Unit 11 — Reducing Poverty

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Purpose:

To examine some of the causes of differences in income, and to describe and analyze some of the government policies that attempt to reduce poverty.

Objectives:

  1. To make the viewer aware of the two basic types of government programs: those that seek to reduce the causes of poverty (such as training and education programs, antidiscrimination policies, the prevention of unemployment or disability, and day care), and those that reduce the symptoms of poverty (such as Social Security, insuring unemployment and disability, welfare, Medicare and Medicaid, public housing, and food stamps).
  2. To show how the Social Security program is designed, how it developed from an insurance program to a transfer program, and how it helped to reduce poverty.
  3. To show the goals and problems of job-training programs for the poor.
  4. To show that in-kind benefits are not as economically efficient for the individual as cash benefits, but promote the consumption of merit goods.
  5. To show that programs that attempt to create a more equitable distribution of income often have harmful unintended effects because of hidden incentives and disincentives (e.g., breaking up families, high implicit marginal tax rates).
  6. To show that the ongoing inequality of economic outcomes between U.S. Caucasians and African Americans, and U.S. Caucasians and Hispanics, is a result of entrenched inequality of opportunities, and that individuals given opportunities for education and employment can rise out of poverty.

Audio and Transcripts

Meet the Series Experts

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Wilbur Cohen

Wilbur Cohen

Social scientist expert on the welfare state and a key player in the creation of New Deal and Great Society programs.

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Ron Haskins

Ron Haskins

Co-Director of the Center on Children and Families at the Brookings Institution and Senior Advisor to President George W. Bush for Welfare Policy.

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Peter Wallison

Peter Wallison

Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute (AEI) and Co-Director of AEI's program on financial policy studies, specializing in banking, insurance, and securities regulation.

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Alan Weil

Alan Weil

Executive Director of the National Academy for State Health Policy and former Director of the Urban Institute’s “Assessing the New Federalism” project.

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WHAT’S YOUR
ECONOMICS IQ?

  1. According to statistical evidence, which of the following families is MOST LIKELY to be poor?

    A nonwhite family with six members

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  2. When a tax is defined as progressive, that definition implies that...

    the percentage of tax paid tends to increase with income.

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  3. Ted W. is an economics student who strongly favors an egalitarian society with equal income distribution. Which of the following arguments would Ted be MOST LIKELY to use in defending his position?

    Income inequality gives some people political advantages unavailable to others.

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  4. Since the 1940s, the incidence of poverty in the U.S., as measured by the Social Security Administration’s definition, has...

    declined from about 30% to about 12% of the total population.

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  5. The following table shows a payment schedule for a hypothetical negative income tax program. Based on this table, we can conclude that...

    chart chart

    A family with an income of $3,000 will pay no taxes at all. A family at this level may receive income. The third option might be true, but we cannot conclude that without further information. The tax structure seems to be progressive since taxes rise with income.

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  6. Holding such factors as education and work experience constant, the difference in earnings between men and women for a comparable job is...

    about 20%.

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Glossary

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