con artists or other negative factors that disproportionately affect the poor. This could be interpreted as showing that social spending and extra educational efforts to help poor people are futile and should be phased out.

    I disagree and think that social spending is necessary to try to address these problems. I don’t see how the effects of an unhealthy social milieu can be separated. I suppose it is the poor record of positive effect of the present social welfare system that gives the blame inequality idea some currency. Some facts do seem to contradict this idea.

    Statistics I am aware of show that longevity is increasing world wide, that it is increasing in America among all income groups, but at a slower rate among the poor. At the same time income disparities are rising. If this were the major factor longevity among the rich should be increasing, which it is, but longevity among the middle class and poor should be decreasing, which it isn’t.

    The whole social science industry is devoted to documenting social, racial, gender, and ethnic and income disparities. It predictably finds evidence of shocking inequality and injustice. Somehow the studies do not, as in other scientific pursuits result in a progressive narrowing down and focusing in upon a valid explanatory hypothesis nor do they reveal a specific or effective solution that can be tried on a small scale and proven effective. This does not prevent the authors of these studies from spinning elaborate ideologically laden theories and vague recommendation for expensive, coercive federal solutions. Social science teachings are in dire need of a rigorous evidence based approach.

    While admittedly I have little contact at present with the truly poverty stricken, most people I know don’t fit stereotypes. They have their troubles such as ill health, financial or marital and family problems but these are not group specific and can and do occur in anyone’s life. While I do not dispute the fact that wealth can have a powerful ameliorative effect on these problems and that this is unfair, the fact is that most people in America today are able to find a way to get by and much public and private help is available and effective. Inevitably personal problems eventually visit everyone and in my observation they themselves far outweigh statistical disparities between social groups.

    PS- The increased mortality rate of blacks could have several etiologies besides inequality or discrimination. It is well known that blacks in this country have a propensity to get high blood pressure and diabetes, both potent predictors of cardiovascular mortality. Theoretically this could have been a result of the rigors involuntary transportation on slave ships. Some of the physiological mechanisms that will predict survival under conditions of starvation and dehydration might decrease longevity in more benign conditions. It is well known that many of the reflexes that protect people in acute shock in the heart will cause chronic heart failure to spiral out of control and hasten death. Treatment is directed towards inhibiting these reflexes. Thus various hypotheses are potentially explanatory for disparities. This shows that righteous indignation is not always indicated. An honest search for knowledge is what is needed.

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