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Measuring Poverty: A New Approach

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Contributors

Description

Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

Topics

Suggested Citation

National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. https://doi.org/10.17226/4759.

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Publication Info

521 pages | 6 x 9
ISBNs:
  • Paperback: 978-0-309-05128-6
  • Ebook: 978-0-309-17684-2
DOI: https://doi.org/10.17226/4759
Contents

Table of Contents

 skim chapter
Front Matter i-xx
Summary and Recommendations 1-1
THE CURRENT POVERTY MEASURE: EVALUATION 2-2
RECOMMENDATION: A NEW POVERTY MEASURE 3-4
SETTING AND UPDATING THE POVERTY THRESHOLD 5-6
ADJUSTING THE THRESHOLD 7-8
DEFINING FAMILY RESOURCES 9-10
NEEDED DATA 11-12
OTHER ISSUES IN POVERTY MEASUREMENT 13-13
RELATING THE POVERTY MEASURE TO ASSISTANCE PROGRAMS 14-16
1 Introduction and Overview 17-18
WHAT IS POVERTY? 19-23
Development of the Measure 24-24
Adequacy of the Current Measure 25-26
Composition of Families and Households 27-27
Geographic Differences in Prices 28-28
Taxes 29-29
Increase in the Standard of Living 30-30
Absolute and Relative Thresholds 31-31
Expert Budgets: The U.S. Experience 32-33
Other Approaches 34-35
Definitions of Family Resources 36-36
Criteria for a Poverty Measure 37-37
Statistical Defensibility 38-38
A New Poverty Measure 39-41
Periodic Reviews 42-43
The Poverty Threshold 44-45
Updating the Thresholds 46-47
Threshold Concepts: Assessment 48-49
Recommended Threshold Concept and Updating 50-52
Setting the Initial Threshold 53-57
Adjusting the Thresholds - Equivalence Scale 58-59
Adjusting the Thresholds - Geographic Variations 60-64
Defining Family Resources 65-65
In-Kind Benefits - Nonmedical 66-66
Medical Care Costs 67-68
Taxes 69-69
Work-Related Expenses 70-70
Assets 71-71
Effects 72-73
Distributional Effects 74-76
Effects of Selected Components 77-78
Effects on the Poverty Rate 79-79
Time Trends 80-80
Needed Data 81-84
Time Period 85-85
Unit of Analysis 86-86
Other Measures 87-88
Need Standards for Programs That Use the Official Measure 89-91
Need Standards for AFDC 92-93
The Poverty Measure and AFDC Benefit Standards 94-96
2 Poverty Thresholds 97-97
THRESHOLD CONCEPTS 98-99
RECOMMENDATIONS 100-100
The Two-Adult/Two-Child Reference Family 101-101
Updating the Thresholds 102-104
Setting the Initial Threshold 105-106
EXPERT BUDGETS 107-107
The Original U.S. Poverty Thresholds 108-109
The Orshansky Multiplier over Time 110-113
Other Multiplier Approaches 114-115
Categorical Approaches 116-118
York Family Budget Unit 119-119
BLS Family Budgets Program 120-121
Conclusions 122-122
Updating for Price Changes 123-123
RELATIVE THRESHOLDS 124-125
International Examples 126-127
U.S. Expert Committee on Family Budget Revisions 128-128
Issues in Deriving Relative Thresholds 129-130
Behavior of Relative Thresholds Over Time 131-133
SUBJECTIVE THRESHOLDS 134-134
Research Findings 135-136
Behavior of Subjective Thresholds Over Time 137-139
CONCLUSIONS 140-144
IMPLEMENTING THE PROPOSED APPROACH 145-145
Analysis of 1989-1991 CEX Data 146-146
The Basic Bundle 147-150
The Multiplier 151-151
The Basic Bundle and Multiplier Together 152-152
Comparison with Other Thresholds 153-153
Analysis Over Time 154-156
Further Evaluation 157-158
The Concept of an Equivalence Scale 159-159
Overview and Recommendation 160-161
The Current Equivalence Scale 162-165
Programmatic Equivalence Scales 166-168
Behavioral Scales 169-169
The Engel and Iso-Prop Methods 170-171
The Rothbarth and Other Methods 172-173
Subjective Scales 174-174
Recommended Procedure 175-181
Overview and Recommendations 182-182
Feasibility and Desirability 183-185
Research Findings on Price Differences 186-187
Estimating Geographic Variations in Housing Costs 188-188
HUD Fair Market Rents 189-189
BLS Family Budgets Program 190-190
Hedonic Models 191-192
Discussion 193-193
Recommended Approach 194-198
Updating the Housing Cost Index 199-199
Further Research 200-202
OVERVIEW AND RECOMMENDATION 203-205
Resources as Disposable Income 206-206
Adjusting Income, Not Thresholds 207-208
Recommendation 209-209
Resources as Consumption or Expenditures 210-210
Implications 211-212
Assessment 213-213
A Crisis Definition of Resources 214-214
Methodological and Measurement Issues 215-215
Implications 216-216
Assessment 217-217
Money Income 218-218
Nonmedical In-Kind Benefits 219-219
Census Bureau Valuation Procedures 220-221
Assessment of Valuation Approaches 222-222
Medical Care Needs and Resources 223-224
Proposed Approach: Recommendation 225-225
Current Poverty Measure 226-226
Adding Health Insurance Benefits to Income 227-230
A Comprehensive Single Index 231-231
A Two-Index Poverty Measure 232-234
Separate Measures of Medical Care Risk and Economic Poverty 235-236
Taxes 237-237
Census Bureau Tax Estimation Procedures 238-238
Assessment 239-239
Child Care 240-241
Other Work-Related Expenses 242-242
Child Support Payments 243-243
Home Ownership Services 244-246
5 Effects of the Proposed Poverty Measure 247-247
Poverty Measure Alternatives 248-248
Imputation Procedures for Proposed Resource Definition 249-250
In-Kind Benefit Values and Taxes 251-252
Out-of-Pocket Medical Care Expenditures 253-254
Other Work-Related Expenses 255-255
Effects with a Constant Poverty Rate 256-261
The Overall Rate 262-263
Groups 264-265
Marginal Effects 266-268
Equivalence Scale Effects 269-270
Accuracy of Medical Care Expense Imputations 271-273
Data and Procedures 274-274
Results 275-277
Poverty Rates Using SIPP 278-279
DATA SOURCES 280-280
Recommendations 281-281
The March CPS 282-282
The Alternative of SIPP 283-284
Orienting SIPP to Poverty Measurement 285-286
Transition 287-287
Income Data in Other Surveys 288-288
Income Data in the Decennial Census 289-289
Expenditure Data 290-292
Recommendation 293-294
Short-Term Measures 295-297
Long-Term Measures 298-300
Unit of Analysis 301-301
Discussion 302-306
Unit of Presentation 307-307
INDEXES OF POVERTY 308-308
Recommendation 309-309
Alternative Indexes 310-312
Indexes with Alternative Resource Definitions 313-313
THE LIMITED SCOPE OF MEASURING ECONOMIC POVERTY 314-316
7 Use of the Poverty Measure in Government Assistance Programs 317-317
RECOMMENDATION 318-319
Overview 320-323
Head Start 324-324
WIC 325-325
Food Stamps 326-326
The Thresholds 327-329
Simplified Determination of Disposable Income 330-331
Full Determination of Disposable Income 332-332
Other Issues 333-334
8 The Poverty Measure and AFDC 335-335
DETERMINING PROGRAM BENEFIT LEVELS 336-337
Proposals for AFDC Minimum Benefits: A Brief History 338-338
A Supplementary Program with a National Benefit Standard - Food Stamps 339-339
A National Minimum Benefit Standard for AFDC 340-340
Issues in Program Benefit Design 341-341
Budget Constraints 342-342
Targeting Strategies and Preferences 343-343
Program Interactions 344-344
Work Effects 345-345
Migration Effects 346-348
Summary 349-349
Federal-State Cost Sharing 350-350
Summary 351-351
Recommendation 352-352
Program Regulations 353-353
Standard Setting in the 1970s 354-356
Standard Setting in the 1980s 357-358
Differences in Need Standards and Benefits 359-364
Differences in Equivalence Scales 365-367
Trends in Need Standards and Benefits 368-368
Conclusions 369-374
Comparative Advantage of the Proposed Poverty Measure 375-375
Program Interactions 376-376
Implications of Updating for Costs and Caseloads 377-379
Summary 380-382
APPENDICES 383-384
APPENDIX A Dissent 385-385
MEASURING THE POVERTY LINE 386-386
UPDATING THE POVERTY LINE 387-387
MEASURING FAMILY RESOURCES: THE ISSUE OF MEDICAL CARE 388-389
REFERENCES 390-390
Consumer Expenditure Survey 391-391
Design and Use 392-392
Content of the Interview Survey 393-394
Design 395-395
Content 396-396
Design 397-397
Content 398-399
Design 400-400
Content 401-401
Quality of Income Data 402-405
Taxes 406-406
Medical Benefits/Costs 407-407
Asset Holdings 408-408
Shorter or Longer Term Measures 409-409
Related Measures 410-410
Quality of Income Data 411-411
Population Undercoverage 412-412
Household and Person Nonresponse 413-414
Item Nonresponse 415-416
Other Sources of Error 417-418
Aggregate Comparisons 419-420
APPENDIX C The Interdependence of Time and Money 421-421
Illustration 422-424
Expenditure Data 425-425
Discussion 426-427
Time Poor: A Measurement 428-429
Calculating Earnings Capacity 430-430
CONCLUSION 431-432
APPENDIX D Assistance Programs for People with Low-Incomes 433-436
Maternal and Child Health Services Block Grant (Title V) 437-437
Medicaid 438-438
Food Stamps 439-439
Special Milk Program 440-440
Vocational Education Opportunities, Disadvantaged Activities (Perkins Act) 441-441
Job Corps 442-442
Low-Income Home Energy Assistance Program (LIHEAP) 443-443
Aid to Families with Dependent Children 444-445
Section 8 Low-Income Housing Assistance and Low-Rent Public Housing 446-446
Supplemental Security Income 447-447
Pensions for Needy Veterans, Their Dependents, and Survivors 448-448
References and Bibliography 449-482
Biographical Sketches of Panel Members and Staff 483-488
Index 489-501
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