[kamagmar]

I took a look at the data you cite in your blog post. You seem to imply people earning < $5k/yr receive on average ~$20k in welfare. However, in the BLS Expenditure Survey you used to create the figure, under the section marked "Sources of income and personal taxes", the real number is only $467.[0]

This cohort doesn't appear to be very poor at all, in fact -- they report negative self-employment income. I wonder if you've confused low income with poverty. Or perhaps i'm confused, and haven't grasped your argument.

[0] I'm taking welfare to be the sum of "Unemployment and workers' compensation, veterans' benefits" and "Public assistance, supplemental security income, food stamps".

[yummyfajitas]

That's interesting, I didn't notice it. It looks like the bottom income level is primarily people who took a business loss.

As for my confusion, I'm only looking at people near or below the US poverty line. Business owners who take a loss are defined by the government as living in poverty. You might argue that the government overstates poverty, and I would agree with you.

As for the sources of income section, it is clearly incomplete. If it weren't, consumption would be equal to income + change in net worth.

[kamagmar]

> Business owners who take a loss are defined by the government as living in poverty.

The poverty line sets a minimum level of consumption. These people are consuming above that threshold, so i don't think the government counts them as poor.

> If it weren't, consumption would be equal to income + change in net worth.

You're forgetting change in asset prices. If i own a house, and consume all my income, my net worth can still change if the price of the house changes.

[yummyfajitas]

The poverty line sets a minimum level of consumption.

Poverty is defined by income, not consumption. Please go read the link I provided explaining how the census calculates poverty.

You're forgetting change in asset prices.

Unless you are proposing that most poor people are homeowners, and that the value of their houses increased in 2009, that explanation doesn't carry much weight.

Fun fact: only cash transfers are counted as income. A housing voucher, for example, pays for consumption, but does not count as income.