A new way to measure poverty shows the US falling behind Europe | Hacker News Reader

A new way to measure poverty shows the US falling behind Europe

euronews.com

99 points_DeadFred_85 comments

The new measure:

> As of 2025, the time needed to earn $1 is 63 minutes in the US.

Confused, I clicked one of the links and tried to understand. Found this:

> The time to get $1 refers to a day of life for anyone at any age and in any circumstance, not just the hours worked by someone with a job.

Clicking another link took me to the abstract at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4785458 but that didn't answer any questions either.

I can't find anything really of substance in this, other than someone trying to redefine a lot of terms in confusing ways

$1 every 63 minutes would be $8343/year. I cannot think of any way to reconcile that with the US average household income or any other related figure.

I did the same math. The closest guess I have is that it is derived from the poverty line for a family of four, $32150 (which divided by four is $8037).

That's because it is the average of the "time to earn 1$" per individual.

So let's say you're Elon Musk and it takes you a negligible enough time to do this that we can say that t_Elon = 0.

Now say you are way below the poverty line and earn 6000$/year. This means t_Poor = 87 mins.

If we average 80 t_Poor and 20 t_Elon we find we get 0.8 x 87 mins = 67 mins. Even when the average income in this case would be 0.2 x income_Elon. Something like 7 billion $/year.

I hope this shows why you can't just take the inverse to get the average income. The only way that was true was if everyone earned the exact same income.

Why is this a better metric?

The average income is biased towards big earners, while this metric is more centered around the mode of the distribution (poor people).

It captures the income distribution much better than average income.

Well, Average is indeed a worthless metric, and that's why everyone is using median for these statistics unless they're arguing in bad faith

If you do want to use average, you'd at least need to remove 10% both from the top and bottom before calculating it, but it's still gonna be super untrustworthy.

Not sure what to take away from your comment, I'm still unsure what kind of metric you're pitching and why it'd be a valuable thing to track

I'm not pitching any metric. I'm describing the metric being discussed.

The average is certainly not worthless. The average gives the expectation, which is more meaningful than the median, which is just the arbitrary line at the 50th percentile.

So if we're trying to find the expected value of how rich someone is, the average income is the answer. And if we want the expected value of how poor someone is, this new metric (average poorness) is the answer.

If we want to learn about poverty, obviously the poorness is more important.

But of course, you could also calculate the median poorness in this case, but that would actually just be the inverse of the median income, so no new information would be gained.

this metric is more centered around the mode of the distribution (poor people).

It's focused on the very poorest, who are not the mode. (Income distribution is approximately lognormal; see https://www.researchgate.net/figure/The-lognormal-distributi...).

Say you have 10 people: one making $800/year, 8 making $80k/year, and one evil billionaire making $800 million. Their times to earn $1 are respectively 10 hours, 0.1 hours, and essentially zero. If you take the arithmetic mean of that you get 1.09 hours, and that's dominated by the single poor person. If you double that person's income to $1600, then they're at 5 hours to earn $1, and the overall average is nearly cut in half to 0.58. Meanwhile you can reduce the income of all the middle class people to $40k and not much changes; the average time to $1 would be (5+8(0.2)+0)/10=0.66.

It captures the income distribution much better than average income.

Not really, and certainly not better than median income which is what people typically use. It tries to measure exactly how little income the very poor make, which is not normally what people mean when they talk about inequality or poverty, and also hard to measure at the accuracy that you need when small changes produce huge swings in the result. In particular I don't believe he's correctly accounted for government benefits; hardly anyone in the US is consuming less than $8000/year.

Thanks for the comment, I was trying to parse the meaning of "time needed to earn $1" for a bit. This just boils down to what countries have the highest floor for their poorest members.

He is not proposing to do away with the median income measure (or other quantile measures), but to add to them.

The median income is not a very good measure at all, you would need more quantiles to capture the distribution.

This metric is much better at capturing the distribution than the average income.

It's true that the mode is not at the very bottom of the distribution, but it is much more aligned with the lower tail than with the upper tail.

And I don't know why you mistrust this figure so much, it's based on this World Bank dataset, which you can verify yourself: https://datacatalog.worldbank.org/search/dataset/0064304/100...

I can get somewhat close from the Census Person Income in 2017 all data tables:

https://www.census.gov/data/tables/time-series/demo/income-p...

That has numbers of people in $2500 income intervals. Calculate people in interval * 1/(income/minutes per year) for each interval sum and divide by total with income and I get an average poverty of 49 minutes.

I think he might be using after tax income and may be calculating based on household income/household members or similar instead which would explain the discrepancy (since children don't work).

I believe he is using this World Bank dataset: https://datacatalog.worldbank.org/search/dataset/0064304/100...

You have to reconcile it with unemployed and children.

The idea of measuring an average time effort across employed, sick and unemployed is not a bad one, but I’m not sure adding children to the mix is a good idea.

That just creates a measure where children equals poverty.

In many cases, children do cause poverty

I’m as frustrated as anybody else with how the economy is going in the US. But we should be skeptical about a new metric with an intuitive name that seems to confirm exactly what we all suspect but is sort of complex to interpret/measure, right?

In particular it seems weird that only we had a massive change during COVID.

Also seems a little odd that Germany was always better than the US, even in the 90’s when things were pretty good here.

Putting it together, we need to have COVID all the time here, so we can match the economic development of Germany immediately post-reunification.

> In particular it seems weird that only we had a massive change during COVID.

It is not weird if you were old enough to be aware of the news during that time. Poor people in the US suddenly coming into money and being lifted out of poverty thanks to COVID stimulus checks was front and center in the news cycle as it was happening. The other countries noted did not follow the same "hand out free money" approach. Their safety nets were built around maintaining continuity during COVID.

> It is not weird if you were old enough to be aware of the news during that time. Poor people in the US suddenly coming into money and being lifted out of poverty thanks to COVID stimulus checks was front and center in the news cycle as it was happening.

A lot was written about the stimulus checks but they were so small to not matter. A $1200 check isn't going to suddenly lift a lot of people out of poverty and keep them there, even though it could be make-or-break for a few selected cases.

The bigger change was that the American economy was basically turbocharged by all of the interventions going on. Remember "The Great Resignation" when everyone was changing jobs because all the companies were hiring as fast as they could? It was an ideal time to move your way into a better position in the job market.

> A $1200 check isn't going to suddenly lift a lot of people out of poverty

"A lot" is subjective, I suppose. Concretely, it lifted 11.7 million Americans[1] out of poverty. That makes up approximately 30% of those who were in poverty prior to the stimulus.

[1] https://www.commondreams.org/news/2021/09/14/incredible-covi...

That article is just making the same mistake I pointed out: It looks at the change in poverty during that time and claims it all came from the $1200 stimulus checks.

A lot of things changed during that time, notably the job market. Getting a new job that paid $1/hour more would be more impactful than a $1200 stimulus check. People were getting raises much bigger than that.

The checks were not the primary driver of the economic changes

> That article is just making the same mistake I pointed out

The article doesn't do anything other than quote the US Census Bureau.

Obviously you will have already read the citation in full, but for everyone else here is the full quote: "Stimulus payments, enacted as part of economic relief legislation related to the COVID-19 pandemic, moved 11.7 million individuals out of poverty. Unemployment insurance benefits, also expanded during 2020, prevented 5.5 million individuals from falling into poverty."

Again, this is from the US Census Bureau. It is being asserted in an official government capacity, from an governmental organization that has access to all the relevant data. If you think that they got something wrong you're going to have to offer something more compelling than some random theory you made up on the spot.

I lived through it and discussed it at the time. I'm aware of the the different politicians and agencies congratulating themselves for the stimulus checks because in politics people make political connections to receiving a check addressed to them but discussing the overall economy is more complex.

This one needs a little common sense. A one-time $1200 stimulus check is not going to lift 11.7 million individuals out of poverty in any meaningful sense, unless you're literally just looking at people within $1200 of an arbitrary cutoff and saying you "lifted them out of poverty" by bumping them over that threshold for the year.

It was the unemployment checks much more than the stimulus checks that made a difference. There was an extra $600/week tacked on to those during COVID. I know a lot of people who were making more on unemployment during that time than they ever had made while working.

Even if we take a face value the assertion that a 1200 one time check raised so many people out of poverty, it seems incredibly difficult to believe that single check for that single time was enough to change this "average poverty" value from 2x the other countries being referenced to not only less than half of that value, but also below 2 of the 3 comparative counties in the same time period AND 60% of the value in 1990 where the US was supposedly running equal with the comparative countries. Looking at the article graphs, none of the comparative countries see even a blip in their trends during the same time period. For that to make sense, especially in light of the rest of the article, it seems like a handful of things would have to be true:

1) That all of the effects of America's wealth inequality on American poverty could be made up for simply by giving everyone a thousand dollars a year. Not even UBI proponents are that optimistic.

2) That nothing any of the 3 comparative countries did or did not do during a massive global pandemic did anything to alter the relative poverty levels of their populations in the slightest

3) That the major economic crashes and recessions over the last few decades have actually improved American average poverty (notice that the US rate dips for the beginnings of the dot com crash, 9/11 and the 2008 financial crisis, despite none of those coming with government stimulus checks.

This measurement might be have something interesting to say, but I'm not sure it's saying what is being claimed. It feels more like they've found a more volatile measure of the US economy and stock market than of poverty.

> that a 1200 one time check raised so many people out of poverty

It was $600 per week for a while, along with several other stimulus programs, not even including state-level support — totalling around $50,000 all told. Maybe if you were rich you only saw one relatively small check. But someone who was rich is obviously not someone who was in poverty, per the discussion.

> it seems incredibly difficult to believe that single check for that single time was enough to change this "average poverty" value

Quite. So you admit to recognizing that you overlooked something when preparing your comment but, despite that, decided to post it anyway? I could see asking for clarification or help in understanding, but going off on some long tangent that you already fully realize doesn't make sense...? What motivates that behavior?

Most of the ongoing support was additions to unemployment wasn’t it? So that should have been replacing lost wages and you wouldn’t expect most of it to show up in this “average poverty” metric. I know a lot of people saw more from those extended UE benefits than they were making at the time, but finding good numbers on how large of an effect that was has been difficult. I found one study that put the median recipient as replacing 105% of their lost income, and scaling from nearly 400% replacement for the bottom 1-4% of earners down to 100% replacement by the ~40th percentile. But they also noted that only about half the people who had a significant loss in income (defined as a >10% reduction) received any UE benefits at all. Overall it looked like more people had more of their income replaced than in prior recessions but more people lost their income than in prior recessions as well.

And it still just seems off that in the midst of such a massive blow to the job market and especially the low end of the market that a even historically large unemployment increase for such a small segment of the population caused the “poverty” as measured by this metric to improve beyond our EU peers all while only addressing one portion of the entire tangled mess that is the American poverty dynamic. And agin without any of the comparative countries showing any changes at all in their own trend lines for the same time period.

If a significant driver of this poverty metric was the increasing GNI coefficient, that GNI did drop quite a bit in the COVID period (in fact in a way that very closely mirrors this “average poverty” metric), but that drop was to mid 90s levels (roughly 0.40) and still well above the comparative counties (0.32 per the article). Which makes the sudden US improvement to better than 2 of the comparison counties seem anomalous. Again I’m not saying there might not be something interesting to be found in this metric, just that I don’t believe it’s accurately measuring what it claims to be measuring. I just don’t think the “average poverty” in the us was better than the “average poverty” in EU comparative EU counties given the vast disparity between the existing poverty programs and the relatively limited nature of the US ones during that time period even if they were historically bigger than the ones the US has normally employed during other financial crises.

I can absolutely believe it got better during that time period. I can believe it got better to a larger degree relative to the comparative countries. My difficulty is in believing it get better to such a large degree that for the 2 biggest years of COVID your were better off being in poverty in the US than in the EU. Not with such a huge disparity between them at all other times.

Interesting. I hope this catches on -- it's tough to visualize poverty in concrete terms, but assessing how long it takes a population to make a given unit of purchasing power in average is a clever idea. It's sobering to realize that it would take a friend across the sea over 100 hours to assemble the funds for a $100 bill that I wouldn't look at twice...

Although I wish this sparked a conversation on how we can do better instead of national dick measuring contests. Those don't help.

He finds that “average poverty is substantially higher in the US, even though average incomes are higher than in most Western European countries”.

That seems like a complicated way to "talk about median income without talking about median income". By the end, they do describe the basic situation: US has greater total wealth and total income but that wealth and income is so unequally distributed that more people are poor.

Cost of living and cost of goods sounds ludicrous from outside. Like rents and car payments, and insurance. And even stuff like some restaurants... Ofc, there is expensive locations outside but there is also lot more reasonable places. From outside it feels that there is something especially broken in cost wise in USA.

This metric makes a lot of intuitive sense and reflects the consumer sentiment I hear from neighbors. "Working more for less" isn't a new complaint, but something that measures that is interesting.

I would be very interested to find out how those stats are related to things like, GINI or old pre-GDP economic measures of raw production.

It is not intuitive at all to me. From the article, I can see that there's some sort of penalty by having more billionaires in the country, and that somehow leads to "the time needed to earn $1 is 63 minutes in the US", which doesn't really line up with the fact that minimum wage per hour ranges from $7-$18 depending on the state.

The "old" way was to measure median net PPP per capita, which makes more sense to me:

https://upload.wikimedia.org/wikipedia/commons/8/85/Annual_m...

This time is a global average, including non working people or part time people.

The figure you linked to is particularly unintuitive. It shows income per household, divided by square root of household size. There are plenty of complex and unpredictable interactions with heuristics like that. For example, if housing becomes more affordable, young people may move out sooner. Then there will be more small households with low incomes, which may bring the reported income down.

I believe this is the paper https://ora.ox.ac.uk/objects/uuid%3A501e8eb8-3ce7-4ac0-9d09-...

Great intro that quickly explains the reasoning for the proposed new measure:

> Virtually everyone would agree that a 20-meter tree is twice as tall as a 10-meter tree. Conversely, everyone would agree that the 10-meter tree is twice as short as the 20-meter tree. There is no threshold or “shortness line” above or under which these relationships cease to hold: a 5-meter tree is twice as short as a 10-meter tree, a 1-meter tree is twice as short as a 2-meter tree, and so on. This reasoning remains valid when considering other multiples: a 1-meter tree is three times shorter than a 3-meter tree. To be sure, when assessing the height of a single tree, different people may disagree whether it is short or tall, as their judgment will depend on the benchmark they use for their assessment. However, when comparing two different trees, virtually everyone would make similar cardinal comparisons. In mathematical terms, shortness is the reciprocal of tallness. [...] In this paper, I apply the same logic to define a new poverty measure

There are a lot of words that have nothing to do with the claimed measure.

I'm still trying to figure out how he reached the conclusion that it takes 63 minutes to earn $1 in the US

And it's silly. A person earning $100 a year is not "twice as poor" as a person earning $200 in any meaningful sense; both are extremely poor and will require essentially the same amount of public support. But this metric treats the difference as so huge (80 hours to earn $1 vs 40) that it drowns out any differences in the rest of the income distribution.

Average != median. This measure seems to be so high because there are so many low paid workers in the US due to low minimum wage.

Median workers in the US have some of the highest hourly wages at PPP in the rich world and they have been increasing, but they are pretty similar to those in Germany. The big difference in annual pay at PPP is down to hours worked.

For 2022 average annual hours worked per worker in the US is 1790 while in Germany it is 1340 [1]. Meanwhile average hourly wages at PPP in US are $34.9 vs $34.6 in Germany [2]

[1] https://ourworldindata.org/grapher/annual-working-hours-per-...

[2] https://ourworldindata.org/grapher/average-hourly-earnings

You forget that in the US, even with PPP, the level of "comfortable" is higher, due to missing social safety nets.

This means using PPP doesn't actually show where the level of precarity is.

Life in the US is definitely more precarious than in Europe but that has been the case for a long time while median real earnings after stagnating from about 2001 to 2015 have been growing well since then.

https://fred.stlouisfed.org/series/LES1252881600Q

There is a huge mismatch between perception and data. I wonder whether some costs are just more pertinent?

I wonder if there’s also some difficulty in translation happening due to adding up inverted numbers for example 1/(a+b+c+…) != 1/a+1/b+1/c+…

That's exactly what's going on. The inverses are very sensitive to small changes at the low end.

> The $1 is measured in international dollars. This means it buys the same amount of goods and services in any country as a US dollar does in the United States. It is often used alongside purchasing power parity (PPP) data. The “time” refers to a day of life for anyone, at any age and in any circumstance — not just the hours worked by someone with a job.

So IIUC this "average poverty" (measured in time per international dollar) includes people living off social welfare? Otherwise, if it only included the working population, wouldn't we have

  average poverty ≝ (average yearly income* of the working population / 1yr)⁻¹

and so it should be inversely proportional to the average yearly income* metric mentioned in the article?

*) Adjusted for purchasing power, i.e. measured in international dollars.

From a linked article:

>For these purposes, income includes earnings from work, government benefits and other sources of money, and it is averaged among all family members.

Yes, it is supposed to include income from all sources.

https://theconversation.com/measuring-poverty-on-a-spectrum-...

Huh, I must have missed that. Thanks!

No, it's

average poverty ≝ average(1 / annual income)

Inversely proportional to the harmonic mean of average yearly income.

Ah, you're right. I added the (·)⁻¹ at the very end, when I noticed the units on both sides didn't agree, and forgot about the average.

I don't think that's quite right, it would be the average of the inverse hourly wage not the inverse of the average hourly wage.

    >>> import statistics
    >>> 1/statistics.mean([10,30,100])
    0.02142857142857143
    >>> statistics.mean([1/10, 1/30, 1/100])
    0.04777777777777778

it feels counterintuitive to me that US "average poverty" dropped more than 50 percent in covid, while european stayed absolutely untouched.

How much of that could be the lack of real social nets in the US compared to Europe?

In addition, anecdotally, everyone I know in the EU that had a job pre covid has a job today. I can't say the same thing about folks in the US.

The curious data point is that on this graph poverty seems to have strongly reduced during covid. Less poor.

Why does this surprise you? There were large, direct transfers to initially children, then everyone. This was the largest and most effective American anti-poverty program of all time.

Huge amounts of cash were given to many Americans during Covid.

That's not my experience in Finland. The unemployment rate passed 10% a few months ago. Youth unemployment is now over 20%.

Of course, this is due to the current Finnish govt. weakening its welfare system, driving down demand and creating incentive traps.

I.e. making the economy more like the US.

No, the current austerity measures are due to the national debt crisis in 2023, before the last parliamentary election. Even Yle acknowledged this beforehand.

https://yle.fi/a/74-20007883

https://yle.fi/a/74-20017437

I did not even mention the causes of austerity measures, I'm simply describing their effect.

You are not even responding to anything in my post. Please try again.

You're blaming the "current" Finnish government for austerity measures and implicitly removing blame from the previous administration for driving up the debt in the first place. I would just blame "the Finnish government" (over all administrations).

Uh, no. The unemployment is due to this govt. The austerity measures have led to purchasing power dwindling, leading to lowering domestic demand, and changes to unemployment, removing the possibility to do part-time work while on benefits has disincentivized people from becoming employed.

These austerity measures have made the Finnish welfare system more U.S.-like. This is all I'm commenting on. My initial comment did not assign blame, it simply described the situation.

The debt issue is separate from this point, since we're not talking about why these measures were made. But the debt is definitely not due to the previous govt. If you look at the data, the debt has been an issue since 2008 (just as it has been worldwide).

Different responses to the COIVD shutdowns. The US government gave stimulus money directly to the people, for many bringing an increase to one's income during that period. The European response was focused more on helping people keep their jobs so their incomes remained stable.

Extremely doubtful that the stimmy was enough to meaningfully reduce the real poverty level. The people who already live paycheck to paycheck spent that almost as soon as they got it (hopefully on something that meaningfully improved their lives, like deferred car or home repairs, but if we're being real a lot of people blew it on gambling apps.)

The metric in question measures how much time it takes to get $1 in income. When, over a set period of time, your income increases (in this case because the government started paying you more than you were getting before), the time to get $1 goes down. When the government stops paying and you go back to the way things were then the time to get $1 goes back up.

Incorrect.

https://www.nationalacademies.org/news/federal-tax-credits-i...

Politicians are judged by these metrics, so they all get gamed.

They are not, sadly. Or rather, many voters care about many different things and the resulting metric is not that sensible.

I felt the same. But I think the reason is similar to how your fuel economy is absolutely destroyed by sitting still. When you average in a speed of zero the calculation goes haywire.

People in the US are so close to financial disaster that in order to avert disaster the US had to heavily subsidize those out of work. Many people got healthcare and unemployment benefits that would not have been otherwise available. This meant money for zero hours of work. When you average in $1/0 hours it does crazy things to the graph.

The reality is: During Covid the US rapidly adopted similar safety nets to EU countries and, in effect, aligned with their levels of poverty. Once the emergency measures ended we snapped back to our previous, precarious, poverty level.

Just my theory.

It is not counterintuitive at all, unless you misunderstand the income levels of the poor. Sending everyone $1400 massively increased the income of the poorest Americans.

Sterck's article from The Conversation referenced in this article: https://theconversation.com/measuring-poverty-on-a-spectrum-...

But measuring only the earning of 1 usd is enough ? Or should we take into construation that how much 1$ can buy in real life

The declining standard of living in the USA is has become painfully obvious. I think we're past solutions. The question is if it will go the way of Italy or the way of Yugoslavia.

OK, the idea is interesting, but the numbers seem completely bogus. In what world does it take the average American 63 minutes to earn $1, even one "international" dollar?

I get the "international" part - purchasing power. The number still seems way off, though.

In a time when minimum wage is $7/hr, how is the average American earning $1/hr?

Can anyone make that number make any sense?

>The “time” refers to a day of life for anyone, at any age and in any circumstance — not just the hours worked by someone with a job.

So it's how much you earn per day divided by 24, or maybe by yearly earnings and hours per year

Nope, I just spent 15 minutes reading the original paper and can’t make any sense of what he is calculating.

International dollars are normalized to USD, so there’s no conversion necessary. The figure he quotes of 63 min per dollar converts to $8343/year. However, his original paper states that he created this measure by inverting income, so the number 8343 is his starting point.

The closest guess I have is that is derived from the poverty line for a family of four, $32150 (which divided by four is $8037).

If that is the case, what he is really doing is comparing poverty line definitions between countries.

You can't compare calculations in article with minimum wage.

Think of it this way, its like difference between median and average income. Larger inequality, larger the gap between median and average.

It seems biased to ignore things like growth in housing prices and the stock market where we have seen some massive gains in recent years. If it's easy to invest in property or companies or bonds or treasuries or whatever to make a dollar. That should count.

This seems like a quite nice way to measure poverty.

This sounds like so much Eurocope: https://www.noahpinion.blog/p/eurocope

the article doesn't explain how the math works. if min wage is 15$ an hour or 10$, how do they arrive at 1$ for 63 min???

See my comment elsewhere in this thread: https://news.ycombinator.com/item?id=47605141

It doesn't make sense to talk about poverty in the US without talking about race (or, ok, for you libertarians in the audience: "geography"). It certainly doesn't make sense to average the economic standing of a population split between imperial core and colonized enclaves.

This metric rates very high on my private index Compensation, Obscuring, Paltry, Earnings (COPE)

Is the measure they are using inflation adjusted over time? If not this shows an enormous loss in purchasing capacity over time for the average person, which is certainly how its felt over the past decades as inflation has outrun wages for most people.

I would guess this is because places like Germany having incredibly low annual working hours.[1] The bottom of the list is populated by all European countries.

[1]https://en.wikipedia.org/wiki/List_of_countries_by_average_a...

Being at the bottom of that list is very desirable, because it means high quality of life, while being at the top of that list means very low quality of life.

The goal of increasing work productivity must be to produce the same by working less, not to work the same in order to make higher profits for a negligible part of the society.

Reply on news.ycombinator.com