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Measuring Poverty: A New Approach (1995)

Chapter: Discussion

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Suggested Citation:"Discussion." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 193

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ADJUSTING POVERTY THRESHOLDS 193 Area or Population Size Index for Index for Combined Index Rank Renters Owners West—continued Anchorage 1.004 1.219 1.289 10 Areas of 0.705 0.803 0.863 27 500,000-1,200,000 Areas of 0.727 0.774 0.848 29 100,000-500,000 Areas under 100,000 0.718 0.742 0.820 32 Low index value 0.522 0.449 0.518 Median index value 0.798 0.871 0.952 High index value 1.427 1.877 1.830 SOURCE: Kokoski, Cardiff, and Moulton (1992: Table 2.4). NOTE: Areas are ordered within region by population size as of the 1990 census; rankings are assigned to the combined index values from 1 (highest cost) to 44 (lowest cost). equations included some 33 attributes of housing units and neighborhoods.) They created bilateral interarea price indexes from the resulting antilogs of the estimated coefficients on the area dummy variables, and then created "multilateral" indexes from the bilateral indexes. The authors claim that the resulting multilateral indexes are independent of the choice of reference area and, hence, that the rankings for areas are stable. The results obtained by Kokoski, Cardiff, and Moulton (1992) for July 1988-June 1989 tend to accord with common expectations about the location and magnitudes of high- and low-cost areas; see Table 3-5 . The major cities in the Northeast (Boston and New York City) and the West (Los Angeles, San Francisco, and San Diego) have the highest shelter costs, with index values between 1.46 and 1.83. Washington, D.C., Philadelphia, and Chicago have mid- range index values, while other major cities in the Midwest (e.g., St. Louis, Cleveland) and the South (e.g., Houston and Dallas) have substantially lower shelter costs, with index values between 0.69 and 0.84. Small urban areas generally have lower shelter costs than larger metropolitan areas in the same region. Indexes for rent and owners' equivalent rent tend to be highly correlated. In areas in which rent control is important (e.g., New York, Los Angeles, and San Francisco), the index for owners' equivalent rent is substantially higher than the rent index. Discussion What can one conclude from the work to date to develop interarea housing cost indexes? Clearly, there are no easy answers to the question of how to develop a reliable index. Not only does the use of different methods yield

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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.

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