Poor in the U.S. = rich

A single-parent family of three in New York, making $8000 per year, makes under half the income level of the Federal poverty line and qualifies for food stamps, TANF (direct cash benefits) and Medicaid. (Details at our guide to U.S. public assistance)

And yet, at $2,667 per person per year, this family is wealthier than 70% of the people in the world. (See the Global Rich List calculator as well as the Giving What We Can version, which may be using more up-to-date data.)

In the poorest parts of the world, fewer than half have access to a latrine or toilet; only 17% own a television; and 19-45% lack access to a reliable source of clean water. In the U.S., practically everyone has all three. (Details.) As we wrote yesterday, the two areas have completely different concepts of “hunger.” And finally, while anyone in the U.S. can ultimately be served in an emergency room, people across the world die or suffer from health conditions for which proven solutions exist.

In the U.S., helping the less fortunate usually means tackling a thorny “equality of opportunity” problem such as improving education or helping struggling adults to find and retain jobs. These problems have a long history of failure and few proven approaches to them. By contrast, helping people overseas can mean delivering something as proven and life-changing as a bednet or tuberculosis treatment.

Hopefully, these observations give some context on why a charitable dollar goes so much further overseas. If you are looking to use your wealth to help those less fortunate, we believe it’s hard to argue the case for U.S. as opposed to international charity, unless you believe that American lives are orders of magnitude more valuable.

Comments

Poor in the U.S. = rich — 9 Comments

  1. Holden, I don’t think that you can realistically claim that a family of 3 with an $8K income in NYC is 70th percentile global wealthy. You can’t just use PPP numbers and multiply, you have to look at the actual basket of goods that the people in question are consuming. I have spent substantial time in Costa Rica and in Kazakhstan, in 1998 and 2000, not today, both are much richer now, especially Kazakhstan. Costa Rica is a mid-second-quintile-wealth country with freakishly high quality of life relative to GDP. Kazakhstan is now a mid-second-quintile petrostate but in 2000 it was a mid-third-quintile former Soviet mess (Aruna, of course, grew up in Kazakhstan 1991-1997, a fourth quintile region in a failing Soviet state). People in both countries had terrible conditions in some respects, but in both cases ordinary people had more stuff, more security, and in many respects better conditions than the poorest Americans, though they did lack some things we consider necessities. The subsequent increase in wealth of Kazakhstan without attendant improvements in standard of living are a testimony to the relative inefficacy of simply giving money to people who aren’t desperately poor.

    I generally agree with the sentiment you are expressing though

  2. Michael,

    Is your argument based on representative studies, or on personal experience? It’s possible that the poorest Kazakhstanis and Costa Ricans were not so easily on display while in the country. As a relatively wealthy New Yorker, I know that I don’t get a regular view of the consumption habits of the cities lower classes.

    Also, can you elaborate on the “relative inefficacy of simply giving money”? One of the conclusions that Givewell folks are slowly marching towards (and I with them) is that giving money to people may be the best way to help them.

  3. Holden,

    I find your remarks compelling as far as immediate effects of donations in the direction of alleviating the concerns of the poor go.

    I’ll remark that there are contexts in which it seems that charitable efforts are better directed toward the developed world than toward the developing world. For example, if one is interested in preserving the environment, presumably one’s efforts in that direction would have greater effect in the developed world (which is presumably eating away at global natural resources much faster per person and where there’s more possibility of the discovery of relevant helpful technological innovations) than in the developing world.

  4. Michael, I would guess that the purchasing-power-parity calculations are far from perfect, and that there are people with much lower incomes who are much better off (materially) and vice versa. However, I do think they’re the best estimates available, and the overall picture they give seems likely to be accurate. I see the direct observations about standard of living as a common sense check: the U.S. family in question almost certainly has a TV, running water, and a toilet, things which are far from common in the rest of the world.

    Jonah, agreed. The argument of this post isn’t that charity is always more effective when spent in the developing world. It’s much narrower than that.

  5. That family only has a TV, running water, and a toilet if that family isn’t homeless. Are they getting subsidized housing from somewhere? If they’re not, I’d like to know how they’re getting a roof over their heads for less than $667 a month.

  6. That makes sense, but should public assistance be counted as “income” in this kind of analysis? If I “earn” nothing, but receive various benefits (free housing, food stamps, etc.) then is my income nothing, or what it would cost to purchase those benefits on the open market?

  7. Doug, I am not sure whether such a family could afford housing if not for public assistance, but the question seems somewhat academic to me. The fact that public assistance benefits are so much stronger here than in the developing world is a relevant part of the picture. We are not arguing for dismantling of these benefits; our focus is on the marginal dollar from a private donor.