America's Exceptional Child Poverty

This week has turned out to be the week of low-hanging fruit for me. On Monday, we had a misleading Cato post that falsely claimed that the US poor are as well off as the poor in Sweden and Denmark. In fact, the poorest Swedes and poorest Danes have 48% and 63% more income than the poorest Americans, and that's not even counting their free health care and child care. Now, the National Review has decided to walk into the same trap as Cato, claiming that child poverty in the US is not worse than child poverty in other developed countries, so long as you count it in absolute terms.

This claim should strike you as strange. As I pointed out above, the poor in many developed countries are overall better off than the poor in the US. And the US also has a remarkably low level of child benefits, especially benefits that reach the poorest. Together, then, the US should stand out even more in its level of child deprivation than it stands out in its level of overall deprivation. And, of course, it does.

I ran the numbers on this directly from the LIS microdata back in January of this year. Using an absolute income measure, here is how various countries rank in terms of per-capita income (explained in technical note below) of children in the mid-2000s (click on graphic to get a larger version):

The way this works is each country is ranked from first to fifteenth based on how much income children have at the 5th, 10th, 20th, 30th, 40th, and 50th percentile. In parentheses next to each country, I have how much more or less income children have at that percentile relative to the US. So, for instance, Norway's "97%" at the 5th percentile says that Norwegian children at that percentile have 97% more income American children at that percentile.

What you can see is that the US does stand out in how incredibly impoverished its children at the bottom are. And this metric will tend to understate how much better children have it in these other countries because it does not include non-income social benefits like free center-based child care and free health care, which are common in many of the countries on this list.

I also ran these same figures using equivalized income (explained in technical note below), which is a measure that attempts to simulate the economies of scale enjoyed by larger households. It doesn't meaningfully change the story (click on graphic for larger version):

For both per-capita and equivalized income measures, American child poverty is very exceptional. And even more so when you consider that America is richer overall (on a per-capita basis) than all of these countries except Norway. There is no reason Denmark's poorest children should have 80% more income than the poorest children in the US. But that's what happens when you spend 4% of your GDP on child benefits (as Denmark does) instead of just 0.7% of your GDP on child benefits (as the US does).

Pick A Story

As someone who has been dealing with the social democratic naysayers for many years now, I am struck by an interesting tension in the way that their arguments unfold. Naturally, naysayers of the Nordic model or other more generous tax-and-benefit societies will oppose any such policies no matter what any empirics say about anything. They have a freestanding belief that those policies are unjust and wrong and everything else is backfilled from there.

And that's fine. But the trouble is that their backfill efforts are horribly uncoordinated, leading to all sorts of contradictions. If you are trying to backfill a rationale for opposing social democratic policies, you basically have three choices: 1) claim that social democratic societies don't actually succeed, 2) claim that their success is owing to the fact that they are actually more capitalist than the US, or 3) claim that their success is owing to some other circumstance that we can't possibly match (e.g. homogeneity).

However, because the right can't decide which rhetorical line to carve, they end up saying all three of them, and that leads to some hilarious mix-ups. So, for instance, Kevin Williamson will go for option (2) and tell you that the Nordics succeed because they are super-capitalist. But then Michael J. Petrilli will go path (1) and tell you that they don't succeed. But wait a minute, if Williamson is right and they are super-capitalist, then how can they not succeed? If the Nordics are both super-capitalist and more economically laissez-faire then the US (per Williamson's approach) and don't do well (per Petrilli's approach), then doesn't that mean super-capitalism laissez-faire is a failure?

I won't belabor the point here, but I just wanted to convey how strange this policy world I live in is. It's a world where on any given week, a few incurious conservatives who don't know much of anything about social democratic countries will simultaneously tell you that the countries are failures and that they are quite successful (but for reasons other than their social democratic leanings). Both of these things can't be true, but somehow they are maintained simultaneously by the American right.


Technical Note. Per-capita income for children is derived by dividing each household's disposable income by the number of people in the household. A four-person household with $20,000 of disposable income has a per-capita income of $5,000 ($20,000/4). Any children in that household are thus counted as having $5,000 of income for these purposes. From there, you just find the 5th, 10th, et al percentiles of children using these per-capita incomes.

Equivalized income is derived by dividing each household's disposable income by the square root of the number of people in the household. A four-person household with $20,000 of disposable income has an equivalized income of $10,000 ($20,000/sqrt(4)).

The income measure here is 2005 $PPP, which is a measure that converts national currency units into a common international currency unit by adjusting it according to local purchasing power.

I use the mid-2000s because that was the last period in which the LIS had data from lots of countries and that also wasn't in the middle of a massive global recession.