National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Criteria for a Poverty Measure

« Previous: Definitions of Family Resources
Suggested Citation:"Criteria for a Poverty Measure." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 37

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INTRODUCTION AND OVERVIEW 37 attained. In practice, the availability of high-quality data is often a prime determinant of whether an income- or expenditure-based family resource definition is used. Whichever type of family resource definition is used, decisions must be made about its precise components. In the case of an income definition, one must decide whether to include or exclude taxes or in-kind income and whether to take account of expenses involved in earning income (e.g., commuting or child care expenses). One must also decide whether to include any value for asset holdings that could be used to provide cash income. For the definition of expenditures, one must decide which types of expenditures to include. A basic principle for a poverty measure, but one that has not always been followed, is that the threshold concept and the family resource definition should be consistent. Relative measures, such as one-half median family income, achieve consistency because the thresholds are defined from the same data that are used to estimate resources. Other types of thresholds are typically defined on the basis of different data from those used to estimate resources. Hence, explicit attention must be paid to achieving consistency between the two components: for example, if child care expenses are treated as a deduction from income on the grounds that the money so spent is a cost of earning income and is not available for consumption, such expenses should not be part of the poverty-level budget. In general, income is used for consumption, savings, and taxes, and it does not make sense to base the threshold and family resource concepts on different components of these elements. Criteria for a Poverty Measure Science alone cannot determine whether a person is or is not poor. Thus, there is no scientific basis on which one might unequivocally accept or reject a budget-based, or a purely relative, or a subjective concept for developing an official poverty measure. Each has some merit, and each has limitations; one concept may be more useful for one purpose and another for some other purpose. Although there are options that are clearly incorrect or internally inconsistent and there are better and worse ways of determining needs or resources, there is no way to reach a judgement solely on scientific grounds. Even if there were such a basis for an underlying concept, there is no purely scientific basis for specifying the level that should be defined as the threshold for poverty. This is at its essence a matter of judgement. Given the limits of science, other criteria must be brought to bear in weighing alternatives and reaching decisions about an appropriate concept to underlie an official poverty indicator. We, as a panel that has deliberated about these matters at considerable length and benefited from the counsel of many experts, believe that three criteria are important in considering a concept

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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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