December 07, 2014 | David Wood

General Economics

Mollie Orshanksy, an economist of the Social Security Administration in the early 1960s, perceived the poverty threshold as the level of income that separates the poor from the not poor. With reference to a relative poverty threshold defined within a political boundary, the administration can provide enough equivalent KE (compares to benefits) so that an individual (or a family) not tumble to lower poverty level and start expressing dissatisfaction over administration (or environment). The maximum welfare (at extreme poverty n = 1) can be equivalent to (DKE)max, if PFS be defined as n = infinity as in Fig. 1. However, relative poverty (or deprivation) may have its own scale, and may be with different value of n, the optimized benefit could be less than (DKE)max.

Welfare standards vary across US states, and no state provides benefits as generous as the official poverty thresholds. It could be because program benefit levels have not been adjusted over time to take account of monotonic nature of Po over time, as entropy (analogy dP/f(p)) does increase over the real thermodynamic processes. Some economists have suggested to revise measure or perhaps even several measures, including at least one indicator of asset poverty which has been perceived as a net worth insufficient to cover minimal living expenses for three months. Procedures for annual updates of poverty measures could include developing a correlation of Po with multiple economic indicators at a given time, as attempted by Thurow  followed by a forecast. An optimum benefit can be designed such that an individual does not slip down on the poverty ladder.