Wednesday, August 30, 2006

On Poverty

My company, Entergy, helped fund a fascinating study on the possibility and the benefits of eliminating poverty. 

Some highlights from the study:
  • For the average non-low-income family, eliminating poverty would be like getting a 30 percent wage increase ($18,000).
  • About a quarter of Americans try to live on $26,640 or less (60 percent of current median income) while the rest live on incomes averaging more than $60,000. For the lower quarter, there is not enough income to heat and/or cool their homes, feed their children, and afford medical care.
  • The health of individuals in society is strongly and inversely correlated with inequality of income. The United States is the wealthiest  nation on earth -- ever -- but people live longer in Sweden and Japan, where incomes are more equal.
  • Targeted investments like pre-school education return nine times their investments.
  • Directly raising incomes to a low but decent level (60 percent of current median income) would return at least about four times the investment.
  • Middle-income supports -- such as Medicare, Social Security, and income tax breaks -- cost the average family about four times as much as do low-income supports such as homeless shelters and food.
  • What makes poverty expensive is not the low-income social supports but rather its large indirect costs, especially in health care, crime, and lost productivity. The cost of the judicial, correctional, and security systems could be substantially reduced by removing the desperation that causes a substantial fraction of crime.

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