Friday, February 2, 2018

Can You Really Be Poor In America? (Bureau of Specious Statistics, Part 12)

Self-reported statistical data is always suspect.  Doubly so when the techniques are fatally flawed.

An interesting opinion piece in the paper the other day points out that when comparing poverty data in the USA and the third world, we use reported income in the US to measure poverty, while we use reported consumption in the third world.

As a result, people who are receiving various forms of welfare in the US report "zero" as income, while a starving man in Africa appears to be wealthier by dint of his consumption being greater than that number.

The Bureau of Specious Statistics strikes again!

The problem with these kind of poverty statistics is that they rely on self-reported data for starters.  And people have incentives to mis-report their own data, and also may not realize exactly how much money they make or spend.

Using "income" - which in America means taxable income as a measure of wealth is often misleading.   For example, since I am retired and not tapping into my 401(k) but instead spending after-tax savings, my "income" is nearly zero.   According to the government, I am living not far above the poverty line, and indeed, qualify for nearly free Obamacare as a result.   By this standard, you would think I was suffering from malnutrition and not overweight, that I was living in a slum shack and not on a resort island.   Raw statistics can be misleading.

For someone living in the margins or scamming the system, under-reporting income is also a way of life.  I recounted before how a friend of mine works carpentry jobs during the "construction season" up North (the few warm months in the summer before deer season).   He works just long enough to collect "unenjoyment" as he calls it, and then qualifies for whatever government handouts are available to an "unemployed" person such as he.   In the meantime, he gets remodeling jobs from local homeowners, for which he is paid under-the-table as unreported income.

If you were to add up what he spent every year, you'd find it was a much larger number than the sum of his taxable income and his government benefits.   He isn't about to report that undeclared income to someone doing a survey.   But as the Vox article notes, people doing these surveys don't even ask about government assistance and many people don't consider it "income".

So, yes, a lot of people, when responding to these surveys, will say with a straight face that their income is "zero" which is physically impossible.   Even if you are living in your parent's basement and raiding their refrigerator at night, you are getting your pot money from somewhere.

Even homeless people have income - and in fact, many of them burn through a lot of money feeding their drug habits.   That guy panhandling at a busy intersection can make far more than the minimum wage - and in fact far more than some officer workers.   But if you were to ask him how much money he made, he would not tell you the truth.  Indeed, even though he knows he makes money, he likely has no real idea of exactly how much he makes, the amount of which would surprise even him.

Clearly another standard for determining and comparing "poverty" levels across the board is needed.  And clearly, measuring "income" is a flawed metric.   Clearly, using self-reported data in the form of surveys is also flawed.  People looking for government handouts or scamming the system by under-reporting income are not going to "come clean" with how much they actually make and spend.

Spending is probably a better metric of poverty and wealth.   You may have "zero" in the form of "income" through a job, but you may receive hundreds, if not thousands, of dollars in benefits every month.  But there has to be a better way of determining this than merely asking people how much they spend - because let's face it, most of us have no idea, or have an idea that is wrong.  Maybe using a metric other than money is a better idea.   Maybe measuring their overall health and well-being is a better and more accurate measurement - but one that is a lot harder to acquire through surveys.

The idea that people are "starving to death" in America is almost laughable.   We have so many layers of social programs that you would have to work at it, to starve.   We have food stamps, or as it is called now, SNAP, which can provide hundreds of dollars a month in free food.  We have section-8 housing and other programs to provide free or subsidized housing.   We have temporary welfare or TANF for families in financial distress.  We have Social Security for retirees, and SSI for people who retire without Social Security.  We have Medicare and Medicaid and Obamacare.  We have food banks and soup kitchens.   We have all sorts of programs, from the Federal, to State, to local, to volunteer and church groups.

The idea that people are living on nothing or are worse off than someone starving to death in Africa is not only wrong, it is offensive.  It is offensive for Americans to posit that their plight is worse than people who live in countries where there is real poverty.  Where the largest single health concern is not obesity (as it is here in the States) but starvation and disease.

But people want to buy into this narrative for a number of reasons - on both the Right and Left.  Some on the Right want to posit that Americans need "foreign aid" more than foreign countries do, and we should "take care of folks at home first!" - which is just a way of saying, "let's cut foreign aid" because they have no intention of throwing money at poor people who tend to vote Democratic, when they vote at all.

On the Left, this mythology is used to sell the idea that capitalism is flawed, deadly, and uncaring, and that the entire system needs to be overthrown and replaced with socialism.   But what this argument neglects is that we are not a capitalist society in its purest form, but a hybrid of socialism and capitalism.  We have so many social and welfare programs and layer upon layer of "safety net" for our citizens that one cannot say we are a strictly "capitalist" country.  Is it as extensive a safety net as in Europe?  No, of course not.   But that is not to say it doesn't exist.

Sadly, it seems that a lot of these surveys and studies these days are being performed with the outcome in mind before they start.  "Let's do a survey to show that American's are as poor as people in third-world countries!  How can we skew the data to show this?" - that seems to be the sort of "science" behind much of this sociological nonsense being batted about today.   Rather than look at raw data from impartial sources (and questioning the validity of that data in the process) the goal today seems to be to find the answer first, and then fit the data to the answer later on.

And this is why I don't buy these statistical arguments, particularly when they make alarming claims.   Be skeptical and ask questions, and just use your own judgement and common sense.   When you see "poor" people in America who are as fat as a house, it should be creating some sort of cognitive dissonance when you read a report saying Americans are starving.

Because they aren't.

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The Bureau of Specious Statistics is one government agency I wish Trump would shut down!  Unfortunately, like with most politicians, it appears to be his favorite.  Here are some of the antics the BSS has been up to in recent years: