Poverty in the United States

I'm working on my next post, and it's going to be about after-school programs and their affects on academically at-risk children with a particular focus on latino migrant children.  However, it's slowly becoming more and more detailed and complicated.  There's quite a bit of research here.  And I'd like to make it a substantive post.

In the meantime, here's this amazing piece by Paul Tough of the New York Times on urban poverty in the United States, the deepest soft-spot for President Obama.

[What we know now about poverty and how to truly reverse it (it's going to take not just money, but a lot of concentrated, directed money)]:

Americans know how to use their government to remediate a certain kind of poverty. If a family does not have enough food to eat or money to survive, we know how to issue food stamps or cut a check. But when children are growing up in a home without the kind of stability and support and order that they need to succeed in life, Americans don’t always know — and certainly don’t always agree — on what we want the government to do. We generally agree that we want the government to help increase opportunity and social mobility. But we don’t like the idea of the government meddling in the home lives of private families. And so we’re in a dilemma: the biggest factor holding back social mobility for poor children may be one we don’t have a good strategy to solve — and it may be one we don’t feel comfortable even addressing at all.

What [we] need more than anything else is an antipoverty strategy that is much more comprehensive and ambitious than what exists there today, an approach that focuses on improving outcomes for children from birth through adolescence.

[Most importantly, however:]

Obama laid out an ambitious agenda [as candidate] to do just that [fight urban poverty]. At its center was a proposal to expand the work of Geoffrey Canada and his organization, the Harlem Children’s Zone, which takes an intensive and comprehensive approach to child development in a 97-block high-poverty neighborhood in central Harlem, providing poor children with not just high-quality charter schools but also parenting programs, preschools, a medical clinic, a farmers’ market, family counseling and help with college applications. 

To reduce poverty, and provide our children with the futures they deserve--we need a 360 degree plan.  Yes, it's going to be huge.  It's going to be liberal.  It's going to be a lot of government.  But we need to do it because no one else can or will.

We need not just focus on quality schools, but the environment in which the children in these schools live in.  Why don't we get that?

As Obama said, we have to heal entire communities.  Sure, we can continue debating the question, "Where does personal responsibility end and government intervention end?"

Or, we can do something.  It's hard to be personally responsible when no one cares.

Children and Health Focus

With the advice from my economics mentor, Anya Samak, I'm going to focus this blog into a Health Economics blog with a particular emphasis on children, education, and their health.

I'm also going to translate health economics literature/research into digestible and quotable blog posts, while providing the public quick references, evidence, and new knowledge gained from the most recent research--or research I find really interesting.

I'll also try to post interesting and up to date news articles I come across relating to health, youth development and education, as well as asking questions and expressing my own opinion and ideas.

Let's see what happens.

Thanks Anya, for the recommendation.  I think this could be something really cool.

Quality Assurance Assessment Program: Michigan FY2012

Here's a little table I had to make for my internship at CHRT this summer.  I did a lot of research on this, spoke a lot of state budget officials, and hopefully it's mostly right.

For the "Revenues Collected to Date," I got that information from successfully submitting a Freedom of Information Act (FOIA) request!  :]  That was cool.

Michigan's Provider Tax Structure FY2012:

(Click picture to enlarge)

International Bribery: Economically Uncool

I came across this recommended read in the New Yorker about international bribery and the arguable role it plays in economic development within nations:

Without bribes, the argument goes, it takes much longer to do anything, and you end up with less economic activity—fewer Walmarts, less trade. Seen this way, bribes grease not just palms but the very wheels of commerce...

... 

[However,] for the firms paying the bribes, corruption is costly—not just monetarily but also in terms of time and uncertainty, since bribery requires bargaining and monitoring. Kaufmann and Wei show that businesses that paid more bribes spent more time dealing with government officials, not less, and that their cost of capital was higher, not lower. Far from greasing the wheels of commerce, bribery tends to throw sand in them."

So bribery is bad.  Who knew?  How do we combat it for sustainable economic development internationally?  Get as many countries as possible to take a stance together against corruption-facilitating practices:

Bans on bribery work best when they’re widespread; otherwise, companies start to feel competitive pressure to bribe. The problem today is that some of the biggest players in the global market, like India, don’t have laws against foreign bribery, while others, like China and Russia, have laws but little or no enforcement. A recent study by Transparency International found that Chinese and Russian companies—which, in 2010, invested a whopping hundred and twenty billion dollars abroad—were the most likely to pay bribes. It’s no wonder that there have been recent calls to roll back, or even repeal, the F.C.P.A [Foreign Corruption Practices Act]. But weakening it would only lead to an arms race of graft. The smarter strategy is to use what leverage we have—including things like membership in the O.E.C.D.—to get countries to adopt a standard [against corruption].   

We should persuade others to join us there.

But an interesting question arises.  If individuals and firms bribe to engage in business instead of going through official channels, wouldn't that mean that bribes (as perceived by the firm) must be less costly?  Or else, why would the firm dabble in bribery if it doesn't receive a higher return from engaging in business through official channels?

Taxes: Are They Really "Too" Progressive?

[Before we continue, I'm not entirely sure if this tax model I will reference includes cash transfers from local, state, and federal programs to individuals.  That would reduce the effective tax rate for the individuals receiving them.  And, on the graphic you'll see below, income doesn't seem to include cash transfers.]

Now, I agree our tax code is hugely flawed.  Our tax base is small, with large tax loopholes (which are tax expenditures!) available largely for the wealthy individual and business.  That's a fact.

Read Showdown at Gucci Gulch: Lawmakers, Lobbyists, and the Unlikely Triumph of Tax Reform.

As I was saying, though, when you include all taxes--local, state, and federal taxes--the idea that the poor don't pay taxes, and that the taxes in the United States are extremely progressive seems uncertain and potentially flat out wrong (again, I say that as I look for information otherwise).  From the Economist:

The fact of the matter is that the American tax code as a whole is almost perfectly flat. The bottom 20% of earners make 3% of the income and pay 2% of the taxes; the middle 20% make 11% and pay 10%; and the top 1% make 21% and pay 22%.

 Now, look at this interesting graphic from Citizens for Tax Justice:

Taxes don't seem all that progressive now.  The conventional wisdom reasons that poorer folk still have to pay local and state taxes, which takes up larger chunks of their income compared to their much wealthier fellow Americans, who can also avoid a lot taxes through tax-sheltered accounts and other financial tools widely available to wealthier Americans.

The tax code seems to be progressive at first, and then becomes regressive. It's essentially flat.

Who really pays taxes, and at what rate?

It’s often claimed that the richest Americans pay a disproportionate share of taxes while those in the bottom half pay nothing. These claims ignore the many taxes that most Americans are subject to — federal payroll taxes, federal excise taxes, state and local taxes — and focus instead on just one tax, the federal personal income tax. The other taxes are mostly regressive, meaning they take a larger share of income from a poor or middle-income family than they take from a rich family.

Let's just get the facts straight, people.

Now, if we include both local and state cash transfers, but only federal taxes (including federal excise taxes), we have a very progressive tax system, according to the Congressional Budget Office, which Greg Mankiw references:

Because transfer payments are, in effect, the opposite of taxes, it makes sense to look not just at taxes paid, but at taxes paid minus transfers received.  For 2009, the most recent year available, here are taxes less transfers as a percentage of market income (income that households earned from their work and savings):

Bottom quintile: -301 percent
Second quintile: -42 percent
Middle quintile: -5 percent
Fourth quintile: 10 percent
Highest quintile: 22 percent

Top one percent: 28 percent

The negative 301 percent means that a typical family in the bottom quintile receives about $3 in transfer payments for every dollar earned.

But then he notes,

Update: A reader points out the CBO's transfer data includes state and local transfers, but the tax data includes only federal taxes.  If state and local taxes were included, or if state and local transfers were excluded, the middle quintile might well turn positive, though the CBO does not provide the data to establish that conclusion definitively.

Side note: I SAW THIS FIRST, AND I SHOULD HAVE E-MAILED HIM!  UNFAIR!  Gosh darn it.


Boom.

Family Income and the Health of Children: The Poor Get Sicker and Sicker

If there was any question whether income and education affect health outcomes...well, there isn't one now.  Or at least there shouldn't be, after the hallmark study "Economic Status and Health in Childhood: The Origins of the Gradient" by Case et al.

She and her team of researchers found:

Immediately apparent in the left panel of Figure 3.1 (graph shown below) is the inverse relationship between family income and children’s health status for children of all ages. The correlation becomes progressively more negative with age—a phenomenon that holds throughout childhood and adulthood (note the change in scale between the panels). This steepening of the gradient with age is observed until roughly age 65, a result consistent with the findings of other researchers. The results for the PSID [Panel Study of Income Dynamics] are similar to those for the NHIS [National Health Interview Survey].

...on average, children’s health becomes poorer with age and...the differences in the health of wealthier and poorer children become more pronounced with age. 

Family income is not only a strong predictor of a child's health status at any given age, but it also seems to determine whether children face negative health outcomes that increase in severity as they age.

Being poor means that as children grow older, not only do they experience higher percentages of worse health outcomes, but their health status worsen over time--meaning the health gap between wealthier and poorer children only grows over time.

Family income really determines a child's health from beginning to end.  Income's protective power over children's health cannot be underestimated.

As Case et al conclude:

...income is itself protective of children’s health, or is correlated with things that are protective of children’s health. Perhaps both.

But what about parental education?  That has to have some positive effect on children's health outcomes, considering that education tends to lead to higher incomes, right?

The addition of parents’ educational attainment to the set of controls has a large effect on the estimated income coefficients, reducing them by roughly a third for all ages relative to results using Controls 1. However, the gradients remain large and highly significant. Even with controls for parents’ educations, a doubling of household income is associated with an increase in the probability that a child is in excellent or very good health of 4.0 percent (for ages 0-3), 4.9 percent (ages 4-8), 5.9 percent (ages 9-12) and 7.2 percent (ages 13-17).

... 

Although adding controls for education does not eliminate the effects of income, the coefficients on parents’ educations are large and significant. Children living with a mother with a high school degree are reported to be in better health than those whose mothers have not finished high school (the omitted category here). Children whose mothers have more than a high school degree are reported to be in even better health. A similar pattern is seen with respect to fathers’educations.

So while parental education does improve the health of children, income still dominates when it comes to improving a child's health outcomes.

(Click to enlarge the graphs!)

I have more to expand upon.  The paper also covers children and chronic conditions.