經(jīng)濟(jì)學(xué)英文教學(xué)課件：KW2_Ch19 The Economics of the Welfare State

1、1 of 52chapter: 192009 Worth PublishersThe Economics of the Welfare State2 of 52WHAT YOU WILL LEARN IN THIS CHAPTER What the welfare state is and the rationale for it What defines poverty, what causes poverty, and the consequences of poverty How income inequality in America has changed over time How

2、 programs like Social Security affect poverty and income inequality The special concerns presented by health care insurance Why there are political differences and debate over the size of the welfare state3 of 52Poverty, Inequality, and Public PolicyThe welfare state is the collection of government

3、programs designed to alleviate economic hardship.A government transfer is a government payment to an individual or to familiesthat provide financial aid to the poor, assistance to unemployed workers, guaranteed income for the elderly, and assistance in paying medical bills for those with large healt

4、h care expenses.4 of 52The Logic of the Welfare StateOne major rationale for the welfare state is alleviating income inequality.A poverty program is a government program designed to aid the poor.A second major rationale for the welfare state is alleviating economic insecurity.A social insurance prog

5、ram is a government program designed to provide protection against unpredictable financial distress.5 of 52The Logic of the Welfare StateThese two rationales for the welfare state are closely related to the ability-to-pay principle (see Chapter 7). The ability-to-pay principle was used to justify pr

6、ogressive taxation. 6 of 52The Logic of the Welfare StateThe ability-to-pay principle says that people with low incomes (for whom an additional dollar makes a big difference to their economic well-being) should pay a smaller fraction of their income in taxes than people with higher incomes (for whom

7、 an additional dollar makes much less difference).The same principle suggests that those with very low incomes should actually get money back from the tax system.7 of 52FOR INQUIRING MINDSJustice and the Welfare StateIn 1971 the philosopher John Rawls published A Theory of Justice. It is the most fa

8、mous attempt to date to develop a theory of economic fairness. Rawls concluded that we should decide economic and social policies behind a “veil of ignorance” about own identity. Its sort of a generalized version of the Golden Rule: Do unto others as you would have them do unto you if you were in th

9、eir place.It is an argument for a generous welfare state.8 of 52FOR INQUIRING MINDSJustice and the Welfare StateIn 1974, Robert Nozick published the libertarian response, Anarchy, State, and Utopia.Nozick argued that justice is a matter of rights, not results, and that the government has no right to

10、 force people with high incomes to support others with lower incomes. He argued for a minimal government that enforces the law and provides securitythe “night watchman state.”He argued against the welfare state programs that account for so much government spending.9 of 52The Problem of PovertyThe po

11、verty threshold is the annual income below which a family is officially considered poor.The poverty rate is the percentage of the population with incomes below the poverty threshold.The following graph shows the U.S. poverty rate since 1959.10 of 52U.S. Poverty RateYear20062000199019801970195925%201

12、510Trends in the U.S. Poverty Rate, 1959200611 of 52FOR INQUIRING MINDSDefining PovertyWho decided how much income an American family needs to escape poverty? Mollie Orshansky, a research analyst at the Social Security Administration, developed initial estimates of the poverty threshold in 19631964.

13、 Orshansky started by estimating the cost of an inexpensive, but nutritionally adequate diet. She then observed that families with children spent about one-third of their income on food. She argued that any family earning less than three times the cost of purchasing an adequate diet did not have ade

14、quate income.12 of 52FOR INQUIRING MINDSDefining PovertyWas Orshanskys the right measure of poverty? Yes, when it was created.This measure of poverty is badly outdated now because the composition of spending by low-income families has changed significantly since the 1960s. On average, the share of i

15、ncome spent on food has fallen to less than 20%, but the share spent on things such as housing, health care, transportation, and child care has risen.13 of 52Who Are the Poor?In 2006, about 36.5 million Americans were in poverty12.3% of the population, or about one in eight persons. About one-quarte

16、r of the poor were African-American and a roughly equal number were Hispanic. Within these two groups, poverty rates were well above the national average: 24.3% of African-Americans and 20.6% of Hispanics. But there was also widespread poverty among non-Hispanic Whites, who had a poverty rate of 8.2

17、%.14 of 52Who Are the Poor?Adults who work full-time are very unlikely to be poor: only 2.7% of full-time workers were poor in 2006. Adults who worked part-time or not at all during the year made up 88.3% of the poor in 2006.15 of 52Who Are the Poor?Female-headed families with no husband present had

18、 a very high poverty rate: 30.5%. Married couples were much less likely to be poor, with a poverty rate of only 4.9%; still, about 38% of poor families were married couples.16 of 52What Causes Poverty?Lack of education83% “college premium” (2006)Lack of proficiency in EnglishRacial and gender discri

19、minationBad luck17 of 52Consequences of PovertyThe consequences of poverty include:lack of access to health carelack of access to affordable housinglearning disabilitiesChildren raised in severe poverty tend to suffer from lifelong learning disabilities.18 of 52Consequences of PovertyPoverty is self

20、-perpetuating. The children of the poor start at such a disadvantage relative to other Americans that its very hard for them to achieve a better life.19 of 52GLOBAL COMPARISONPoor People in Rich CountiesUnited States18%1614121086420Poverty rateCanadaSwedenGermanyRelativeAbsolute17.0%12.4%11.4%6.9%8.

21、3%7.6%7.5%6.5%8.7%United Kingdom20 of 52GLOBAL COMPARISONPoor People in Rich CountiesAccording to the relative definition of poverty (youre poor if you have a low income compared with other people in your country), the United States has high poverty compared with other rich nations.According to abso

22、lute poverty (similar to the official U.S. poverty threshold), the U.S. is no longer the country with the highest poverty rate by this measure. The U.S. in second place. By either measure, the U.S. has a high poverty rate compared to other rich countries.21 of 52Economic InequalityMean household inc

23、ome is the average income across all households.Median household income is the income of the household lying at the exact middle of the income distribution.22 of 52Economic InequalityIncome in the United States is quite unequally distributed. The average income of the poorest fifth of families is le

24、ss than a quarter of the average income of families in the middle.The richest fifth have an average income more than three times that of families in the middle. The incomes of the richest fifth of the population are, on average, about 15 times as high as those of the poorest fifth. The distribution

25、of income in America has become more unequal since 1980.23 of 52Economic InequalityThe Gini coefficient is a number that summarizes a countrys level of income inequality based on how unequally income is distributed across quintiles.24 of 520 0. 290. 30 0. 390. 40 0. 490. 50 0. 590. 60 1No DataN O RT

26、HAM ERI CASO U THAM ERI CAAFRICAEU RO PEASI AAUSTRALI AIncome Inequality Around the World25 of 52 ECONOMICS IN ACTIONSecondBottomThirdFourthTop2.5%2.01.51.00.50Growth in IncomeIncome Group (quintile)(a) Rates of Income Growth Since 194750%45403530Share of total income going to top 10%Year(b) The Ric

27、hest 10% of Americans, 191720060.11%2.37%0.48%2.11%0.68%2.30%0.99%2.36%1.88%2.05%19802005194719801930196019171990 2006Trends in U.S. Income Inequality26 of 52The U.S. Welfare State27 of 52The U.S. Welfare StateA means-tested program is a program available only to individuals or families whose income

28、s fall below a certain level.Social Security, the largest program in the U.S. welfare state, is a non-means-tested program that provides retirement income for the elderly. It provides a significant share of the income of most elderly Americans.Unemployment insurance is also a key social insurance pr

29、ogram.28 of 52The U.S. Welfare StateAn in-kind benefit is a benefit given in the form of goods or services.A negative income tax is a program that supplements the income of low-income working families.29 of 52The Effects of the Welfare State on Povertyand Inequality30 of 52The Effects of the Welfare

30、 State on Povertyand InequalityThe American welfare state is redistributive.It increases the share of income going to the poorest 60% while reducing the share going to the richest 20%.31 of 52 ECONOMICS IN ACTIONPercent of population with less than 50% of 1998-1999 median income(a) Britains Poverty

31、Rate, 19792006Y ear200620001990197925%2015105Gini coefficient(b) Britains Gini Coefficient, 19802006Year20061990 1995 2000198519800.390.370.350.330.310.290.27Effects of Policy on British Poverty32 of 52The Economics of Health CareHealth insurance satisfies an important need because expensive medical

32、 treatment is unaffordable for most families.Under private health insurance, each member of a large pool of individuals pays a fixed amount to a private company that agrees to pay most of the medical expenses of the pools members.33 of 52Private Insurance34%Medicare19%Medicaid15%Who Paid for U.S. He

33、alth Care in 2006?Out of pocket12%Other private7%Other public12%34 of 52Who Paid for U.S. Health Care in 2006?The majority of Americans not covered by private insurance are covered by: Medicare, which is non-means-tested and applies only to those age 65 and older, and Medicaid, which is available ba

34、sed on income.35 of 52The Economics of Health Care36 of 52Percent(a) Barriers to Receiving HealthCare, 200350%40203010042%9%35%9%37%47%15%13%No regular source of carePostponed seeking care because of costNeeded care but did not get itDid not fill a prescription because of cost(b) The Financial Burde

35、n of Paying Medical Bills, 200350%40203010036%16%23%23%9%8%InsuredUninsuredHad problem paying medical billsChanged way of life significantly to pay medical billsContacted by collection agency about medical billsThe Consequences of Being UninsuredPercent37 of 52Health Care in Other CountriesThe Unite

36、d States differs from other wealthy countries in its heavy dependence on private health insurance and its high health care spending per person. Compared to other wealthy countries, the U.S. system has much higher costs. The higher costs do not necessarily imply better care.38 of 52Health Care in Oth

37、er CountriesSome countries, such as Canada, have a single-payer system. A single-payer system is a health care system in which the government is the principal payer of medical bills funded through taxes.39 of 52Health Care in Other Countries40 of 52Medicaid and SCHIP201510505Change (millions)Employm

38、ent-based coveragePopulationUninsured17.32.38.78.6Changes in Health Insurance Status, 2000200641 of 52Health care expenditure (percent of GDP)Year20062000199019801970196016%1284Rising Health Care Costs42 of 52 ECONOMICS IN ACTIONNumber of procedures (thousands)Year197019801990200020041,2001,00080060

39、04002000DialysisAngioplastyHip ReplacementThe Cost of Medical Progress, 1970200443 of 52The Debate Over the Welfare StateThe debates over the welfare state include thefollowing questions and concerns:about how large the welfare state should bephilosophical concerns about government involvementabout

40、the trade-off between efficiency and equitythat high marginal tax rates to finance an extensive welfare state can reduce the incentive to workthat means-testing programs to reduce the cost of the welfare state also reduce the incentive to work44 of 52The Debate Over the Welfare State45 of 52 ECONOMI

41、CS IN ACTIONFrench Family Values The United States has the smallest welfare state of any major advanced economy. France has one of the largest. As weve already described, France has much higher social spending than America as a percentage of total national income, and French citizens face much highe

42、r tax rates than Americans. One argument against a large welfare state is that it has negative effects on efficiency.46 of 52 ECONOMICS IN ACTIONFrench Family Values Is France less efficient compared to the U.S.? Yes, generally the French work less. French GDP per capita is only 72% of the U.S. leve

43、l. But young people in France need to work because college education is generally free, and students receive financial support. Also, French law requires employers to offer at least a month of vacation. Most U.S. workers take less than two weeks off. French retirement system allows workers to collec

44、t generous pensions even if they retire very early. This is a big burden on the French welfare state.47 of 52SUMMARY1.The welfare state absorbs a large share of government spending in all wealthy countries. Government transfers are the payments made by the government to individuals and families. Pov

45、erty programs alleviate income inequality by helping the poor; social insurance programs alleviate economic insecurity.2.The poverty threshold is adjusted according to the cost of living, but not according to the standard of living. The average American income has risen substantially over those 30 y

46、ears. However, the poverty rate in the U.S.the percentage of the population with an income below the poverty thresholdis no lower than it was 30 years ago. There are various causes of poverty: lack of education, the legacy of discrimination, and bad luck. 48 of 52SUMMARY3. Median household income, t

47、he income of a family at the center of the income distribution, is a better indicator of the income of the typical household than mean household income because it is not distorted by the inclusion of a small number of very wealthy households. The Gini coefficient, a number that summarizes a countrys

48、 level of income inequality based on how unequally income is distributed across quintiles, is used to compare income inequality across countries.49 of 52SUMMARY4. Both means-tested and non-means-tested programs reduce poverty. The major in-kind benefits programs are Medicare and Medicaid, which pay for medical care. Due to concerns about the effects on incentives to work and on family cohesion, ai