On May 4, 2010, at 10:03 PM, D D wrote:
> The Limits of Policy
> DAVID BROOKS
> May 3, 2010
>
> Roughly a century ago, many Swedes immigrated to America. They’ve
> done very well here. Only about 6.7 percent of Swedish-Americans
> live in poverty. Also a century ago, many Swedes decided to remain
> in Sweden. They’ve done well there, too. When two economists
> calculated Swedish poverty rates according to the American standard,
> they found that 6.7 percent of the Swedes in Sweden were living in
> poverty.
>
> In other words, you had two groups with similar historical
> backgrounds living in entirely different political systems, and the
> poverty outcomes were the same....
>
> http://www.nytimes.com/2010/05/04/opinion/04brooks.html
This appears to be Brooks's ultimate source:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1095742
The figures for an Orshansky line - that is, a fixed poverty line adjusted over time for inflation, rather than setting the poverty line at a fixed percentage of household median income - they come up with are mysteriously volatile. That aside, Brooks uses data from 1998. Notten and de Neubourg translate the U.S. poverty line for that year into foreign poverty lines using PPP exchange rates. But that year, Sweden's per capita income on a PPP basis was 25% below the U.S. According to the paper, the Orshansky poverty line for the U.S. in the U.S. was 39% of median income - but it was 54% for Sweden. And the poverty gap by the Orshansky line - the amount of additional income it would take to lift the poor out of poverty - is much bigger in the U.S. So the 6.7% Swedish-American poor are actually worse off than the 6.7% Swedish poor.
It's a little hard to believe that Swedes, on average, are 25% worse off than Americans, but that's the downside of using simple PPP translations.
Doug