What Does Living In Poverty Really Mean?

Financial writer Tim Harford, author of the new book The Undercover Economist Strikes Back, says the poverty line for a single American in 2012 was $30.52 per day. But Harford, talking to NPR's David Greene, says that it's also about how people think of you and how you think of yourself.


Interview Highlights

On defining and measuring poverty

"In the United States, the definition is an idea of absolute poverty. What that means is we're looking at how much money you need to support a particular standard of living, to buy a certain amount of calories, a certain amount of vitamins, to buy a certain standard of housing.

"Somewhat controversially, that is based on a basket of goods that was worked out by a researcher called Mollie Orshansky over 50 years ago and while the prices have been tweaked, what's in that basket of goods hasn't been tweaked at all. It's actually based on food, and then there's a rule of thumb that says if this is how much the food costs then you need another allowance for accommodation and for clothes. It's all about the basic standards of living but it doesn't incorporate any changes in the economy that have happened since the early 1960s [like cell phones and televisions].

Poverty as a social condition

"This goes back to Adam Smith writing in the late 18th century. Smith said that a man would be ashamed to appear in public without a linen shirt. And then he pointed out that the Greeks and the Romans — even the emperors — didn't have linen shirts. His point is that poverty is partly about not having enough money to buy what society expects you to have. If you don't have enough money to meet those social expectations, people will think of you as poor and you will think of yourself as poor. That's not to say that poverty is totally relative, but it is saying it's subjective, it's a social condition. And he's got to be right in some fundamental way about that.

"It's about more than survival. It's also about: Can you participate in social conversations. Are you ashamed to be seen in public or not? There is some controversy about whether that sort of thing should count for the poverty line or not."

On the lasting impact of prolonged unemployment

"What we've discovered is that if you graduate during a recession, that could be a problem for you for five years, for 10 years, even after the economy has recovered, because what's happened is you've had to make compromises, you've had to take a career that really didn't suit you. ... That's absolutely down to bad luck, bad timing.

"The second issue is that if you are unemployed for a long time, you start to be very, very difficult to employ. There was a fantastic study [done by doctoral student Rand Ghayad, where he] mailed out resumes. ... Some had loads of relevant experience and some didn't have relevant experience. Some had recent employment and some were long-term unemployed. What he found was employers care more about whether you had recently had a job than they cared about whether you had any relevant experience or not.

"These are people who could work, who want to work, have the skills to work and yet employers don't want to give them a second glance. Big problem."

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