Discussion
A new way to measure poverty shows the US falling behind Europe
some_random: "We hacked on a metric until it said USA Bad, named it something ambiguous, and now journalists are writing USA Bad articles based on it, please clap"Just look at that average poverty over time graph, it's obviously nonsense.
entropicdrifter: They compared purchasing power for an actual apples to apples comparison. Did you even read the article?
abighamb: This metric makes a lot of intuitive sense and reflects the consumer sentiment I hear from neighbors. "Working more for less" isn't a new complaint, but something that measures that is interesting.I would be very interested to find out how those stats are related to things like, GINI or old pre-GDP economic measures of raw production.
ktoyame: it feels counterintuitive to me that US "average poverty" dropped more than 50 percent in covid, while european stayed absolutely untouched.
unsnap_biceps: How much of that could be the lack of real social nets in the US compared to Europe?In addition, anecdotally, everyone I know in the EU that had a job pre covid has a job today. I can't say the same thing about folks in the US.
weberer: It is not intuitive at all to me. From the article, I can see that there's some sort of penalty by having more billionaires in the country, and that somehow leads to "the time needed to earn $1 is 63 minutes in the US", which doesn't really line up with the fact that minimum wage per hour ranges from $7-$18 depending on the state.The "old" way was to measure median net PPP per capita, which makes more sense to me:https://upload.wikimedia.org/wikipedia/commons/8/85/Annual_m...
weberer: That's not my experience in Finland. The unemployment rate passed 10% a few months ago. Youth unemployment is now over 20%.
9rx: Different responses to the COIVD shutdowns. The US government gave stimulus money directly to the people, for many bringing an increase to one's income during that period. The European response was focused more on helping people keep their jobs so their incomes remained stable.
mikkupikku: Extremely doubtful that the stimmy was enough to meaningfully reduce the real poverty level. The people who already live paycheck to paycheck spent that almost as soon as they got it (hopefully on something that meaningfully improved their lives, like deferred car or home repairs, but if we're being real a lot of people blew it on gambling apps.)
jeffbee: Incorrect.https://www.nationalacademies.org/news/federal-tax-credits-i...
9rx: The metric in question measures how much time it takes to get $1 in income. When your income increases over a fixed period of time (in this case because the government started paying you more than your employer did), the time to get $1 goes down. There is nothing counterintuitive about it.
wilg: I believe this is the paper https://ora.ox.ac.uk/objects/uuid%3A501e8eb8-3ce7-4ac0-9d09-...
makapuf: The curious data point is that on this graph poverty seems to have strongly reduced during covid. Less poor.
milesskorpen: Huge amounts of cash were given to many Americans during Covid.
mikkupikku: Politicians are judged by these metrics, so they all get gamed.
jojomodding: They are not, sadly. Or rather, many voters care about many different things and the resulting metric is not that sensible.
jeffbee: It is not counterintuitive at all, unless you misunderstand the income levels of the poor. Sending everyone $1400 massively increased the income of the poorest Americans.
bee_rider: I’m as frustrated as anybody else with how the economy is going in the US. But we should be skeptical about a new metric with an intuitive name that seems to confirm exactly what we all suspect but is sort of complex to interpret/measure, right?In particular it seems weird that only we had a massive change during COVID.Also seems a little odd that Germany was always better than the US, even in the 90’s when things were pretty good here.Putting it together, we need to have COVID all the time here, so we can match the economic development of Germany immediately post-reunification.
casey2: This metric rates very high on my private index Compensation, Obscuring, Paltry, Earnings (COPE)
AnimalMuppet: OK, the idea is interesting, but the numbers seem completely bogus. In what world does it take the average American 63 minutes to earn $1, even one "international" dollar?I get the "international" part - purchasing power. The number still seems way off, though.In a time when minimum wage is $7/hr, how is the average American earning $1/hr?Can anyone make that number make any sense?
WarmWash: I would guess this is because places like Germany having incredibly low annual working hours.[1] The bottom of the list is populated by all European countries.[1]https://en.wikipedia.org/wiki/List_of_countries_by_average_a...
adrian_b: Being at the bottom of that list is very desirable, because it means high quality of life, while being at the top of that list means very low quality of life.
jltsiren: The figure you linked to is particularly unintuitive. It shows income per household, divided by square root of household size. There are plenty of complex and unpredictable interactions with heuristics like that. For example, if housing becomes more affordable, young people may move out sooner. Then there will be more small households with low incomes, which may bring the reported income down.
akamaka: Nope, I just spent 15 minutes reading the original paper and can’t make any sense of what he is calculating.International dollars are normalized to USD, so there’s no conversion necessary. The figure he quotes of 63 min per dollar converts to $8343/year. However, his original paper states that he created this measure by inverting income, so the number 8343 is his starting point.The closest guess I have is that is derived from the poverty line for a family of four, $27700 (which divided by four is 6925).If that is the case, what he is really doing is comparing poverty line definitions between countries.
9rx: > In particular it seems weird that only we had a massive change during COVID.It is not weird if you were old enough to be aware of the news during that time. Poor people in the US suddenly coming into money and being lifted out of poverty thanks to COVID stimulus checks was front and center in the news cycle as it was happening. The other countries noted did not follow the same "hand out free money" approach. Their safety nets were built around maintaining continuity during COVID.> even in the 90’s when things were pretty good here.Things being good does not necessarily equate to not requiring more time to get $1, which is what we're talking about. The American stereotype is that workers will work every single day of the year if you let them. Whereas the stereotypical German places much greater value on not working. If hypothetically an American works 40 hours in a week to get $1,000, and a German works 20 hours in a week to get $501, then the American will present as being worse off by the time to get $1 metric even though in absolute terms someone with $1,000 is better off than someone with $501.
hnthrow0287345: >The “time” refers to a day of life for anyone, at any age and in any circumstance — not just the hours worked by someone with a job.So it's how much you earn per day divided by 24, or maybe by yearly earnings and hours per year
codethief: > The $1 is measured in international dollars. This means it buys the same amount of goods and services in any country as a US dollar does in the United States. It is often used alongside purchasing power parity (PPP) data. The “time” refers to a day of life for anyone, at any age and in any circumstance — not just the hours worked by someone with a job.So IIUC this "average poverty" (measured in time per international dollar) includes people living off social welfare? Otherwise, if it only included the working population, wouldn't we have average poverty ≝ (average yearly income* of the working population / 1yr)⁻¹ and so it should be inversely proportional to the average yearly income* metric mentioned in the article?*) Adjusted for purchasing power, i.e. measured in international dollars.
mwhitfield: No, it'saverage poverty ≝ average(1 / annual income)Inversely proportional to the harmonic mean of average yearly income.
rassimmoc: You can't compare calculations in article with minimum wage.Think of it this way, its like difference between median and average income. Larger inequality, larger the gap between median and average.
Aurornis: > It is not weird if you were old enough to be aware of the news during that time. Poor people in the US suddenly coming into money and being lifted out of poverty thanks to COVID stimulus checks was front and center in the news cycle as it was happening.A lot was written about the stimulus checks but they were so small to not matter. A $1200 check isn't going to suddenly lift a lot of people out of poverty and keep them there, even though it could be make-or-break for a few selected cases.The bigger change was that the American economy was basically turbocharged by all of the interventions going on. Remember "The Great Resignation" when everyone was changing jobs because all the companies were hiring as fast as they could? It was an ideal time to move your way into a better position in the job market.
laurencerowe: Average != median. This measure seems to be so high because there are so many low paid workers in the US due to low minimum wage.Median workers in the US have some of the highest hourly wages at PPP in the rich world and they have been increasing, but they are pretty similar to those in Germany. The big difference in annual pay at PPP is down to hours worked.For 2022 average annual hours worked per worker in the US is 1790 while in Germany it is 1340 [1]. Meanwhile average hourly wages at PPP in US are $34.9 vs $34.6 in Germany [2][1] https://ourworldindata.org/grapher/annual-working-hours-per-...[2] https://ourworldindata.org/grapher/average-hourly-earnings
tovej: You forget that in the US, even with PPP, the level of "comfortable" is higher, due to missing social safety nets.This means using PPP doesn't actually show where the level of precarity is.
janalsncm: I wonder if there’s also some difficulty in translation happening due to adding up inverted numbers for example 1/(a+b+c+…) != 1/a+1/b+1/c+…
9rx: > A $1200 check isn't going to suddenly lift a lot of people out of poverty"A lot" is subjective, I suppose. Concretely, it lifted 11.7 million Americans[1] out of poverty. That makes up approximately 30% of those who were in poverty prior to the stimulus.[1] https://www.commondreams.org/news/2021/09/14/incredible-covi...
Aurornis: That article is just making the same mistake I pointed out: It looks at the change in poverty during that time and claims it all came from the $1200 stimulus checks.A lot of things changed during that time, notably the job market. Getting a new job that paid $1/hour more would be more impactful than a $1200 stimulus check. People were getting raises much bigger than that.The checks were not the primary driver of the economic changes
embedding-shape: Great intro that quickly explains the reasoning for the proposed new measure:> Virtually everyone would agree that a 20-meter tree is twice as tall as a 10-meter tree. Conversely, everyone would agree that the 10-meter tree is twice as short as the 20-meter tree. There is no threshold or “shortness line” above or under which these relationships cease to hold: a 5-meter tree is twice as short as a 10-meter tree, a 1-meter tree is twice as short as a 2-meter tree, and so on. This reasoning remains valid when considering other multiples: a 1-meter tree is three times shorter than a 3-meter tree. To be sure, when assessing the height of a single tree, different people may disagree whether it is short or tall, as their judgment will depend on the benchmark they use for their assessment. However, when comparing two different trees, virtually everyone would make similar cardinal comparisons. In mathematical terms, shortness is the reciprocal of tallness. [...] In this paper, I apply the same logic to define a new poverty measure
Aurornis: There are a lot of words that have nothing to do with the claimed measure.I'm still trying to figure out how he reached the conclusion that it takes 63 minutes to earn $1 in the US
tovej: Of course, this is due to the current Finnish govt. weakening its welfare system, driving down demand and creating incentive traps.I.e. making the economy more like the US.
phainopepla2: It was the unemployment checks much more than the stimulus checks that made a difference. There was an extra $600/week tacked on to those during COVID. I know a lot of who were making more on unemployment during that time than they ever had made while working.
9rx: > That article is just making the same mistake I pointed outThe article doesn't do anything other than quote the US Census Bureau.Obviously you will have already read the citation in full, but for everyone else here is the full quote: "Stimulus payments, enacted as part of economic relief legislation related to the COVID-19 pandemic, moved 11.7 million individuals out of poverty. Unemployment insurance benefits, also expanded during 2020, prevented 5.5 million individuals from falling into poverty."Again, this is from the US Census Bureau. It is being asserted in an official government capacity, from an governmental organization that has access to all the relevant data. If you think that they got something wrong you're going to have to offer something more compelling than some random theory you made up on the spot.
Aurornis: I lived through it and discussed it at the time. I'm aware of the the different politicians and agencies congratulating themselves for the stimulus checks because in politics people make political connections to receiving a check addressed to them but discussing the overall economy is more complex.This one needs a little common sense. A one-time $1200 stimulus check is not going to lift 11.7 million individuals out of poverty in any meaningful sense, unless you're literally just looking at people within $1200 of an arbitrary cutoff and saying you "lifted them out of poverty" by bumping them over that threshold for the year.
Aurornis: The new measure:> As of 2025, the time needed to earn $1 is 63 minutes in the US.Confused, I clicked one of the links and tried to understand. Found this:> The time to get $1 refers to a day of life for anyone at any age and in any circumstance, not just the hours worked by someone with a job.Clicking another link took me to the abstract at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4785458 but that didn't answer any questions either.I can't find anything really of substance in this, other than someone trying to redefine a lot of terms in confusing ways$1 every 63 minutes would be $8343/year. I cannot think of any way to reconcile that with the US average household income or any other related figure.
tovej: That's because it is the average of the "time to earn 1$" per individual.So let's say you're Elon Musk and it takes you a negligible enough time to do this that we can say that t_Elon = 0.Now say you are way below the poverty line and earn 6000$/year. This means t_Poor = 87 mins.If we average 80 t_Poor and 20 t_Elon we find we get 0.8 x 87 mins = 67 mins. Even when the average income in this case would be 0.2 x income_Elon. Something like 7 billion $/year.I hope this shows why you can't just take the inverse to get the average income. The only way that was true was if everyone earned the exact same income.Why is this a better metric?The average income is biased towards big earners, while this metric is more centered around the mode of the distribution (poor people).It captures the income distribution much better than average income.
