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The Poorest 20% of Americans Are Richer on Average Than Most Nations of Europe




America’s poor are surprisingly wealthy. If the poorest 20 percent of Americans were a country, they would rank in the top half (13th) in material well being among the countries in the Organisation for Economic Cooperation and Development. This finding, writes James Agresti, contradicts a recent New York Times video op-ed by Taige Jensen and Nayeema Raza, who “claim that the U.S. has ‘fallen well behind Europe’ in many respects and has ‘more in common with “developing countries” than we’d like to admit.’”

The most glaring evidence against the Times’ rhetoric is a note located just above the OECD’s data for poverty rates. It explains that these rates measure relative poverty within nations, not between nations. As the note states, the figures represent portions of people with less than “half the median household income” in their own nations—and thus—”two countries with the same poverty rates may differ in terms of the relative income-level of the poor.”

The upshot is laid bare by the fact that this OECD measure assignsa higher poverty rate to the U.S. (17.8%) than to Mexico (16.6%). Yet, World Bank data shows that 35% of Mexico’s population lives on less than $5.50 per day, as compared to only 2% of people in the United States. […]

The World Bank’s “preferred” indicator of material well-being is “consumption“ of goods and services. […]

The World Bank publishes a comprehensive dataset on consumption that isn’t dependent on the accuracy of household surveys and includes all goods and services, but it only provides the average consumption per person in each nation—not the poorest people in each nation.

However, the U.S. Bureau of Economic Analysis published a studythat provides exactly that for 2010. Combined with World Bank data for the same year, these datasets show that the poorest 20% of U.S. households have higher average consumption per person than the averages for all people in most nations of the OECD and Europe.

[James D. Agresti, “The Poorest 20% of Americans Are Richer on Average Than Most Nations of Europe,” Just Fact, August 26]


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