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Our previous work argued that the official U.S. poverty definition is flawed because it ignores interest paid on household debt. When it was developed in the early 1960s, this was not a problem because U.S. households had little consumer debt. Today, most households have considerable consumer debt and are paying high interest rates on that debt. This paper argues that what is true of poverty is likewise true of income inequality indices, such as the gini coefficient and the percentage of middle-class families. Interest payments on past debt reduce the income that households have to maintain a certain standard of living. A problem (such as a bout of unemployment, the expenses of having a new baby, or a health problem) leads to borrowing that tends to reduce household living standards in the long run. This phenomenon is not captured in standard measures of income equality. We then use the Survey of Consumer Finances to correct this problem, estimating income inequality both before and after subtracting interest payments on consumer debt. Finally, we discuss why these different measures have increased over time and conclude with some policy proposals to deal with the problem of substantial consumer debt interest payments. Keywords: household debt, poverty, income inequality, middle class JEL Classification Codes: D31, I32, D14, E43, No other question in economic policy is ever so important as the effect of a measure on the distribution of income. --J.K. Galbraith ([1958] 1998, 71) In previous work (Pressman [...]

This paper discusses the regressive nature of tax exemptions for children compared to child allowances and estimates the decline in child poverty in several developed countries due to child allowances. The paper then estimates the decline in child poverty in the United States due to tax exemptions for children and simulates the impact of various possible child allowance programs on child poverty in the United States. It finds that a $3000 to $4000 child allowance would reduce child poverty in the United States to the level of other developed nations and, due to the costs associated with child poverty, be a cost effective policy change. Keywords: child allowances, child poverty, Luxembourg Income Study, tax exemptions JEL Classification Codes: H3, H24, H53, I3, I38, In 2009, 20.7% of U.S. children were officially poor. Since the late 1970s, child poverty in the United States has averaged 20%, far exceeding the poverty rates for other age [...]

This paper examines how consumer debt impacts middle-class households. Interest payments on this debt reduce spendable income and household living standards. We argue that it is necessary to account for interest payments on consumer debt when measuring income inequality and the size of the middle class, and then estimate the impact of doing this using the Survey of Consumer Finances datasets since the 1980s. We find that both greater income inequality and rising interest payments on past debt are squeezing the middle class, with interest becoming more important in the 2000s. We conclude with some policy proposals to aid middle-class households. Keywords: consumer debt, debt poor, income inequality, middle class. JEL Classification Codes: D14, D18, D31, D63, H50, It is well known that income inequality in the United States has increased steadily since the early 1980s. The top earners have gained while incomes for everyone else have either [...]

Our previous research argued that interest payments on consumer debt should be subtracted from household income to measure poverty. We estimated 4 million additional poor Americans in 2007, calling them "debt poor." This paper finds that the debt poor are somewhat like the poor (they are unlikely to own a home or have private health insurance), somewhat like middle-class households (race), and in-between in other ways (education levels). Debt poor households were likely middle class once, having access to considerable consumer credit; but following a loss of income, their large debt burden put their living standard below their poverty threshold. Keywords: Debt poor, Survey of Consumer Finances, consumer debt, poverty JEL Classification Codes: I32, E51, E49, In two earlier papers (Pressman and Scott 2007; 2009) we argued that there was a major flaw in how U.S. poverty rates are computed. Many households have an annual income [...]

INTRODUCTION Let me begin this article with a brief summary of my qualifications. During my career, I have refereed nearly 300 articles for professional journals and as a journal editor [...]

This paper shows how cumulative causation supports Kaldor's main policy proposals. Kaldor advocated an expenditure tax to encourage savings, which would lead to technological advancement, productivity growth, income growth, and more savings. Second, Kaldor argued that tax policy should favor the manufacturing sector. Because productivity growth is greater there, this would lead to greater aggregate productivity growth and income growth, which increases the demand for manufactured goods and leads to a virtuous cycle of growth and improved living standards. Finally, Kaldor used cumulative causation arguments against monetarism and to support an incomes policy to stop the inflationary wage-price spiral. Keywords: cumulative causation, policy, expenditures, growth JEL Classification Codes: B52, E11, E12, E64, 043, Kaldor and his Theory of Cumulative Causation Kaldor was born in Budapest, Hungary in 1908. In 1925, he went to the Humboldt University of Berlin to study political economy because [...]

The mean grade point average (GPA) at 80 United States universities and colleges increased from 2.94 in academic year 1991-1992 to 3.09 in academic year 2001-2002, according to gradeinflation.com. Rise in GPAs was not caused by increased quality of students, but instead by the pressure on faculty to give higher grades to students, particularly to those who are working. Suggested changes in grading systems are provided.

Empirical evidence is used to propose a post Keynesian education policy in the United States by funding students of low-income families.

A large and vibrant middle class is important to every nation. It contributes to economic growth, as well as to social and political stability. The middle class helps mitigate class [...]

A brief profile of John Kenneth Galbraith, Canadian-born American economist, including his services is presented.

For institutionalists, behavior depends on the habits, routines, and customs of economic actors. Habits, routines, and customs are how actors make decisions. They are matters of law and tradition, and [...]

Abstract This article introduces the Review of Social Economy symposium on the basic income guarantee (BIG). It argues that there are several ways in which the BIG is consistent with [...]

The public choice is an approach using economic analysis to study the political matters. The people's voting behavior is studied to understand where public choice is gone wrong and some suggestions about how and why public choice has gone wrong.

The study materials that professors could use to teach a Post Keynesian economics course to undergraduate students are discussed.

It is well known that women are much more likely to be poor than men. This is true in the United States (Pearce 1978; Pressman 1988) and in most developed [...]

As economies throughout the world experience large and wrenching changes, poverty has increasingly become a problem in country after country. This is true regardless of whether these changes result from [...]

David Gordon (1996) Fat and Mean: the corporate squeeze of working Americans and the myth of managerial 'downsizing' (New York, Free Press), 320 pp. ISBN 0-684-82288-1 $25.00 My first exposure [...]

For many decades, the disciplines of economics and sociology have been at odds with each other. Economists have looked down on sociology for lacking mathematical rigor; on the other hand, [...]

For many decades, the disciplines of economics and sociology have been at odds with each other. Economists have looked down on sociology for lacking mathematical rigor; on the other hand, [...]

By Andrea H. Beller and John W. Graham. New Haven: Yale University Press, 1993. Pp. 338. American children are mired in poverty. Child poverty has risen dramatically since the late [...]

Half a century ago, Gunnar Myrdal's An American Dilemma [1944] was published. This paper attempts to assess the arguments and the policy solutions of this classic work on the economic [...]

Eliminating child exemptions and replacing them with a European-style child allowance program would be an effective and costless antipoverty policy. The distributional and poverty-reducing effects of three potential child allowance programs are examined. These include a fixed-dollar tax credit, a tax credit that declines with income, and a taxable allowance of the same dollar amount for each child.

The 1991 National Commission on Children study 'Beyond Rhetoric' has determined that child poverty in the US is at its highest level since 1965. The Commission has proposed a policy wherein a tax credit of $1,000 per child would be allowed to lighten tax burden of poor parents.

In 'Economic Possibilities for Our Grandchildren' Keynes defined the economic problem as the 'struggle for subsistence' (1972, p. 326). Its solution required providing the entire population with enough income to [...]

The U.S. Savings Challenge: Policy Options for Productivity and Growth. Edited by CHARLS E. WALKER, MARK A. BLOOMFIELD and MARGO THORNING, Boulder: Westview Press, 1990. A simple macroeconomic identity holds [...]

By James Angresano, Cheltenham, UK and Lyme, US: Edward Elgar 1997, 197 pp. $80.00. 1998 marks the centeniary of the birth of Gunnar Myrdal, one of the more important and [...]

Tax reform is once again front page news. To some degree this stems from the fact that top marginal tax rates have risen slowly over the past decade. Another factor [...]

In his last major work, The Challenge of Humanistic Economics, Mark Lutz (and Lux 1979) provided a compelling critique of neoclassical economics. But he attempted to do much more than [...]

In a recent issue of this journal, Louis-Philippe Rochon (1999) compares three distinct approaches to money creation--the neoclassical view, the Post Keynesian view, and the circuit approach. Through this juxtaposition [...]

Luxury Fever: Why Money Fails to Satisfy in an Era of Excess. By Robert H. Frank. New York: Free Press, 1999, 326 pp. $25.00.. One hundred years ago, Thorstein Veblen [...]