freeing neighborhoods and nations from the virus of poverty pt 1 Introduction

April 27, 2020    By: Matt W. @ 10:43 am   Category: Life

Jeffrey Holland at one point said, speaking of the current pandemic: “We pray for those who have lost loved ones in this modern plague, as well as for those currently infected or at risk. We certainly pray for those who are giving such magnificent healthcare. When we have conquered it—and we will—may we be equally committed to freeing the world from the virus of hunger and freeing neighborhoods and nations from the virus of poverty. May we hope for schools where students are taught—not terrified they will be shot—and for the gift of personal dignity for every child of God, unmarred by any form of racial, ethnic, or religious prejudice.”

This is an amazing call to action from an Apostle of Jesus Christ: to end hunger, end poverty, increase education, increase safety, and end prejudice.

It’s also really big and complicated, and there are a lot of opinions about what does and does not work in this space. Many of these items are inter-related and have causal relationships one with another. Hunger is caused by Poverty. Poverty is impacted by lack of education, education is impacted by prejudice.

Since General Conference I have been reading a lot about Poverty and thought it would be good to lay out some items I have read about what causes and what has been seen to reduce poverty. This is me taking Holland’s call seriously and hopefully will be seen as such. I am not an expert in any of this. I just read multiple articles by others and took notes on what I found interesting. In some cases I even used Wikipedia as my source. Also, I didn’t do a good job of tracking sources as again this is mainly for my own benefit. Some things will be sighted, others will not be.  All that said:

There are a few different definitions of poverty that go around in academic circles, so first it may be beneficial to define poverty metrics distinctly from one another.

Extreme Poverty, which by all measures, is defined by the UN as when someone makes less than $1.90 a day to live on (moved up from $1.00 in 2011, if we scaled on the same scale it would be ~$2.20 today). The Majority of extreme poverty is in South Asia and Sub-Saharan Africa with the most people living in extreme poverty being in Nigeria. In 1990 the largest region with Extreme Poverty was East Asia and the Pacific, but due to the financial improvement of China, almost 1 billion people have moved out of extreme poverty in the past 20 years. (In the same period of time the world population has grown from 5.2B to 7.5B) China’s route out of extreme poverty began with economic reform which liberalized trade and took advantage of the burgeoning global market, allowing for more foreign investment. This continued with the addition of compulsory education and more allowance for personal mobility. It’s not perfect but it is pretty awesome to see such a dramatic step change. (Cool Chart on China, but at 5.50 rate)

The next definition of poverty is termed relative poverty, and in the literature I’ve read, the consensus measure here is that people earning below 50% of the median adjusted disposable income of the country in which they live. The idea here is using these numbers controls for cost of living differences between the countries to give a method where poverty can be compared across nations. Timothy Smeeding has a really good article that goes over this in the Journal of Economic Perspectives (Winter 2006 issue). This article is one of my 2 favorite sources. (Determinants on Relative Poverty in Advanced Capitalist Democracies by Moller, Huber, Stephens, Bradley and Nielsen is my other favorite and available here:

The last definition of poverty is termed absolute poverty, where the US poverty line sets the standard and is converted to other nations using purchasing power parity (PPP) exchange rates. Like the above this is an attempt to control for difference in cost of living and other factors to get to a number which can be compared across nations. Again Smeeding’s “Poor People in Rich Nations” Article is a great source here.

Using Smeeding as a source, let’s establish some baselines. Looking across the US, Canada and 9 samples nations in Europe the overall average relative poverty rate is ~10%, with the US the highest at ~17% and Finland the lowest at ~5%. Looking in terms of absolute poverty rate, Smeeding took the same cohort of countries (less Ireland and Italy in the EU as data was not available). Here the average absolute poverty rate was ~8%, with the US second highest at ~9% (UK was highest at ~12%) and Austria lowest at ~5%. I might look at the big difference in numbers for the US and wonder “which is correct”. The answer is that both are correct. They are two different measures. Both show that the US, relative to other countries in the

We can take the above measures that are relatively comparable and then use these measures to stochastically look for unique attributes in each country to determine which of those attributes have a causal impact on poverty. Because someone will say something about correlation not being causation, I will remind myself here that correlation is not causation but it is correlation, which is a great step in scientific inquiry.  We can infer causal impact and even test for causal impact after we derive correlations.

In Future Posts, I will run through information on I have on items which the data indicates are determinants in Poverty. If you have any sources you think would be beneficial in this effort, please share.

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