Relative poverty?

Lane Kenworthy takes exception to Paul Krugman‘s use of relative poverty rates to compare countries. The idea is that every country has a different level of income below which they classify a family as poor. Ken says one such relative measure of poverty is counting the number of people that earn less than half of the median income. Because the U.S. has higher incomes than most every other country, this definition would classify many more people as poor.

His post explains that by using absolute measures of income (like saying anyone that makes the equivalent of less than $x), the U.S. turns out to be about in the middle of the pack in terms of the number of poor people. He ends the post with this comment:

This is not to suggest that we should be satisfied with our absolute poverty ranking. Given our nation’s economic wealth, incomes for Americans at the low end of the distribution are far lower than they could be.

So he thinks we should care about the relative poverty measure, just that we shouldn’t use it to compare the U.S. against other countries.

Per my discussion the other day, I’m not sure why we should care about a measure of poverty that relies on comparing incomes. We can all agree that in terms of material outcomes, today’s American poor are an order of magnitude better off than the poor just a few generations ago and they’re several orders of magnitude better off then some poor souls living today continents away. To the extent that poverty is relative to the culture and norms of the day and place, the poor see themselves as poor (or the rest of us see them as poor) by comparing themselves to some culturally determined standard. The rich may not be the standard barer. Thus, defining “the poor” as contrasted to “the rich” may be missing the point.

Even if we define poverty in terms of health care (or health outcomes), labor hours, education attainment, or whatever, its worth pointing out that we’re doing so without reference to the behaviors of the rich. I just don’t see why a relative measure of poverty based on income inequality matters for what we really care about.