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Measuring Poverty: A New Approach (1995)

Chapter: Time Poor: A Measurement

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Suggested Citation:"Time Poor: A Measurement." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 428
Suggested Citation:"Time Poor: A Measurement." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 429

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APPENDIX C 428 If one argues for subtracting expenditures that substitute for time at home doing certain tasks, such as child care, when measuring the relevant level of family income for determining poverty status, then it seems logical to argue that time at home does legitimately enter into the determination of the relevant measure of money income in determining poverty status. If so, the issue becomes what level of nonmarket time is implicitly assumed in setting the poverty threshold levels of money income for a household of one adult, or for a family with two adults and no children, or a family with one child, and so on. To be frank, we do not know how to incorporate time in a feasible and manageable way. Consequently, we do not know how to adjust for more or less time as one measures money resources to compare with those poverty thresholds. We next review two suggestions from the literature. RESEARCH APPROACHES Time Poor: A Measurement Perhaps the best statement of the problem with ignoring time that has an associated suggestion regarding its solution is Vickery (1977), who stressed the importance of time as a resource and suggested a two-dimensional poverty definition. As shown in Figure C-1, Vickery suggested that a poverty threshold should have both a minimum money level, such as M0 in that figure, and also a minimum time level, such as T0, and with some tradeoff, as depicted by the curved line segment AB. Households with resources to the left of T0 would be considered time-poor, and those below M0 would be considered monetarily poor; those to the right and above M0, T0, and AB would be considered not poor. Of course, setting the level T0 and the tradeoff AB would require judgement, as does setting the minimum income level, M0. (Vickery had some suggestions about these minimum levels.) We suggest that a key element in this determination of poverty would be a household's ability to convert time into money—the wage rate of the adult(s) in the unit—which we depict at two levels in lines L and H in the figure. As drawn, the household with the lower wage rate, L, would be considered in poverty; the household with the higher wage rate, H, would not be considered in poverty. Notice that the second household might choose a position along its wage line at which its nonmarket time was in fact below time poverty, but it could as well select a position along its wage line that put its income below money poverty. In neither case would the household be considered in poverty, however, since these choices are discretionary. Notice that this strategy for defining which households are in poverty places the burden of the definition of poverty heavily on the notion of the wage rate, the best indicator of the potential tradeoff between time and money. To define poverty by the wage rate instead of by the actual income received

APPENDIX C 429 FIGURE C-1 Time and money tradeoffs in the poverty threshold for a household. SOURCE: Adapted from Vickery (1977). can, in fact, resolve much of the problem of disregarding time, but it places a very heavy burden on the determination of the relevant, available wage rate for the adults in the household. Even when that wage is determined, there is the issue of whether it is in fact available and, if so, for how many hours. In fact, using a given wage rate as depicted in Figure C-1 assumes that the adult can trade any number of hours for dollars at that wage rate. But the presence of unemployment, of various rigidities in hours of work on certain jobs, and the high rate of job turnover, especially among those who are less skilled, causes one to doubt that assumption. And if that wage is not actually available, this theoretically appealing strategy for measuring poverty would be quite difficult to implement empirically. Considering the complexity of measuring the relevant wage rate for all persons and units and of knowing the constraints on its availability across hours of work and from week to week, we as a panel do not recommend adopting this strategy for measuring poverty. In light of the practical difficulties it raises, we do not consider it a feasible alternative. It is possible that with further research this analytically attractive alternative would become tractable and implementable, but it is not so today.

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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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