Thursday, September 12, 2019

Latest Data on Poverty and Inequality Show Small Improvements but No Break in Long-Term Trends

On Tuesday, the Census Bureau released the latest data on poverty and income distribution for U.S. households. They show small improvements for 2018 compared with the year before, as would be expected with unemployment nearing 50-year lows. However, the short-term gains were not large enough to constitute a break with long-term trends.

One piece of welcome news was a drop in the percentage of people living in poverty from 12.7 percent in 2017 to 11.8 percent in 2018. Still, as the following chart shows, the 2018 poverty rate remains above the lows reached in the 1970s and again at the turn of the century. The longer-term trend of the official poverty rate since the late 1960s remains upward even when recent decreases are taken into account.

The official poverty rate is only one of several ways of looking at income distribution in America. The Gini index provides another perspective. This statistic varies from a possible value of zero, when distribution is perfectly equal (like a cake cut into equal slices) and 100 for a winner-take-all situation (like a hand of poker where the winner gets everyone else’s chips). The same statistic is sometimes on a scale of zero to one, in which case it is called the Gini coefficient or Gini ratio.

Tuesday, September 3, 2019

What Explains Voter Aversion to Carbon Taxes?

 Despite widespread support among economists of all political persuasions, polling shows public attitudes toward putting a price on carbon emissions to be lukewarm, whether you call it a tax, a fee, a user charge or anything else. A Hill+Knowlton survey found that although 81 percent of Americans respond positively when asked if they favor government action to limit carbon emissions, support falls to 56 percent when they are asked whether they favor a carbon tax.

Conservatives are not the only ones who are skeptical. According to a YouGov Blue poll, people who identify as Democrats have greater-overall support for climate action than do Republicans, but even they prefer an approach that emphasizes public investment and regulation over any kind of carbon tax or fee. A Politifact analysis of climate policies as stated on campaign websites found that only six of the 21 Democratic candidates who participated in the June and July debates offered explicit support for a carbon tax.

Nor is aversion to carbon taxes limited to the United States. A comprehensive cross-national review of climate policy opinion by Stefano Carattini, Maria Carvalho, and Sam Fankhauser, “Overcoming Public Resistance to Carbon Taxes,” (Carattini) finds similar attitudes both in the United States and abroad.

In what follows, I will try to address the issues that these polling data raise for economists, myself included, who see carbon taxes as “obviously” the best tool of climate policy. Why is it that so many members of the public are skeptical, even when they strongly favor climate action? How can carbon tax backers improve their communication strategies?