Planet Money is one of my favourite new pastimes. I consume their podcasts like sugar-free candy – in traffic, while cooking dinner, at no time in moderation. It also helps that they’re unashamed about opening proceedings with the occasional P!nk song.

But sometimes, you get episodes like Episode #487.

Episode #487 is called “The Trouble With The Poverty Line”, and it features an interview with a New Yorker. Some facts:

  • she’s a single mom (she has one son)
  • she lives in the Bronx
  • she is trying to live on $23,000 per year
  • and “according to the government, she does not live in poverty.”

Hmmm.

According to me too, I think.

Especially when computer games for her son are considered an essential expense because they “keep him off the street”.¬†That is not poverty.

I realise that I may sound a bit like a Human Rights graduate with a chip on my shoulder and a passing affiance with “real poverty” from that trip to Africa where I “witnessed it” through the glazed windows of an air-conditioned Range Rover. While sipping on bottle of Evian. And instagramming.

But I’m not comparing anything to real poverty. I’m just saying that $23,000 per year, with access to food stamps, the local food pantry and housing assistance – that does not sound like poverty. When computer games and trainers for extracurricular basketball are part of the “essentials”, even if that’s because it keeps you son busy and not-in-a-gang, you have crossed over into the middle class. Firmly.

WTF.

That said, I do agree that poverty statistics are a bit weird.

Absolute Poverty

Absolute Poverty is living on less than $2 per day (as the IMF measures it). That measure makes the poverty rate in the United States and Europe equal to zero.

But Absolute Poverty does tend to be seen as ideological hokum. It makes the assumption that the market is so perfectly globalised that transactions take place at the same price everywhere, and that everywhere is in the same location (otherwise, there would be transport costs that would cause price differentiation).

$2 in Borneo will get you the same amount of food as $2 in Paris.

It’s just not true.

So we need to talk about Relative Poverty, which is measured by some kind of index that takes living standards, life expectancy, sanitation and health into account.

And, to be fair, that is kind of the general observation of the podcast. The point they’re making is that an unemployed college student working odd-jobs and being supported by his parents is considered “poor” by poverty line standards, where a working mother on food stamps is not.

There is an issue of relativity here: while the poverty line measure in the States is an absolute measure linked to the price of food.

But still.

You’re going to have to work harder to persuade me that $23,000 per year in income is a question of poverty.

PS: if you don’t want to listen to the podcast, there is a rough summary on the Planet Money blog here.