Tuesday, December 14, 2010

Should Poor People Own Cell Phones?

Forty-four million Americans live in poverty, according to the latest Census Bureau statistics, a substantial 14 percent of the population. Who are the poor? They are people whose incomes fall below the level needed to buy what was deemed to be a nutritionally adequate diet in 1955 multiplied by three and adjusted for inflation. Sounds crazy, no?

Crazy, but all too true. Mollie Orshansky, an employee of the Social Security Administration, was charged in the early 1960s with creating a poverty measure. She and her colleagues never meant for the methodology they devised to become permanently enshrined in American economic policy. But politics being what it is, that's what happened. Orshansky believed her calculations would be updated every few years to account for rising living standards and changing spending patterns. No update has ever occurred. The poverty measure she created, based on a 1955 food consumption survey, is simply adjusted for inflation each year. Today, a family of four, is deemed to be poor if their income falls below $21,954.

Officially, poverty in the United States is defined by this income measure alone. The poor may or may not receive benefits such as food stamps, subsidized housing, or Medicaid. In fact, most of the poor do not receive these government benefits. The poor may or may not own a house, a car, a television, a microwave, or even a cell phone. In fact, 97 percent of the poor have a television, 79 percent have air conditioning, and most own a cell phone. As Adam Smith once cautioned, poverty is relative. Begrudging the poor the necessities of the 21st century makes no more sense than begrudging them 20th century basics like running water and indoor plumbing.

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