Poverty and Safety Net Spending

Poverty and Social Spending as a Percentage of GDP in the OECD

Description:

Discussion:

Clearly, and unsurprisingly, the more of its GDP a country dedicates to bolstering its safety net, the fewer people live in poverty.

France (which spends the largest percentage of its GDP on its safety net), Mexico (which spends the smallest percentage) and the United States are specifically marked. The U.S. spends a low percentage of its GDP on its safety net and has a very high percentage of its population living in poverty. Only four countries in the OECD have a higher percentage of their populations living in poverty- Chile, Mexico, Turkey and Israel. Notably, the U.S.'s poverty is high even for a country that spends a relatively small portion of its GDP on maintaining its safety net.

It is important to note that the poverty line is defined as having less than 50% of the median income for that country. Therefore, a person in a wealthier country who is below the poverty line may have a higher absolute income than a person who is above the poverty line in a poorer country. Of course, the safety net spending as a percentage of GDP also represents a smaller absolute amount in countries with lower GDPs. Long story short, the message of this graph is not that people are poorer in the U.S. than elsewhere, it is that regardless of whether a country is rich or poor, dedicating a significant portion of its GDP to poverty amelioration reduces poverty.

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Poverty

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