Lives of the poor

On Sunday, Nicholas Kristof mentioned a survey question on whether "poor people today have it easy because they can get government benefits without doing anything in return" or "poor people have hard lives because government benefits don't go far enough to help them live decently."    I've written about that question before, but it's been asked a couple of times since then, so here's an update:

As I mentioned in my previous post, changes in average opinion can be predicted by three things:  party of the president (people are more likely to say "easy" when a Democrat is in office), the unemployment rate (people are less likely to say "easy" when unemployment is high, and the welfare reform of 1996 (people have been less likely to say "easy" since the reform).

What struck me about Kristof's description was that the focused on the opinions of affluent people: "the delusion on the part of many affluent Americans that those like Kevin [a high school friend of his who had been living on disability assistance] are lazy or living cushy lives. A poll released this month by the Pew Research Center found that wealthy Americans mostly agree that 'poor people today have it easy because they can get government benefits without doing anything in return.'"  But as the figures above suggest, a lot of Americans who aren't especially affluent must also agree.  More precisely, here is a breakdown of opinions by income in December 2013:

Under $10,000       +38
$10-20,000          +18
$20-30,000          +13
$30-40,000          -6
$40-50,000          -26
$50-75,000          -9
$75-100,000         -6
$100-150,000        -12
over $150,000       -10

The numbers are the percent choosing "hard life" minus the percent choosing "have it easy."  For example, among people earning over $150,000, 38% chose "hard life," 48% chose "easy" and 14% volunteered another answer like "some of both."

So the affluent aren't very different from the middle class--in fact, people earning $40 to 50,000 are most likely to say that poor people have it easy, although it's not clear that the difference is statistically significant.

I adjusted for differences in the composition of income groups in terms of race/ethnicity, gender, martial status, and education.  Results are shown in this figure:

 

Again, opinions are similar in all groups with moderate or higher incomes.  This pattern is interesting, because common sense suggests that opinions should become steadily more negative as income increases.  Compared to a person who earns $150,000 a year, a person who earns $40,000 a year is more likely to have been   poor in the past, has more chance of being poor in the future, and is more likely to have friends or family members who are poor.  But they're not more likely to say that the poor have hard lives.

[Data from the Roper Center for Public Opinion Research]

Be careful what you ask for

Since several of my recent posts have involved complicated calculations, it seems like time for a straightforward report of percentages.  In 1993, the Americans Talk Issues Foundation sponsored a poll on political issues.  As far as I can tell, the foundation was basically one man, so he just asked what was on his mind, resulting in some interesting questions.  People were asked to rate various ideas on a scale of 0 (very unfavorable) to 100 (very favorable).  One was:

"Choose members of Congress not by elections as now but by selection in the same way as juries are chosen--thus changing the composition of Congress to represent all demographic groups and walks of life and removing the influence of money from elections"

35% were favorable (51-100), 22% were neutral (50), and 40% unfavorable (0-49)

That would definitely be a break with tradition, but it's defensible in terms of the principle of democracy.

Another was:

"Choose members of Congress not by elections as now but by auctions selecting the highest qualified bidders with the money going to the federal treasury"

19% were favorable, 19% were neutral, and 58% unfavorable.

This method of choosing rulers is totally inconsistent with the basic idea of democracy, as well as common sense, so I would have expected it to get almost no support.  But a substantial number thought it was a good idea, or at least weren't opposed.

[data from iPOLL, Roper Center for Public Opinion Research]

A New Look at the Old South

I hadn't worked with the DW-Nominate scores before my last post:  I just knew in a general way how they were constructed.  According to the online documentation (see the link above),  "the first dimension can be interpreted in most periods as government intervention in the economy or liberal-conservative in the modern era. The 2nd dimension picks up the conflict between North and South on Slavery before the Civil War and from the late 1930s through the mid-1970s, civil rights for African-Americans."   So the calculations in that post were based on the scores from the first dimension.

However, out of curiosity I took a look at scores for individual senators and found something puzzling, as seen in this scatterplot.

Southerners have the highest scores on the second dimension, which makes sense.  What seems less reasonable is that Republicans have substantially lower scores (ie more "liberal") on the second dimension than northern Democrats.  To take a particular example, Barry Goldwater, who is at the intersection of the two lines, has a lower score than all but one northern Democrat, even though he voted against nearly all civil rights bills.  

This means that the interpretation of Dimension 1 as economic issues and 2 as civil rights is problematic:  both dimensions are a mix of both types (at least at this time).  As an alternative measure, I considered the scores from the Americans for Democratic Action, a liberal group.  Their website gives not just the total scores, but votes on each of the items used to compute them.  I distinguished between civil rights issues and other issues.  On the average, northerners ranked 45th on the "other" issues, and southerners ranked 69th.  12 of the 30 most conservative Senators, and only one of the 30 most liberal, were from the south.  That is, the regional differences were almost exactly like those that the DW-Nominate scores show today.  So the conventional wisdom about the political shift being just one of party, not of ideology, seems to be correct.  

It would be interesting to redo the whole analysis using the ADA scores, but that would take more time than I care to devote to a blog post.  

The old South

Fifty years ago, almost all of the senators from the South were Democrats--today, only two (out of twenty-two) are.  But many accounts of the shift suggest that there was little change in political philosophy--it's just a matter of going from conservative Democrats to conservative Republicans.  It's possible to check this using the DW-Nominate scores, which basically try to reduce all roll-call votes to a small number of dimensions.  Although it's not based on prior classification of votes as liberal or conservative, the first dimension generally turns out to be pretty much equivalent to liberal-conservative positions on economic issues: for example, in the 2011-12 session, Bernie Sanders was at one extreme, while Rand Paul was at the other (closely followed by Mike Lee).

Since the scale of the scores doesn't have any natural interpretation, it's easier to work with ranks.  Here is a comparison of the ranks of Southern and non-southern senators on the first dimension in three sessions (1 is most "liberal"):

                   Non-South            South              

2011-12            46                     71

1963-4              50                     60

1947-8              51                     42

Another way to look at it is to divide senators into groups.   Here are the number of Southerners among the 30 most "liberal" and 30 most "conservative"

                      liberal                conservative
2011-12           0                         11
1963-4             4                          5
1947-8             4                          1

So it appears that Southern senators have moved well to the right since 1964.  I'd known that there used to be a some southern liberals, but was surprised that there weren't many consistent conservatives--if ideology were independent of region, you'd expect about 6.5 southerners in the 30 most conservative, so southerners were actually under-represented.

Of course, this comparison is limited to the first dimension--there was also a second dimension corresponding to civil rights issues, and southerners were almost uniformly on the "right."  The major exceptions were Al Gore, Sr. and Ralph Yarborough, both of whom lost their seats in 1970.  

Something happened

In April 1965, the Gallup Poll asked "In some places in the nation, there have been charges of police brutality.  Do you think there is any police brutality in your area, or not?"  The question has been repeated a number of times--the most recent that has reached the Roper Center was in 2005, although hopefully they have asked it within the last couple of months.  The percent saying "yes":

There was a very large change between 1967 and 1991, and little change since 1991 (or I should say, between 1991 and 2005).  Given the long gap, it's not possible to say much about exactly when or why the change occurred.

A similar question was asked in 1970 and 1991:  "When you hear charges of police brutality, how likely do you think it is that the charges are justified----very likely, fairly likely, not too likely, or not at all likely?"  In 1970, 9% said very likely and 27% fairly likely; in 1991, 22% said very likely and 46% fairly likely.

PS:  The question was also asked of a sample of blacks in May 1969:  40% said yes, 38% said no, and 23% weren't sure.

[Source:  iPOLL, Roper Center for Public Opinion Research]

Less than meets the eye

Paul Krugman gave some statistics today on the rate of change in government purchases and economic growth in 33 countries from 2010 to 2014.  There is a strong positive relationship--increases in spending go with higher growth.  I downloaded the data and tried to reproduce his analysis.  There are some small discrepancies, but the figure I got is almost identical to his.  There is a strong and highly significant positive relationship--cuts in government spending go with lower economic growth.  

However, the figure represents spending and growth in the same year.  Suppose you take a person whose income goes up and down from year to year and look at spending in some area, like food and drink.  You'd expect a substantial positive correlation between income and spending--when people have more to spend, they spend more.   The same would apply to governments--when tax revenue rises, governments are likely to introduce new programs and give government employees generous raises; when they fall, they'll cut programs and impose hiring and pay freezes.

   So if you want to know whether government spending affects growth, you need to look at spending in year x and growth in year x+1.  The Keynesian argument is that there should be a positive relationship (government spending saves or creates jobs, people with jobs spend money, and the economy grows), the "austerian" argument is that there should be a negative relationship (government spending inhibits private spending and investment).  The figure:  

The relationship is weaker, but still pretty evident (and statistically significant).  But growth may also depend on last year's growth, not in a causal sense, but in the sense that much of what was happening last year, for good or ill, will probably happen this year too.  If you add last year's growth as a control:

growth=.4+.55*lgrow+.05*lgov

The estimate for last year's growth (lgrow) is statistically significant (t=6), and the estimate for last year's spending growth (lgov) is nowhere near significant (t=0.5).  That isn't proof (or even evidence) that government spending doesn't matter--it basically means that anything is possible:  it could help, hurt, or make no difference.  

Krugman says, "you can, if you like, try to argue that this relationship is spurious, maybe not causal."  Actually, I liked his original figure, since I agree with Krugman on economic policy.   But thinking about the possibility of spurious correlation isn't a matter of liking--it should be pretty much automatic.  

I refute it thus

Although things have picked up recently, the recovery from the 2007-8 recession has been slow. Why?  One answer is offered by Edward Lazear, a well-known economist at the Stanford Graduate School of Business:  "Threats of higher taxes, the constantly increasing regulatory burden, the failure to pursue an aggressive trade policy that will open markets to U.S. exports, and the enormous increase in government spending all are growth impediments."   Obama's economic policies have been aimed at "promoting social agendas" rather than "creating conditions that are favorable to investment."   Of course, other equally distinguished economists, like Paul Krugman, say that this explanation is all wrong.  You might hope that people would have measured the sort of things Lazear talks about and analyzed their relation to growth rates over time, but by and large that hasn't happened.  For example, I don't know of any serious attempt to measure the extent of the "regulatory burden" or the "threat of higher taxes."*

However, it seems safe to say that there's a systematic difference between Democratic and Republican administrations.  Ever since the 1930s, Democrats have stood for more social spending and regulation of business, and Republicans for less.  So Lazear's explanation implies that growth will tend to be higher under Republican administrations--for example, George W. Bush's, which had the benefit of Lazear's advice as the chairman of the Council of Economic Advisers.  As I observed a couple of posts ago, that's not true--it's been much higher under Democratic administrations.  

But as I also observed, growth is affected by "luck," so maybe Republicans have had better policies but worse luck.  I took a closer look at that possibility by distinguishing three categories:  Democrats substantially better, Republicans substantially better, and both about the same.  I defined "about the same" as a difference of less than 0.1% a year.  Using the prior distribution discussed in that post, we get a 71% probability that the Democrats are substantially better, 23% chance that the two parties are about the same, and only a 6% chance that the Republicans are substantially better.    Those conclusions depend on the particular distribution, but if you start with a symmetrical distribution (that is, no initial bias in favor of one party) the chance that the Republicans are substantially better is invariably small.  

Blinder and Watson also look at Canada, France, Germany, and the UK.  Although specific policies differ, the general distinction between policies of the left and right applies in all of them.  They find that growth is higher under governments of the "left" in Canada, but conclude that probably reflects the influence of the US (Canadians happen to have had Liberal governments when the American has grown more rapidly).  They find no significant difference in the other nations.    Taking everything together, there is room for doubt about whether governments of the left are better for economic growth or whether left and right are about the same.  But it's pretty safe to say that governments of the right are not substantially better.   

*Actual marginal tax rates on top incomes are a lot lower today than they were 50-60 years ago,  but I understand Lazear as saying that proposals for higher tax rates deter investment, even if they are not eventually enacted.