Lies, Damned Lies, and Poverty Statistics

An infamous, but oddly rarely-reported piece of recently released economic data indicated that the poverty rate in the United States has risen over the past 30 years - from 11.2% in 1974 to 12.7% in 2004 (cue sound of crowing from the left...this must be Bush's fault!). But does this sound right to you? Well, although the statistics are technically correct, it tells us almost nothing about poverty in America. Even worse, it completely misleads us into thinking that the poverty situation is getting worse, which isn't actually the case. Because what does the data on the living standards of today's poor tell us? Pretty much the complete opposite:

In 1972-73, for example, just 42 percent of the bottom fifth of American households owned a car; in 2003, almost three-quarters of "poverty households" had one. By 2001, only 6 percent of "poverty households" lived in "crowded" homes (more than one person per room) - down from 26 percent in 1970. By 2003, the fraction of poverty households with central air-conditioning (45 percent) was much higher than the 1980 level for the non-poor (29 percent).

While we classify many of today's poor as living below the poverty line, that is really a relative measure. In absolute terms, they're doing better than they ever have. Which isn't to say that we can do a better job of addressing the problems facing the poor in this country, but just to point out that official statistics about poverty only tell you a portion of the story. And often, it's a story out of a whole different book than what's really happening on the ground.

Hat tip: Russ Roberts at Cafe Hayek