National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Differences in Equivalence Scales

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Suggested Citation:"Differences in Equivalence Scales." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 365
Suggested Citation:"Differences in Equivalence Scales." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 366
Suggested Citation:"Differences in Equivalence Scales." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 367

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THE POVERTY MEASURE AND AFDC 365 TABLE 8-5 Mean and Distribution of State AFDC Need Standards, Maximum AFDC Benefits, and Maximum Combined AFDC and Food Stamp Benefits for a Family of Three, as Reported by the States and as Adjusted for Differences in Income and Cost of Housing, January 1994, in Dollars As Adjusted by an Index for Statistic As Reported State Median State-Adjusted Family Income Poverty Thresholda AFDC Need Standards Mean 655 658 657 Range 320–1,648 288–1,361 317–1,469 Standard deviationb 267 240 242 Coefficient of 40.7% 36.5% 36.8% variationc AFDC Maximum Benefits Mean 396 389 394 Range 120–923 169–681 141–838 Standard deviation 156 113 130 Coefficient of variation 39.5% 29.2% 33.1% AFDC and Food Stamp Maximum Benefits Mean 675 677 679 Range 415–1,208 505–892 521–1,096 Standard deviation 147 98 111 Coefficient of variation 21.8% 14.5% 16.3% NOTE: Data derived from Tables 8-1 and 8-4; see text for description of calculations. a The state-adjusted poverty threshold takes account of state differences in cost of housing adjusted for the share that shelter costs (including utilities) represent in the panel's proposed poverty budget. b The value that when added to or subtracted from the mean includes about two-thirds of the observations (states). c The standard deviation as a percentage of the mean value. Differences in Equivalence Scales Equivalence scales—the proportion by which benefits to the AFDC unit are increased for each added child—also vary across states; see Table 8-6.19 Data are available on the maximum AFDC benefit by family size as of January 1994 for the 50 states and the District of Columbia, ranging from the basic two- person unit (parent or other caretaker and child) through the six-person unit 19 As noted above, some states do not currently pay benefits for additional children beyond the first or second, as an intended deterrent to continued childbearing on the part of AFDC recipients.

THE POVERTY MEASURE AND AFDC 366 TABLE 8-6 Equivalence Scale Implicit in Maximum AFDC Benefits for Two-Person Through Six-Person Families, January 1994 Amount Added to Two-Person (One-Adult/One-Child) Benefit (1.00) for Each Added Child State Second Third Fourth Fifth Average, Child (3- Child (4- Child (5- Child (6- Added Person Person Person Person Child Family) Family) Family) Family) Alabama .197 .219 .226 .197 .210 Alaska .124 .124 .124 .124 .124 Arizona .262 .258 .258 .262 .260 Arkansas .259 .265 .241 .278 .261 California .239 .237 .206 .208 .222 Colorado .271 .271 .286 .279 .277 Connecticut .239 .204 .184 .193 .205 Delaware .252 .256 .252 .256 .254 District of .273 .282 .236 .315 .277 Columbia Florida .257 .253 .257 .253 .255 Georgia .191 .213 .204 .136 .186 Hawaii .260 .260 .260 .260 .260 Idaho .263 .259 .263 .259 .261 Illinois .369 .175 .265 .224 .258 Indiana .258 .253 .258 .253 .255 Iowa .180 .191 .147 .172 .172 Kansas .219 .193 .173 .173 .190 Kentucky .163 .291 .245 .219 .230 Louisiana .377 .319 .312 .283 .322 Maine .340 .346 .340 .343 .342 Maryland .280 .262 .245 .178 .241 Massachusetts .191 .183 .189 .193 .189 Michigan .237 .280 .259 .358 .284 Minnesota .217 .204 .174 .174 .192 Mississippi .250 .250 .250 .250 .250 Missouri .248 .214 .197 .184 .210 Montana .261 .261 .261 .261 .261 Nebraska .242 .242 .242 .242 .242 Nevada .208 .208 .208 .205 .207 New Hampshire .143 .131 .125 .168 .142 New Jersey .317 .199 .199 .199 .228 New Mexico .261 .261 .258 .261 .261 New York .233 .235 .241 .179 .222 North Carolina .153 .106 .114 .106 .120 North Dakota .228 .276 .204 .177 .221 Ohio .222 .287 .258 .201 .242 Oklahoma .291 .311 .271 .271 .286 Oregon .165 .266 .241 .241 .228 Pennsylvania .276 .282 .282 .242 .270 Rhode Island .234 .174 .174 .200 .195

THE POVERTY MEASURE AND AFDC 367 Amount Added to Two-Person (One-Adult/One-Child) Benefit (1.00) for Each Added Child State Second Third Fourth Fifth Average, Child (3- Child (4- Child (5- Child (6- Added Person Person Person Person Child Family) Family) Family) Family) South .258 .252 .258 .252 .255 Carolina South Dakota .133 .128 .130 .130 .130 Tennessee .303 .289 .268 .289 .287 Texas .165 .234 .158 .241 .199 Utah .247 .211 .202 .169 .207 Vermont .190 .147 .162 .104 .151 Virginia .204 .190 .265 .102 .190 Washington .241 .218 .223 .230 .228 West .239 .313 .239 .264 .264 Virginia Wisconsin .175 .227 .207 .132 .185 Wyoming .125 .094 .188 .188 .148 Mean .234 .231 .224 .217 .227 Median .239 .242 .241 .219 .228 Range .124-.377 .094-.346 .114-.340 .102-.358 .120-.342 Coefficient 24.0% 24.2% 22.0% 27.1% 21.5% of variationa Current .169 .307 .229 .197 .226 poverty measure Panel's .295 .275 .256 .248 .269 proposed equivalence scale— alternative 1b Panel's .255 .227 .206 .199 .222 proposed equivalence scale— alternative 2c NOTE: Data calculated from U.S. House of Representatives (1994:368-369) for each state; calculated from Bureau of the Census (1993c: Table A) for the current poverty measure. a The standard deviation of a distribution as a percentage of the mean value. b Scale economy factor of 0.75. c Scale economy factor of 0.65.

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Measuring Poverty: A New Approach Get This Book
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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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