The Economic Cost of Childhood Poverty, or Is It Inequality?

The American Pediatric Association (APA) Task Force on Childhood Poverty has recently concluded that childhood poverty has far reaching effects  on children’s health, the manifestation of which include: increased infant mortality, higher rates of low birth weight and subsequent health and developmental problems, increased frequency and severity of chronic diseases,  poorer nutrition and poorer access to quality health care, lower immunization rates, and increased rates of obesity and its associated complications.

Much has been written in the literature on the consequence of poverty to a child health and overall well being.We often hear that hungry children do not study well, a fact that still rings true today perhaps more so than ever, as one in five children in the United States suffer from hunger  and almost one in two are poor or near poor. The long term economic consequences of this decreased capacity to learn which will invariably lead to unproductive adult lives, and trap our children in inter-generational poverty is a reason for great concern. Children growing up in poverty have poorer educational outcomes, higher dropout rates and overall poor academic achievement. Higher education level is often associated with increased earnings as employers use education level as signals for greater productivity.  Firms have observed that the qualities which lead to success in school are related to the qualities which make the individual more productive on the job

According to a Unicef report issued — “Child Well-Being in Rich Countries” — the United States once again ranked among the worst wealthy countries for children, coming in 26th place of 29 countries included. Only Lithuania, Latvia and Romania which happen to be among the poorest countries assessed in the study, had worse rankings. Furthermore, The United States ranked 25th out of 29 in the percentage of people 15 to 19 years old who were enrolled in schools and colleges and 23rd in the percentage of people in that cohort not participating in either education, employment or training.

The report also states that the United States has the second highest share of children living under the relative poverty line, defined as 50 percent of each country’s median income, and the second largest child poverty gap. As a side note, the US does not use relative poverty line as a poverty measure but rather uses absolute level of poverty, which has not been adjusted for any changes in standard of living, medical payments, etc in over four decades, but was only adjusted for price level increases.  It makes our statistics looks much better than it is in reality.

The question to be asked then is, given what we know about the consequence of ill health and lack of education, why are we not “throwing money at the problem”  in an attempt to fix this terrible trajectory that almost half of our children are facing? The answer in one word is inequality.  Widening income disparity between rich and poor, not only brings about stress and feeling of deprivation especially in early years, and may ultimately reduce potential for future success in education and economic life, but also has the arguable negative effect  of the ability of the political process to deliver public goods such as health and education. Inequality in the US has reached 0.477 in 2011, and our political landscape has never been so polarized – both make it almost impossible to formulate public policy that will improve our health and education systems. So “throwing money at the problem” (leave the deficit issue alone  though I can dispute that argument as well), will not help. Redistribution of wealth, however, might, but that is a curse word. At least for now, anyway.


Categories: Means of Reproduction, Poverty and Inequality

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