Relative Deprivation

The Economy

One topic I discuss a lot here on Keywords is inequality, but one thing I’ve never thought about before I read this New Yorker article is proposing a change in the way that the poverty rate is calculated. By using a relational, as opposed to absolute, measure, the poverty rate can better reflect the importance of relative depravation.

Since relative deprivation confers many of the disadvantages of absolute deprivation, it should be reflected in the poverty statistics. A simple way to do this would be to classify a household as impoverished if its pre-tax income was, say, less than half the median income—the income of the household at the center of the income-distribution curve. In 2004, the median pre-tax household income was $44,684; a poverty line based on relative deprivation would have been $22,342. (As under the current system, adjustments could be made for different family sizes.)

Adopting a relative-poverty threshold would put to rest the debate over how to define a subsistence threshold. As long as the new measure captured those at the bottom of the social hierarchy, it wouldn’t matter much whether the income cutoff was set at forty per cent or fifty per cent of median income. If poverty is a relative phenomenon, what needs monitoring is how poor families make out compared with everybody else, not their absolute living standards.

I have to think about this some more…

(via Arts and Letters Daily)

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