Category: Poverty

poverty_20130311One of the most underreported stories of the last decade is about good news: we’re winning the struggle against chronic hunger around the globe.

A new U.N. report estimates that the number of chronically undernourished people in the world has decreased by more than 100 million over the last decade, and 209 million lower than in 1990–92. Those figures are even more remarkable when we consider the global population has increased by almost 2 billion since 1990.

According to the report, since 1990-92, 63 countries have reached the hunger target of halving the proportion of undernourished people and 25 countries have achieved the goal of halving the number of undernourished people. Of the 63 developing countries, 11 already had undernourishment levels below 5 percent (the methodological limit that can assure significance of the results different from zero) in 1990-1992 and have been able to keep it in that interval, and are therefore not the prime focus of the 2014 report.

In the same period, the prevalence of undernourishment has fallen from 18.7 to 11.3 percent globally and from 23.4 to 13.5 percent for developing countries. There has likely never been a time in modern human history when such a large percentage of the population has been freed from chronic hunger.

Unfortunately, about 805 million people — mostly in Africa and South-Eastern Asia still remain without adequate food resources, due largely to conflicts and natural disasters. But we’re making remarkable progress. In fact, as Steve Davies of LearnLiberty explains, in the near future we may be able to eradicate extreme poverty and global hunger altogether.

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childsupport2_1003“Deadbeat Dads”—absent fathers who don’t provide financial support for their children—are one of the most significant factors contributing to child poverty in America. So why do some single women have children outside of marriage when they know they will receive little to no support from the child’s father?

A new study from the University of Georgia and Boston College attempts to answer that question. The authors created an economic model to simulate a scenario in which every absent father was forced to pay child support. As the researchers note, “Looking at the data through the lens of this ‘perfect enforcement’ scenario caused the picture to change.”

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French economist Thomas Piketty

This summer’s issue of The City, which includes an article by myself on Orthodoxy and ordered liberty, opens with a symposium of five articles on “The Question of Inequality.” These include two articles on Pope Francis, two on French economist Thomas Piketty’s recent book Capital in the Twenty-First Century, and one on the Bible.

Having recently written a two part article on the subject for the Library of Law & Liberty (here and here), I took copious notes as the topic is an ongoing subject of research.

In order to recommend the symposium to our readers here, who no doubt have interest in the topic, I compiled the following highlights:

Josiah Neeley, “What Does Bono Know That the Pope Doesn’t?”

Argentina is now the world’s only “formerly developed” country.

[E]ven in the United States a great deal of inequality is the result not of the heroic innovator but of government favoritism.

Donald Devine, “Does Pope Francis Hate Capitalism?”

[B]y 1910 … Argentina’s per capita Gross Domestic Product [was] number ten in the world.

Peron’s Argentina [in the mid-twentieth century] was perhaps the first comprehensive welfare state…. [And] the result has been a much poorer country.

The actual experience of markets [contra Pope Francis] is hardly autonomy. The U.S., one of the freer countries, has 300,000 regulations.

[B]etween 2005 and 2010 the total number of poor in the world actually fell by half a billion people as trickle down prosperity lifted millions from absolute destitution.

Today’s reality is the over-regulatory welfare state, not wild markets. (more…)

7figuresThe UNICEF report Hidden in Plain Sight, which draws on the largest-ever compilation of data on violence against children, reveals the disturbing prevalence of physical, sexual, and emotional abuse of children around the globe.

According to the report the effects of violence on children are often lasting and have inter-generational repercussions. Findings reveal that exposed children are more likely to become unemployed, live in poverty, and be violent towards others. The authors of the report note that the data is derived only from individuals who were able and willing to respond, and therefore represent minimum estimates.

Here are seven figures you should know from the latest report:
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fast-food-strikeWould you be in favor of a pay increase of 107 percent for your current job?

Most of us would be thrilled at having our pay more than double, and would readily support such a change. Imagine if all that was required was to vote for your industry to become unionized. Who wouldn’t support unionization if it resulted in a bigger paycheck?

But what if the change came with one caveat: If the pay increase were approved you’d not only lose your job, you’d no longer be qualified to work in the same industry. Would you still support the pay increase if it cost you your job?

That’s the choice a lot of food-service workers face—though few understand the true implications of their decision. Most fast-food workers going on strike for higher wages simply believe they are deserving of more money and aren’t aware of the basic economic factors that could cause them to become unemployable.
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save-to-winPeople who play the lottery with an income of less than $20,000 annually spent an average of $46 per month on lottery tickets. That comes out to more than $550 per year and it is nearly double the amount spent in any other income bracket.

Those who have the least spend an inordinate percentage of their income every year on lottery tickets (estimates vary from 4-9 percent). Yet while it is irrational for those in poverty to waste their limited resources on a one in 176 million chance, there is something almost rational in the reasoning for doing so. In 2012, The Atlantic’s Derek Thompson noted that,

For the desperately poor, lotteries perform a role not unlike the obverse of insurance. Rather than pay a small sum of money in exchange for the guarantee of protection that you’ll need in the future, you pay a small sum of money in exchange for the small probability that you’ll win money to help your lot right away. It is, for lack of a better term, a kind of aspirational insurance.

But what if the poor could pay a small sum to themselves (in the form of savings) and still reap the “aspirational insurance” benefits of the lottery? As the New York Times reports, some credit unions and non-profits are doing just that:
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lego-people“Can you explain that important economic concept using Legos?”

Apparently, someone must have said that to Richard Reeves, an economist at the Brookings Institution economist, because he’s made a brief video using Legos to visualize social mobility.

There are two reasons I really appreciate this video. First, I love to see important economic issues explained in an accessible and entertaining manner. Second, as I’ve repeatedly said to anyone who will listen, social mobility — specifically getting people out of poverty — is infinitely more important than focusing income inequality, a topic that gets far too much attention nowadays.

The one drawback to the video is that it’s far too pessimistic. Yes, social mobility is still a huge problem. But the video makes clear, that social mobility is possible for almost all people. That has not been true for most of human history and it is not true in most parts of the world today.

Also, I am far less concerned with whether a person can go from the bottom quintile to the top as I am with going from the bottom quintile to the middle. Like many Americans, I was born in the bottom quintile and worked my way to the middle quintiles. The fact that I’m unlikely to ever join the top quintile is of absolutely no importance to may life. None at all. What we should care about is whether people can get out of poverty and flourish economically, not whether they can join Beyonce and Jay-Z in the billionaire’s club.

But those quibbles aside, I’m grateful this video is helping to spread the message about the importance of social mobility.

girl bitting appleThe opening paragraphs of latest issue of Stanford University’s Pathways magazine contains an eye-opening claim: in any given month of 2011, 1.65 million U.S. households with children were living on less than $2 per person, per day.

That sounds horrific, and it is: horrifically misleading.

Once you dig deeper you find that what they mean is “households living on $2 or less in cash income per person per day.” The reason it is misleading is because, as a savvy economist might say, you don’t eat income.

What we mean (or should mean) when we say “living on” is consumption. In economics, consumption is the use of goods and services by households.

For at least the first few years of our lives (i.e., when we’re children), most of us have no incomes at all. So how do we keep from starving? Because what we “live on” (our share of consumption) is paid for by someone else’s income, usually our parents. Americans in extreme poverty are also able to consume using someone else’s income: their fellow taxpayers. This is why the poor can have near zero income and still have access to many of the goods and services, such as housing and food, required for survival.

As Jordan Weissmann notes, the Stanford article “ignored all non-cash safety net benefits.”
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Earlier this month, I wrote a two part article for the Library of Law & Liberty, critiquing the uncritical condemnation of income inequality by world religious leaders.

In part 1, I pointed out that “while the Pope, the Patriarch, the Dalai Lama, and others are right about the increase in [global income] inequality, they are wrong to conclude that this causes global poverty—the latter is demonstrably on the decline. And that, I would add, is a good thing.”

F. A. Hayek

In part 2, drawing on the work of F. A. Hayek, I noted, “As societies learn to use their resources ‘more effectively and for new purposes,’ the cost of manufacturing luxury goods decreases, making them affordable to new markets of the middle class and, eventually, even for the poor.” I continue, “Such inequality not only accompanies the very economic progress that lifts the poor out of poverty, it is one essential factor that makes that progress possible.”

We may add to this two more ways in which focusing solely on income inequality can be misleading from article in the Wall Street Journal yesterday by Nicholas Eberstadt: increased equality in lifespan and education. He writes,

Given the close correspondence between life expectancy and the Gini index for age at death, we can be confident that the world-wide explosion in life expectancy over the past century has been accompanied by a monumental narrowing of world-wide differences in length of life. When a population’s life expectancy rises from 30 to 70, the Gini index drops by almost two-thirds—from well over 0.5 to well under 0.2.

This survival revolution—and the narrowing of inequalities in humanity’s life chances—is an epochal advance in the human condition. Since healthy life expectancy seems to track closely with overall life expectancy, a revolutionary reduction in health inequality may also have occurred over the past century. Improvements in global mortality for the poor have contributed to the very “economic inequality” so many now decry. This is another reason such measures can be deceiving.

The spread and distribution of education has had a similar impact. In 1950 roughly half of the world’s adults—and the overwhelming majority of the men and women from low-income regions—had never been exposed to schooling. By 2010 unschooled men and women 15 and older account for a mere one-seventh of the world’s adults, and about one-in-six from developing areas. (more…)

union-jack-flag-great-britain-x-nature-with-uk-for-2685143At the height of power, circa 1922, the British Empire was the largest empire in history, covering one-fifth of the world’s population and almost a quarter of the earth’s total land area. Yet almost one hundred years later, Great Britain is not so great, having lost much of its previous economic and political dominance. In fact, if Great Britain were to join the United States, it’d be poorer than any of the other 50 states — including our poorest state, Mississippi.

Fraser Nelson discovered that fact by using a “fairly straightforward calculation” (see the end of this article for an explanation, and what Nelson missed). The result, as Nelson explains, is that all but one income group in America is better off than the same group in Britain:
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