Is it true?

From It Is Not True That 15% Of Americans Live In Poverty by Tim Worstall.

Interesting if true, but is it true?

Worstall takes issue with the frequently asserted statement that 15% of Americans live in poverty.

The correct formulation is that 15% of Americans would be living in poverty if it were not for the things that are done to alleviate poverty.

There are two things that make this correction really rather important. The first being that everyone else measures poverty after all the things that are done to alleviate it. Thus any comparison across countries is going to leave the US looking very bad indeed: for others are talking about the residual poverty left after trying to do something about it and the US is talking about the poverty before alleviation. Very different things I hope you’ll agree.

The second reason it’s important is that the only way anyone’s ever really found to reduce the number living in poverty is to give the poor money n’stuff so that they’re no longer living in poverty. But if we don’t count the money n’stuff that is being given to the poor then we’re not going to be able to show that giving the poor money n’stuff alleviates poverty, are we?

If Worstall's contention is correct that we measure poverty on a pre-transfer basis and everyone else measures it on a post-transfer basis, that would explain one of the measurement mysteries of the past couple of decades. Over the years, I have seen a number of studies indicating that the bottom quintile of Americans by income have a capital/durable goods ownership profile similar to that of middle quintile Europeans. The US is materially more productive and therefore richer than all other OECD countries but that statistic has always seemed a little outlandish. Without finding data to contradict the studies, I have papered over the disconnect by ascribing it to three facts, 1) that the European OECD numbers do include some poorer European countries, 2) that for all their fragmentation and variability (government and private charity), the US safety net is more robust than is often recognized, and 3) that probably half of the statistical occupants of the bottom 20 percentile are transitory - people temporarily out of work, students in college and grad school, etc. All three are rational explanations but not robust.

If, on the other hand, Worstall is right, that everyone else is measuring poverty on a post-transfer basis, then the asset-ownership profile mismatch suddenly makes more sense.

I suspect that Worstall is wrong that everyone else measures poverty on a post-transfer basis but cannot find a quick answer to that question. Here is an article that argues otherwise but is materially misleading in its analysis (it fails to address relative versus absolute measures), so again, I am left struggling to know what the right answer is.