Poverty Curve

The original poverty line was based on having enough money to select a nutritious diet in 1963. It was $3,100/year for a family of four with two adults and two children. In 2005, it was $19,800. In constant 2005 dollars using the consumer price index, the 1963 poverty line would be $18,900. Using the GDP deflator (which is based on changing rather than fixed buying patterns), we get $15,400. That is, a family at the poverty line today will buy different items today implying a $4,400 improvement in the standard of living from 1963 to 2005.

Life expectancy has gone up almost 5 years over that time. The white/black life expectancy ratio has been converging from 1.11 to about 1.07 over the same period.

Both the GDP deflator and life expectancy measures indicate those below the poverty line are getting better off in an absolute sense. A couple more are in this week’s Economist. The definition of poverty evolves over time and is more of a curve than a line so that there will alway be people in poverty.