National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Assets

« Previous: Work-Related Expenses
Suggested Citation:"Assets." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 71

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INTRODUCTION AND OVERVIEW 71 for housing costs, so each worker needs to have the same work expense deduction. For a family with child care expenses, the total of child care costs plus other work-related expenses for the parent with the lower earnings should not exceed that parent's earnings. The amount of the flat deduction for other work- related expenses could be developed as a percentage of the median. Data from the 1987 SIPP indicate that median weekly expenditures of adult workers for commuting and other work expenses (e.g., tools and uniforms) are about $17.00 (in 1992 dollars). Instead of deducting child care and other work-related expenses from earnings, an alternative approach would be to include them in the poverty budget. However, this approach would require separate thresholds for working families with and without children and by number of earners, as well as for nonworking families. Child Support Payments The argument for excluding child support payments from the family income of the payer is the same argument of consistency that we have made throughout this discussion. At present, child support payments are counted as part of gross money income of the families that receive them, which is appropriate, because the payments are available for consumption by these families. However, the amounts are not deducted from the income of the families that pay them, which is inappropriate, because the payments are not available for consumption by those families. Thus, we propose that child support payments be deducted from the income of families that pay them. Services from Home Ownership Estimates of families' economic resources, to be comparable for renters and homeowners, should take account of the flow of services that owners obtain from their homes. Thus, people with low or no mortgage payments or other ownership costs do not face the same housing costs as renters or other homeowners and so should have a rental equivalence value (a type of in-kind benefit) added to their income. Alternatively, one could lower the threshold for such families to recognize that they do not have the same budgetary requirements for shelter as other families. However, it does not seem feasible with available data to develop adequate rental imputations. Hence, valuation of home ownership services is a priority area for further research and consideration for implementation in the poverty measure at a later date. Assets Some researchers have argued that families' asset holdings should be considered

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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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