National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Effects of Selected Components

« Previous: Distributional Effects
Suggested Citation:"Effects of Selected Components." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
×
Page 77
Suggested Citation:"Effects of Selected Components." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
×
Page 78

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

INTRODUCTION AND OVERVIEW 77 FIGURE 1-5 Effects of the proposed poverty measure on the geographic distribution of poor people. However, the poverty rate for the elderly and their share of the poverty population are somewhat lower under the proposed measure, compared with the current measure, while the poverty rate for working-age adults and their share of poor people are somewhat higher. By region of the country, the poverty rates for residents of the Northeast and West are higher, and they make up larger percentages of poor people under the proposed measure, compared with the current measure. In contrast, the poverty rates for residents of the South and Midwest are lower, and they make up smaller percentages of poor people under the proposed measure; see Figure 1-5. These shifts occur because of adjustments to the thresholds for geographic differences in the cost of housing.23 Effects of Selected Components We next considered the effects of specific components of the proposed measure on the overall poverty rate of 14.5 percent; see Figure 1-6. Adjusting the thresholds for geographic differences in the cost of housing, while having significant distributional effects, has little effect on the poverty rate for the total population. However, the use of a scale economy factor of 0.75 for determining 23 For the areas and states included in each region, see Table 1-5, above.

INTRODUCTION AND OVERVIEW 78 FIGURE 1-6 Effects of selected components of the proposed measure on the poverty rate. NOTE: The official poverty rate in 1992 was 14.5 percent; see text for a discussion of the interaction effect. equivalent thresholds for other family types decreases the rate somewhat (by 0.7 of a percentage point). The addition to income of nonmedical in-kind benefits (e.g., food stamps) has a sizable effect, decreasing the rate by 1.7 percentage points. The subtraction of out-of-pocket medical care expenditures increases the rate by 2.1 percentage points. The subtraction of taxes, work expenses, and child care expenses increases the rate by 0.5, 0.8, and 0.3 of a percentage point, respectively.24 In addition, there is an interaction effect that decreases the rate by 0.2 of a percentage point: this effect occurs because a combination of changes may move a family above (or below) the poverty line when a single change does not.25 24 From tabulations with SIPP, we estimate that the subtraction of child support payments would also increase the poverty rate by a small fraction of a percentage point. 25 The interaction effect would be positive if our analysis did not use a reference family threshold of $13,175 in order to maintain the official 1992 poverty rate of 14.5 percent; this threshold value reduces the overall poverty rate by 1.2 percentage points.

Next: Effects on the Poverty Rate »
Measuring Poverty: A New Approach Get This Book
×
Buy Paperback | $75.00 Buy Ebook | $59.99
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

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.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!