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Measuring Poverty: A New Approach (1995)

Chapter: Other Approaches

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Suggested Citation:"Other Approaches." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 34
Suggested Citation:"Other Approaches." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
×
Page 35

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INTRODUCTION AND OVERVIEW 34 budget categories are used (e.g., clothing) rather than specific budget items (e.g., a raincoat). There still remains the problem of setting the specific dollar value for each named commodity and for the multiplier (if there is one) and determining how (and how often) to update those values: most expert budgets rely heavily on people's actual spending patterns. Other Approaches There are still other ways of determining poverty thresholds. One approach, which has been the subject of considerable research, particularly in Europe, is to ask a representative sample of the population to specify a minimum necessary income or to evaluate the adequacy of various income levels. There are various methods to calculate these "subjective" poverty thresholds from survey data of this type, each of which has positive and negative features. Generally, subjective poverty thresholds are sensitive to question wording and the particular method used in their derivation. Also, there tends to be wide variation in respondents' answers. Despite their problems, subjective poverty thresholds—particularly a time series derived from consistent questions and procedures—can provide information that helps determine the extent to which other kinds of thresholds are more or less in agreement with broad public perceptions. One such series has been developed for the United States on the basis of responses to questions in the Gallup Poll over the period 1947-1989 (Vaughan, 1993), and there is similar information available from 1992 and 1993 polls.9 This series suggests that people, on average, would have perceived about the same poverty level for a four-person family as the official threshold when it was first developed in the early 1960s. However, for the period prior to 1957, the data suggest that people, on average, would have perceived the poverty level in real terms to be below the official threshold. In contrast, since 1966, the data suggest that people, on average, would have perceived the poverty level to be higher than the official threshold. Overall, there is a marked consistency from the late 1940s to the early 1990s between these subjective estimates of the poverty threshold and a time series of relative estimates based on median family income. For close to half a century these two quite distinct concepts have moved in similar ways and at similar levels. Figure 1-1 shows the official poverty threshold for a two-adult/ 9 The Gallup Poll asked: "What is the smallest amount of money a family of four (husband, wife and two children) needs each week to get along in this community?" In 1989 the Gallup Poll also included a question specifically about the poverty line. Vaughan (1993) used the relationship of the average amounts for the poverty and get-along questions in 1989 to construct a time series of subjective poverty thresholds from 1947 to 1989. A poverty line question in the 1992 Gallup Poll and the 1993 General Social Survey gave results similar to the 1989 Gallup Poll (see Chapter 2).

INTRODUCTION AND OVERVIEW 35 FIGURE 1-1 Alternative poverty thresholds for four-person families, in constant 1992 dollars. two-child family, the subjective estimate of that threshold based on Vaughan's (1993) work, and a relative estimate of that threshold, defined as one- half after-tax median income of four-person families. In 1963, the base year for the official poverty threshold, the subjective and relative estimates are in close agreement, which surely helps explain why the official threshold was so generally acceptable at that time. Researchers abroad have proposed yet another method of establishing poverty standards, namely, identifying a list of specific activities, items of ownership, and types of consumption that are believed to be essential for people to be able to participate normally in their society. In the United Kingdom, Townsend (1979) developed a "deprivation index" that included 12 components, including such items as not having taken a vacation in the past year and having gone through one or more days in the past fortnight without a cooked meal. He used the scores on this index to attempt to determine income levels (poverty thresholds) below which the deprivation index scores rose markedly. Other researchers refined the Townsend index by including only those elements that at least one-half of the respondents to a national survey claimed to be "necessary" for a minimal standard of living in the United Kingdom and by asking those lacking a given item whether they lacked it because they could not afford it or because they did not want it

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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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