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Measuring Poverty: A New Approach (1995)

Chapter: Imputation Procedures for Proposed Resource Definition

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Suggested Citation:"Imputation Procedures for Proposed Resource Definition." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 249
Suggested Citation:"Imputation Procedures for Proposed Resource Definition." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
×
Page 250

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EFFECTS OF THE PROPOSED POVERTY MEASURE 249 population and various groups—of raising the poverty threshold in real terms as well as implementing the proposed threshold adjustments and family resource definition. For this exercise, we used a two-adult/two-child family threshold of $14,800, representing the midpoint of our suggested range for that threshold of $13,700 to $15,900 (see Chapter 2). We implemented two versions of the proposed measure with the $14,800 reference family threshold: one with a scale economy factor of 0.75 and one with a scale economy factor of 0.65. Threshold Adjustments Table 5-1 shows the poverty thresholds for 1992 by family size and number of children for the current measure. Table 5-2 shows the thresholds for three versions of the proposed measure: using a $13,175 reference family threshold to keep the overall poverty rate at 14.5 percent; using a $14,800 reference family threshold and a scale economy factor of 0.75; and using a $14,800 threshold and a scale economy factor of 0.65. Unlike the official thresholds, the proposed thresholds do not distinguish one- and two-person families by whether the head is over or under age 65. We adjusted the thresholds in Table 5-2 for estimated differences in the cost of housing by size of metropolitan area within nine regions of the country; see Table 5-3. Imputation Procedures for Proposed Resource Definition For the two analyses, we also implemented the proposed definition of family resources as disposable money and near-money income, adding values for in-kind benefits (food stamps, school lunches, and public housing) to gross money income, and subtracting the following from income: out-of-pocket medical care expenditures (including health insurance premiums), federal and state income and Social Security payroll taxes, child care expenses, and other work-related expenses. Imputations to the March 1993 CPS were the basis for each of these adjustments. The only element of the proposed resource definition that we did not implement was the subtraction of child support payments to another household, because the March CPS does not provide a basis for a reasonable imputation; however, we have an estimate of the likely effect of subtracting child support payments on the aggregate poverty rate from SIPP (see below). This section describes our imputation procedures (in some cases, the Census Bureau's procedures for which we simply adopted the results) for each component used in the derivation of disposable money and near-money income (see Betson, 1995, for a detailed description). Generally, the goal of our procedures was to use the best and most recent data source and to develop a

EFFECTS OF THE PROPOSED POVERTY MEASURE 250 procedure that preserved as much of the variance and as many of the relationships among key variables as possible. (The preservation of variance and key relationships is particularly important for an indicator such as the poverty measure, which relates to one tail of the income distribution.) However, we were limited in available time and resources.4 4 Readers interested in replicating our results or in conducting additional analyses may obtain a data file (from the Committee on National Statistics) that contains the March 1993 CPS extract file with our imputed variables and poverty status indicators for the current measure and the proposed measure.

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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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