National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Unit of Analysis

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Suggested Citation:"Unit of Analysis." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 86

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INTRODUCTION AND OVERVIEW 86 annual poverty measure for evaluating these programs may be misleading: an annual measure may suggest that the programs are providing benefits to people above the poverty line when, in fact, those people were poor for part of a year and hence eligible for support. An appropriate poverty measure for evaluating such programs also needs to take account of assets because of the requirement that families use up most of their accumulated assets before they can obtain program benefits. SIPP provides data to construct subannual poverty measures that would be suitable for evaluating the effects of such programs as AFDC and food stamps. Given some of the features of the SIPP design, we suggest that a feasible measure might use a 4-month accounting period and add to income any financial assets that the family reports, such as savings accounts (after first subtracting the income from such assets). These 4-month measures might also serve as an indicator of short-term increases or decreases in economic distress, although it may be that other readily available data, such as monthly food stamp caseloads, could serve this purpose. There are also important uses for measures that assess poverty over multi- year periods. There is strong evidence that people who experience long spells of poverty are worse off—not only economically, but also in other respects such as health status and educational attainment—than those who experience short spells. Also, long-term poverty appears concentrated in particular groups of the population, particularly minorities and the disabled. Policies and programs for ameliorating long-term poverty are likely to differ from those aimed at helping people through a temporary economic crisis. There is no agreement on the basis of research on the best form of a long- term poverty measure. It is also not clear how often a long-term poverty measure needs to be updated. The design of SIPP makes it possible to develop estimates of the number of poor in a given year who are still poor 1, 2, and 3 years later. The Panel Study of Income Dynamics permits developing poverty measures for much longer periods, but with small sample sizes. Clearly, further research and the development of some experimental series would be useful. RECOMMENDATION 6.1. The official poverty measure should continue to be derived on an annual basis. Appropriate agencies should develop poverty measures for periods that are shorter and longer than a year, with data from SIPP and the Panel Study of Income Dynamics, for such purposes as program evaluation. Such measures may require the inclusion of asset values in the family resource definition. Unit of Analysis The current poverty measure defines thresholds and aggregates resources for families of various sizes and for adults who live alone or with other people not

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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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