Poverty Chapter 15 Lecture PowerPoint © W. W. Norton & Company, 2008

Introduction Poverty can be defined as a condition of deprivation due to economic circumstances that is severe enough that the individual in this condition cannot live with dignity in his or her society. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Introduction The administration of Lyndon Johnson established a wide range of anti-poverty programs in the 1960s For example, programs for education, job training and placement, housing—as a part of its “War on Poverty.” Within just a few years, many of these programs, and the whole ideology behind them, were coming under attack. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Introduction At the core of the debate about poverty in America is the question of whether poverty is the cause of social ills such as crime, poor educational outcomes, divorce, etc., or their result. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Introduction Perverse incentives are reward structures that lead to suboptimal outcomes by stimulating counterproductive behavior. Unintended consequences are results of a policy that were not fully anticipated at the time the policy was implemented, particularly outcomes that are counter to the intentions of the policymakers. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

The Culture of Poverty The Culture of Poverty Theory Argues that poor people adopt certain practices, which differ from those of middle-class, “mainstream” society, in order to adapt and survive in difficult economic circumstances and that sometimes they continue to rely on these practices even after they are no longer useful and are potentially detrimental Part of a backlash against the policies implemented by President Johnson, and it was used to bolster the arguments of welfare critics You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

The Culture of Poverty While it may be true that reliance on welfare generates a sense of helplessness and dependency in some people, there are also structural reasons why it can be difficult to transition from welfare to work. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

The Culture of Poverty In the 1980s journalist Ken Auletta introduced the concept of the underclass—a much more negative view of poor people. Charles Murray reemphasized perverse incentives by arguing that welfare regulations make work and marriage less attractive and rising welfare benefits more attractive. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

The Culture of Poverty Sociologist William Julius Wilson turned the focus from welfare to factors such as deindustrialization, globalization, suburbanization, and discrimination as causes of urban poverty. In the past twenty to thirty years, policies to combat poverty have focused on encouraging work and offering benefits that directly serve children. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

The Culture of Poverty In her book What Money Can’t Buy, sociologist Susan Mayer writes that she found very little evidence to support the widely held belief that parental income has a significant effect on children’s outcomes. In The Bell Curve, Charles Murray and Richard Hernstein argued that it’s not poverty or education or parenting that ultimately has the most impact on children’s outcomes, but simply genes. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

The Culture of Poverty James Rosenbaum’s study of the Gautreaux Assisted Living Program in Chicago and the Moving to Opportunity (MTO) study began in 1994. Both were efforts to see how moving families from high-poverty to low-poverty communities might affect parental employment, children’s outcomes, and a host of other factors. The results of these studies were mixed for various reasons, but the MTO study in particular seemed to show that living in a quieter, less stressful environment did have very positive effects on children. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Poverty Among Plenty Absolute poverty is the point at which a household’s income falls below the necessary level to purchase food to physically sustain its members. Photo Courtesy of Getty. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Poverty Among Plenty The official poverty line in the United States is calculated using a formula developed in the 1960s by Mollie Orshansky. It estimates food costs for a variety of family types based on U.S. Department of Agriculture recommendations for minimum food requirements and then applies a multiplier. This formulation has not changed since it was introduced but it has been heavily criticized for not evolving to reflect broad changes in people’s circumstances over the past forty years. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Poverty Among Plenty A more fundamental criticism of trying to establish an absolute measure of poverty is that it is impossible because every measure is relative. Different societies and even different groups within one society define poverty differently—there are different, socially constructed notions of what things in life are absolute necessities. A partial response to this is the use of relative poverty, a measurement of poverty based on a percentage of the median income in a given location. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Poverty Among Plenty There are three basic theories about how poverty negatively affects children: One focuses on the material deprivations caused by a family’s low socioeconomic status The second focuses on bad parenting practices that are related to a family’s low socioeconomic status The third focuses on differences between poor parents and higher-income parents, but without much faith that anything can be done to affect these differences You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Why Is the United States So Different? The United States has a much broader range of inequality (our rich are a whole lot richer than our poor) than any other developed nation in the world and higher poverty rates (a larger percentage of the population is below the poverty line). You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Why Is the United States So Different? A number of theories have been advanced as to why the United States is in this unique position among industrialized nations, including the timing of the transition to free-market capitalism by other countries compared to the United States; our decentralized form of government in which states have a lot of power. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Why Is the United States So Different? The history of feudalism in Europe, which may have laid the groundwork for a more paternalistic state; and race—efforts to exclude blacks from mainstream society far into the twentieth century sometimes involved limiting social services. You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Concept Quiz 1. Poverty can best be defined as _______. a) the point at which a household’s income falls below a percentage of the median income in a given location b) the unequal distribution of wealth that results from private ownership and people’s tendency to preserve surplus wealth rather than share it with others c) a condition of deprivation due to economic circumstances that is severe enough that the individual in this condition cannot live with dignity in his or her society d) the point at which a household’s income falls below the necessary level to purchase food to physically sustain its members Answer: C You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Concept Quiz 2. In What Money Can’t Buy, sociologist Susan Mayer challenged the common assumption that ________. a) the welfare system encourages dependence on government handouts b) many welfare recipients do not want transition to work c) poverty directly causes poor health, behavioral problems, and a host of other problems for children d) low-income neighborhoods breed welfare dependence, crime, and divorce Answer: C You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Concept Quiz 3. The _________, as the label was conceived by journalist Ken Auletta, refers to people who not only are unable to take advantage of what society has to offer, but also are increasingly deviant and even dangerous to the rest of society. a) underclass b) working poor c) nonworking poor d) welfare dependent Answer: A You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Concept Quiz 4. The Gautreaux Assisted Living Program in Chicago and the Moving to Opportunity study provided opportunities to explore __________. a) the effects on families of living in a low-poverty versus a high-poverty neighborhood b) how home ownership affects parental employment children’s educational outcomes c) regional differences in public housing programs d) how social conditions are a greater determinant of outcomes than income Answer: A You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Concept Quiz 5. Which of the following are criticisms of how the poverty line is calculated in the United States? a) The formula does not reflect that housing now takes up a much larger portion of family budgets. b) The formula should focus only on income instead of also including assets. c) The formula does not take regional variations into account. d) All of the above e) Both A and C Answer: E You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Concept Quiz 6. The level of income inequality in the United States is ______ . a) lower than that of most other developed countries b) higher than that of most other developed countries c) higher than that of many developing countries d) higher than that of all other developed countries Answer: D You May Ask Yourself Copyright © 2008 W.W. Norton & Company, Inc.

Figure 15.1 | Number in Poverty versus Poverty Rate

Figure 15.2 | Cost of Living, 2007 The cost of living index compares costs between regions using data on housing, transportation, utilities, health care, and groceries. An average score is 100, so states with numbers less than 100 are affordable, and those with scores above 100 are more expensive.

Figure 15.3 | Absolute Poverty Rate (percentage of the population)

Figure 15.4 | U.S. Savings Rate

Table 15.1 | Net Worth of Black and White Families, 1994