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Measuring Poverty: A New Approach
homes. Presumably, findings of this sort stem from such phenomena as self-employed people who report zero income or losses on a business accounting basis but who have adequate cash flow for their own needs. Or some of these people may be students or others with low cash income but access to assets or other resources. Or some people may simply underreport their income, particularly if it is from "off-the-books" sources.
Scattered evidence suggests that SIPP may have fewer reporting problems of this sort, perhaps because SIPP takes more of a cash-flow approach to reporting of self-employment income. For example, in 1984, the proportion of people with income-to-poverty ratios of less than 50 percent was 38 percent of the total poverty population in the March CPS but only 29 percent in SIPP (Bureau of the Census, 1986: Table 6; Radbill and Short, 1992: Table 1). Also, SIPP data for 1984 (Radbill and Short, 1992: Table 10) showed steeper relationships of income-to-poverty ratio categories with such well-being measures as home and vehicle ownership than did the 1980 census data analyzed by Christopher Jencks (private communication). For example, home ownership ratios were as follows from the two data sources:
Unit's Income Level Relative to Poverty
Home Ownership Ratios
Income less than zero
Zero or positive income up to 0.50 of poverty
Income 0.50-0.99 of poverty
Income 1.00-1.99 of poverty
Income 2.00 or more of poverty
THE MARCH CPS AND SIPP COMPARED
This section provides a more detailed comparison of the March CPS income supplement and SIPP, focusing on the adequacy of information from each survey that is relevant to measuring poverty. It also discusses the ability of each survey to construct poverty measures with shorter or longer than annual accounting periods, to construct poverty measures for states, and to construct other measures related to poverty (e.g., measures of access to material goods or access to health care along the lines of work by Mayer and Jencks, 1993). Finally, it offers some comparisons of the quality of income reporting in the two surveys.
Categories of Information
The March CPS income supplement asks no questions about any type of tax payment. Currently, for use in its experimental poverty estimates, the Census Bureau models federal income taxes, state income taxes, and