Danziger chart highlights underlying relationship between poverty and inequality

January 13, 2014

A graph by Sheldon Danziger showing that increased inequality is a factor in persistently high poverty rates was featured in the New York Times' Economix blog. The column uses charts to illuminate the relationship between poverty and inequality, which has changed significantly since the mid 1960's.

Danziger's chart compares changes in the poverty rate with real growth in per-person gross domestic product. The graph shows that overall economic growth accurately predicted the poverty rate from the late 1950s to the mid-'60s. However, the clear relationship ends after that and, as the chart indicates, using G.D.P. growth as a predictor would have forecast the end of poverty by the mid 1980's. The author notes that the disconnect between changes in G.D.P. and the poverty rate happens when less of an economy's growth ends up in the lower reaches of the income scale.

This week, Danziger was also quoted in a Philadelphia Inquirer article on the legacy of the War on Poverty given the persistence of the poverty rate. In the article, Danziger points to the successes of the War on Poverty, including the continuing benefits for the middle class.