Oregon Office of Economic Analysis

An interesting topic arose at the PSU Census Data User meetings two weeks ago. Essentially, it boiled down to the differences between the official poverty measures used and something more akin to material deprivation. Trudi Renwick, from Census’ Poverty Statistics Branch, walked us through a bit of the differences there. Poverty is based on how much money is needed to afford a defined basket of goods and services. Material deprivation is more a measure of physical hardship or being able to afford typical products in society — Trudi mentioned things like indoor plumbing and refrigerators.

Since nearly every American has those items, poverty today is better in a material deprivation sense. In fact, via the New York Times summarizing work from World Bank economist Branko Milanovic, “… the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants.” However, just because Americans in poverty today have access to a toilet and even a smartphone, does not mean they have an easy life.

This discussion brings to mind two of my favorite graphs which do help shed light on these issues. The first graph shows the adoption of new technology over time. I pulled this specific graph from the Harvard Business Review, who grabbed it from the New York Times.

There is a lot embedded in the graph. The rate of adoption is picking up, that is newer technologies spread to a wider swath of the population at a faster pace today than a few generations ago. Some technologies take a longer time to adopt than others and there are certainly plateaus to adoption. For a few simple reference points, Derek Thompson in The Atlantic wrote:

— In 1900, <10% of families owned a stove, or had access to electricity or phones

— In 1915, <10% of families owned a car

— In 1930, <10% of families owned a refrigerator or clothes washer

— In 1945, <10% of families owned a clothes dryer or air-conditioning

— In 1960, <10% of families owned a dishwasher or color TV

— In 1975, <10% of families owned a microwave

— In 1990, <10% of families had a cell phone or access to the Internet

Today, at least 90% of the country has a stove, electricity, car, fridge, clothes washer, air-conditioning, color TV, microwave, and cell phone. They make our lives better. They might even make us happier. But they are not enough.

The other graph the issue of material deprivation and poverty brings to mind is the following, also via the NYT. The graph shows the inflation rate for a particular good or service, relative to the overall increase in the consumer price index. Simply put, this illustrates that many physical products like TVs and phones have become much more affordable over time, hence why so many more people have them. Conversely, categories that are generally accepted to help one escape poverty itself, have risen faster than everything else. College-educated workers earn more, but the costs of obtaining a degree have skyrocketed. Similarly, child care is expensive and parents need child care to be able to work and earn money, which could then put them above the poverty line. Such services are relatively harder to afford today given price trends, yet are needed for parents and households to earn more money.

I find both of these graphs very informative, interesting and applicable to the discussion surrounding material deprivation and poverty. In particular, whenever I see inflation for different goods or services, or hear discussions surrounding poverty, I have this second graph in the back of my mind. Thankfully, for the vast majority of Americans, material deprivation is no longer the primary hardship. Unfortunately, poverty certainly remains a very big, and outsized economic issue.