Measuring Income and Poverty in the United States
Nancy K. Cauthen2007
Sign up for access to the world's latest research
checkGet notified about relevant papers
checkSave papers to use in your research
checkJoin the discussion with peers
checkTrack your impact
Abstract
Most measures of poverty, in the U.S. and elsewhere, focus narrowly on income rather than including other aspects of economic status, such as assets or debt. Income poverty is measured by one of two standards—“absolute” or “relative” measures. Absolute measures of poverty—like the official U.S. measure—set an income threshold below which an individual or family is considered to be poor, regardless of general living standards. Relative measures typically set the poverty level at a percent of median income and therefore vary with the economic fortunes of the population as a whole.
Related papers
Measuring Poverty in the United States
2008
This fact sheet discusses how the U.S. government measures poverty, why the current measure is inadequate, and what alternative ways exist to measure economic hardship. The U.S. government measures poverty by a narrow income standard that does not include other aspects of economic status, such as material hardship (for example, living in substandard housing) or debt, nor does it consider financial assets (including savings or property). The official poverty measure is a specific dollar amount that varies by family size but is the same across the continental U.S. According to the guidelines, the poverty level in 2008 is $21,200 a year for a family of four and $17,600 for a family of three (see table). The poverty guidelines are used to determine eligibility for public programs. A similar but more complex measure is used for calculating poverty rates.
Rethinking relative measures of poverty
Journal of European Social Policy, 2006
Monitoring Absolute and Relative Poverty: “Not Enough” is Not the Same as “Much Less”
Review of Income and Wealth, 2011
Financial poverty indicators assess which people have few financial resources and are thereby at risk of having an unacceptably low living standard. Most countries use one or several "official" poverty indicators, but they typically use either an absolute or a relative benchmark to determine what is unacceptable; absolute benchmarks are based on basic needs or rights while relative benchmarks depend on what is considered to be a "normal" living standard. Applying the absolute U.S. and the relative EU poverty indicators on the U.S. and 15 EU member states, this research shows that it makes sense to use both benchmarks.
Poverty measurement in the U.S., Europe, and developing countries
Journal of Policy Analysis and Management, 2010
THE MISMATCH BETWEEN INCOME MEASURES AND DIRECT OUTCOME MEASURES OF POVERTY
2002
A key finding of recent poverty research is that there is a significant mismatch between poverty measured using an income approach and poverty measured directly in terms of observed deprivation or other indicators of unacceptably low living standards. The mismatch is substantial and is typically in the range of 50% to 60%. This paper takes this mismatch as a springboard for discussion on the conceptualisation and measurement of poverty. A key purpose of the paper is to identify the relevant international literature and report on some of the findings, including some comparisons for New Zealand using data from the 2000 Living Standards Survey. The findings are set out in the context of a general framework for understanding the mismatch and lead to a discussion of the implications for the conceptualising and measurement of poverty, and for reporting on poverty trends. The paper advocates the use of a suite of measures rather than a single measure to better capture the multi-dimensional nature and complexity of poverty, and especially to assist with the understanding of the factors and processes that contribute to the exclusion of citizens from a minimum acceptable way of life in their own society because of inadequate resources.
On Indices for the Measurement of Poverty
The Economic Journal, 1981
When discussing the state of research on poverty and social security in Britain Atkinson (I977) pointed out that, in measuring the prevalence of poverty, attention has been focused upon the proportion of the population with an income below the poverty line. It is well known that as an index of poverty this has serious shortcomings-in particular, it is insensitive to how far below the poverty line the incomes of the poor fall. Alternative indices have been proposed: the United States Social Security Administration introduced the notion of poverty gaps (see Batchelder (I97I)), that is, the aggregate value of the difference between the incomes of the poor and the poverty line, while Sen (I976) has suggested that income inequality among the poor is also an important dimension of poverty. Atkinson (I977) therefore proposed that researchers experiment with a range of indices which incorporate such aspects of poverty, given the possibility that the measurement of poverty may be sensitive to the precise index employed. Beckerman (I979) has shown that the information content of poverty gaps very usefully supplements that provided by the aggregate incidence approach. However, to our knowledge, there has been no attempt in Britain to compute indices which take account of inequality among the poor. In this paper we hope to correct this omission, and in doing so comments will be offered on some proposed methods of incorporating such a consideration. A close examination of these has prompted us to propose two further indices which, although relying on the setting up of an alternative structure for analysing this problem, are firmly based on the approaches favoured in the existing literature. THE ECONOMIC JOURNAL [JUNE
Some conceptual and statistical issues on measurement of poverty
Journal of Statistical Planning and Inference, 1996
One of the major topics that attracted the attention of econometricians in recent years is measurement of poverty. This paper reviews critically the conceptual and statistical issues that have been examined by the econometricians. The paper provides a comprehensive review of major recent approaches and results on measurement of poverty. It devotes one section to outline a new approach to the measurement of poverty that is based on the actual consumption behaviour of the people instead of on arbitrary choice of either a poverty line or a deprivation function. It devotes two sections for suggesting fruitful areas of research, one addressed to economists on synthesizing poverty measurement with applied welfare economics, and another to statisticians on problems of statistical inference associated with functional estimation. The paper also highlights the importance of reliability theory and risk assessment in translating consumption deprivation into a poverty measure. A new index of poverty that depends on risk of consumption deprivation is also proposed.
Poverty and Income Inequality: An International Comparison, 1980s and 1990s
The relative approach, according to which a poor household is one whose income is particularly low relative to the income of other household in the population. * The subjective approach, according to which the poor household is defined as one convinced that its income is inadequate. 9 2.2 Equivalence Scales Equivalence scales enable the adjustment of the poverty line to household size, while taking into consideration the economics scale embodied in household consumption. That is, such a scale considers the fact that household consumption does not rise in exact proportion to the increase in the number of its members-the addition is somewhat less. Practically , an
The Definition and Measurement of Poverty
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. ABSTRACT Both poverty research and social policy employ a variety of poverty definitions. The choice of one specific definition has major consequences for the resulting poverty population. This paper uses eight different definitions of poverty to determine who is poor, using a 1983 Dutch sample of more than 12,000 households. Poverty according to each of these definitions is compared over different subgroups. The relevance of the choice between definitions for social policy is shown by the presentation of poverty percentages according to the various definitions, which vary widely.
Related topics
Related papers
Statement on Establishing a Modern Poverty Measure
2008
I am submitting comments on behalf of the National Center for Children in Poverty (NCCP) to express support for the ideas presented in the draft legislation, the "Measuring American Poverty Act." The proposal addresses a number of issues I raised in testimony given a year ago at this subcommittee's hearing on "Measuring Poverty in America" (Cauthen 2007). In brief, I argued that: n Because poverty exacts such a high toll on our society, it is critical that we measure it in a meaningful way so that we can address it and measure the degree to which our anti-poverty policies are successful. n The National Academy of Sciences' (NAS) 1995 recommendations for improving the official poverty measure offer the most promising-and efficacious-approach to creating a more accurate measure of income poverty. n In a wealthy, advanced industrial society such as ours, it is imperative that we supplement measures of income poverty with additional indicators of the health and well-being of our nation's citizens, especially our youngest.
Alleviating Absolute and Relative Poverty
Hong Kong Economic Journal, 31 May 2017
Poverty is a topic that occasionally makes headlines in the newspapers and attracts a variety of commentators. In a lot of these discussions reference is made to the poverty line as a measure of the extent of poverty in society. The poverty line is used in two senses to denote absolute poverty and relative poverty.
Inequality and Poverty Measures
Oxford Handbooks Online, 2016
The theory of inequality measurement can be founded on a few very simple principles concerning the comparison of income distributions. This chapter discusses the standard principles and the types of inequality indices that follow from them. It shows how these principles and indices can be related to conventional approaches to social-welfare analysis. Adjusting a few pieces within this same framework enables one to derive alternative, novel types of inequality indices and lays the basis for commonly-used types of poverty indices. The chapter also covers other general approaches to distributional comparisons including first-order and second-order dominance and their interpretation in terms of inequality and poverty.
A Critique of Poverty Measurement
1996
The aim of this paper is twofold. The first is to illustrate that a poverty index can be derived from a decomposition of an appropriate inequality index. The advantage of decomposing an inequality index is that the decomposition supplies additional information that is useful for poverty measurement. The second purpose is to illustrate the kind of policy analysis that can be performed with a decomposed inequality index by decomposing the Gini coefficient into Sen's poverty index and other components. The methodology suggests an answer to the following question: Assume that a tax has been imposed on an expenditure item or an income source, what will be the impact on the components of the inequality index? The analysis is performed with data from Romania. D 2002 Published by Elsevier Science B.V. 0176-2680/02/$ -see front matter D 2002 Published by Elsevier Science B.V. PII: S 0 1 7 6 -2 6 8 0 ( 0 1 ) 0 0 0 6 9 -6 www.elsevier.com/locate/econbase *
Revisiting the income threshold for measuring poverty
This article makes a contribution to the ongoing debate on the most appropriate method of measuring poverty for interventionist purposes in rural areas. It is informed by the Zimbabwe experience that income-based measures may not always adequately target those most in need of social support. A new approach is proposed that focuses on the non-income component of poverty. The aim is to assist 'technocrats' to better target the poor in need of a social safety net in crisis situations. The search is for a 'credible' measure that will be acceptable to various interest groups including the poor. Thus the proposed measure derived by means of a consensual approach meets this objective. The article describes and discusses the weaknesses of conventional poverty measures, divided into two broad categories of those pre-and post-dating Sen's introduction of the capability concept. It then uses these to explore the conventional approaches (the dominant income measures) and flag their operational deficiencies, and then postulates an asset threshold model, the minimally adequate asset level (MAAL), which is contextspecific and is based on the consensual approach. Using such a threshold as a basis for intervention makes the intervention direct, for example, asset for asset. An asset-threshold brings out particular specific and peculiar circumstances of the poor as well as providing a fresh perspective and framework for measuring poverty. Thus an asset-threshold can be useful for purposes of allocating resources and setting and monitoring targets. However, the asset threshold is not transferable to other places if typicality cannot be established.
Do we need a separate poverty measurement?
European Journal of Political Economy, 2002
The aim of this paper is twofold. The first is to illustrate that a poverty index can be derived from a decomposition of an appropriate inequality index. The advantage of decomposing an inequality index is that the decomposition supplies additional information that is useful for poverty measurement. The second purpose is to illustrate the kind of policy analysis that can be performed with a decomposed inequality index by decomposing the Gini coefficient into Sen's poverty index and other components. The methodology suggests an answer to the following question: Assume that a tax has been imposed on an expenditure item or an income source, what will be the impact on the components of the inequality index? The analysis is performed with data from Romania. D 2002 Published by Elsevier Science B.V.
Measurements of Poverty: An introduction
2019
This paper discusses the different approaches to poverty and the many implications following the methods. Poverty is understood dissimilarly according to the approaches and ideally an adequate estimation of poverty requires a combination of approaches. Which target is identified as poor is just as important as the method of carrying out alleviation itself and it makes all the difference from the development perspective. The main agenda of using an approach is to identify target groups. As we shall target groups differ across the different methods but there is also a convergence visibly present. Poverty is finally about measuring deprivation but the parameters of defining the bare minimum shift according to method.
Poverty and its measurement
The presentation of a range of methods to obtain measures of poverty INSTITUTO NACIONAL DE ESTADÍSTICA
Loading Preview
Sorry, preview is currently unavailable. You can download the paper by clicking the button above.