Measuring Poverty: A New Approach

Measuring Poverty
Copyright
Acknowledgments
Contents
Preface
Summary and Recommendations
	THE CURRENT POVERTY MEASURE: EVALUATION
	RECOMMENDATION: A NEW POVERTY MEASURE
	SETTING AND UPDATING THE POVERTY THRESHOLD
	ADJUSTING THE THRESHOLD
	DEFINING FAMILY RESOURCES
	EFFECTS
	NEEDED DATA
	OTHER ISSUES IN POVERTY MEASUREMENT
	RELATING THE POVERTY MEASURE TO ASSISTANCE PROGRAMS
1 Introduction and Overview
	WHAT IS POVERTY?
	THE OFFICIAL U.S. POVERTY MEASURE
		Development of the Measure
		Adequacy of the Current Measure
			Work Patterns of Families with Children
			Composition of Families and Households
			Geographic Differences in Prices
			Increases in Medical Care Costs and Benefits
			Taxes
			Provision of In-Kind Benefits
			Increase in the Standard of Living
	ALTERNATIVE POVERTY MEASURES AND CRITERIA FOR A MEASURE
		Types of Poverty Thresholds
			Absolute and Relative Thresholds
			Expert Budgets: The U.S. Experience
			Other Approaches
		Definitions of Family Resources
		Criteria for a Poverty Measure
			Public Acceptability
			Statistical Defensibility
			Operational Feasibility
	A NEW APPROACH TO POVERTY MEASUREMENT: RECOMMENDATIONS
		A New Poverty Measure
		Periodic Reviews
		The Poverty Threshold
			Updating the Thresholds
			Threshold Concepts: Assessment
			Recommended Threshold Concept and Updating
			Setting the Initial Threshold
			Adjusting the Thresholds—Equivalence Scale
			Adjusting the Thresholds—Geographic Variations
		Defining Family Resources
			In-Kind Benefits—Nonmedical
			Medical Care Costs
			Taxes
			Work-Related Expenses
			Child Support Payments
			Services from Home Ownership
			Assets
		Effects
			Distributional Effects
			Effects of Selected Components
			Effects on the Poverty Rate
			Time Trends
		Needed Data
		Other Issues in Poverty Measurement
			Time Period
			Unit of Analysis
			Other Measures
	USE OF THE POVERTY MEASURE IN GOVERNMENT PROGRAMS
		The Poverty Measure and Program Eligibility
			Need Standards for Programs That Use the Official Measure
			Need Standards for AFDC
		The Poverty Measure and AFDC Benefit Standards
2 Poverty Thresholds
	THRESHOLD CONCEPTS
	RECOMMENDATIONS
		The Two-Adult/Two-Child Reference Family
		Nondiscretionary Expenses
		Updating the Thresholds
		Setting the Initial Threshold
	EXPERT BUDGETS
		Multiplier Approaches
			The Original U.S. Poverty Thresholds
			The Orshansky Multiplier over Time
			Other Multiplier Approaches
		Categorical Approaches
		Detailed Budget Approaches
			York Family Budget Unit
			BLS Family Budgets Program
			Schwarz and Volgy Budget
			Conclusions
		Updating for Price Changes
	RELATIVE THRESHOLDS
		International Examples
		U.S. Expert Committee on Family Budget Revisions
		Issues in Deriving Relative Thresholds
		Behavior of Relative Thresholds Over Time
	SUBJECTIVE THRESHOLDS
		Research Findings
		Behavior of Subjective Thresholds Over Time
	CONCLUSIONS
	IMPLEMENTING THE PROPOSED APPROACH
		Setting the Initial Threshold
			Analysis of 1989-1991 CEX Data
				The Basic Bundle
				The Multiplier
				The Basic Bundle and Multiplier Together
			Comparison with Other Thresholds
		Analysis Over Time
		Further Evaluation
3 Adjusting Poverty Thresholds
	ADJUSTMENTS BY FAMILY TYPE
		The Concept of an Equivalence Scale
		Overview and Recommendation
		The Current Equivalence Scale
		Alternative Equivalence Scales
			Programmatic Equivalence Scales
			Behavioral Scales
				The Engel and Iso-Prop Methods
				The Rothbarth and Other Methods
			Subjective Scales
		Recommended Procedure
	ADJUSTMENTS BY GEOGRAPHIC AREA
		Overview and Recommendations
		Feasibility and Desirability
		Research Findings on Price Differences
		Estimating Geographic Variations in Housing Costs
			HUD Fair Market Rents
			BLS Family Budgets Program
			Hedonic Models
			Discussion
		Recommended Approach
		Updating the Housing Cost Index
		Further Research
4 Defining Resources
	OVERVIEW AND RECOMMENDATION
	ALTERNATIVES FOR DEFINING RESOURCES
		Resources as Disposable Income
			Adjusting Income, Not Thresholds
			Recommendation
		Resources as Consumption or Expenditures
			Rationale
			Implications
			Assessment
		A Crisis Definition of Resources
			Methodological and Measurement Issues
			Implications
			Assessment
	PROPOSED RESOURCE DEFINITION
		Money Income
		Nonmedical In-Kind Benefits
			Census Bureau Valuation Procedures
			Assessment of Valuation Approaches
			Needed Research and Development
		Medical Care Needs and Resources
			Proposed Approach: Recommendation
			Alternative Approaches
				Current Poverty Measure
				Adding Health Insurance Benefits to Income
				A Comprehensive Single Index
				A Two-Index Poverty Measure
			Separate Measures of Medical Care Risk and Economic Poverty
		Taxes
			Census Bureau Tax Estimation Procedures
			Assessment
		Work-Related Expenses
			Child Care
			Other Work-Related Expenses
		Child Support Payments
		Home Ownership Services
5 Effects of the Proposed Poverty Measure
	DATA AND PROCEDURES
		Poverty Measure Alternatives
		Threshold Adjustments
		Imputation Procedures for Proposed Resource Definition
			In-Kind Benefit Values and Taxes
			Out-of-Pocket Medical Care Expenditures
			Child Care Expenses
			Other Work-Related Expenses
			Distribution of Imputed Values
	RESULTS
		Effects with a Constant Poverty Rate
		Effects with a New Threshold
			The Overall Rate
			Groups
		Marginal Effects
		Equivalence Scale Effects
		Accuracy of Medical Care Expense Imputations
		Prior Income Years
			Data and Procedures
			Results
		Poverty Rates Using SIPP
	DATA SOURCES
		Recommendations
		Data Sources for Income
			The March CPS
			The Alternative of SIPP
			Orienting SIPP to Poverty Measurement
			Transition
		Research Recommendations
			Income Data in Other Surveys
			Income Data in the Decennial Census
			Expenditure Data
6 Other Issues in Measuring Poverty
	TIME PERIOD
		Recommendation
		Short-Term Measures
		Long-Term Measures
	UNIT OF ANALYSIS AND PRESENTATION
		Unit of Analysis
			Recommendations
			Discussion
		Unit of Presentation
	INDEXES OF POVERTY
		Recommendation
		Alternative Indexes
		Indexes with Alternative Resource Definitions
	THE LIMITED SCOPE OF MEASURING ECONOMIC POVERTY
7 Use of the Poverty Measure in Government Assistance Programs
	RECOMMENDATION
	GOVERNMENT ASSISTANCE PROGRAMS
		Overview
		Determining Income Eligibility: Selected Programs
			Head Start
			School Nutrition Programs
			WIC
			Food Stamps
	USING THE PROPOSED POVERTY MEASURE
		The Thresholds
		The Family Resource Definition
			Simplified Determination of Disposable Income
			Full Determination of Disposable Income
		Other Issues
8 The Poverty Measure and AFDC
	DETERMINING PROGRAM BENEFIT LEVELS
		Proposals for AFDC Minimum Benefits: A Brief History
		The Matching Formula
		A Supplementary Program with a National Benefit Standard—Food Stamps
		A National Minimum Benefit Standard for AFDC
		Issues in Program Benefit Design
			Budget Constraints
			Targeting Strategies and Preferences
			Program Interactions
			Program Incentives
		Work Effects
		Family Structure Decisions
		Migration Effects
		Summary
			Federal-State Cost Sharing
		Summary
	DETERMINING STATE AFDC STANDARDS OF NEED
		Recommendation
		Program Regulations
		Standard Setting in the 1970s
		Standard Setting in the 1980s
		Differences Among States
			Differences in Need Standards and Benefits
			Differences in Equivalence Scales
		Trends in Need Standards and Benefits
		Conclusions
			Comparative Advantage of the Proposed Poverty Measure
			Problematic Aspects of the Proposed Poverty Measure
				Program Interactions
				Implications of Updating for Costs and Caseloads
				Effects of Updating on Program Incentives
		Summary
APPENDICES
	APPENDIX A Dissent
		MEASURING THE POVERTY LINE
		UPDATING THE POVERTY LINE
		CHOOSING A RANGE FOR THE POVERTY LINE
		MEASURING FAMILY RESOURCES: THE ISSUE OF MEDICAL CARE
		CONCLUSION
		REFERENCES
	APPENDIX B Data Sources for Measuring Poverty
		MAJOR FEATURES OF THE CEX, MARCH CPS, PSID, AND SIPP
			Consumer Expenditure Survey
				Design and Use
				Content of the Interview Survey
			CPS March Income Supplement
				Design
				Content
			Panel Study of Income Dynamics
				Design
				Content
			Survey of Income and Program Participation
				Design
				Content
			Summary Comparisons
			Quality of Income Data
		THE MARCH CPS AND SIPP COMPARED
			Categories of Information
				Taxes
				Nonmedical In-Kind Benefits
				Medical Benefits/Costs
				Child Care and Other Work Expenses
				Child Support Payments
				Asset Holdings
			Ability to Support Other Estimates
				Shorter or Longer Term Measures
				State Estimates
				Related Measures
			Quality of Income Data
				Population Undercoverage
				Household and Person Nonresponse
				Item Nonresponse
				Other Sources of Error
				Aggregate Comparisons
	APPENDIX C The Interdependence of Time and Money
		\'\'TIME IS MONEY\"
			Illustration
			Expenditure Data
			Discussion
		RESEARCH APPROACHES
			Time Poor: A Measurement
			Calculating Earnings Capacity
		CONCLUSION
	APPENDIX D Assistance Programs for People with Low-Incomes
		PROGRAMS THAT TIE ELIGIBILITY TO THE POVERTY GUIDELINES
			Medical Programs
				Community Health Centers
				Maternal and Child Health Services Block Grant (Title V)
				Medicaid
				Migrant Health Centers
			Food Programs
				Child and Adult Care Food Program
				Commodity Supplemental Food Program
				Food Stamps
				Special Milk Program
				Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
				Summer Food Service Program for Children
			Education Programs
				Follow Through
				Head Start
				Special Programs for Students from Disadvantaged Backgrounds
				Vocational Education Opportunities, Disadvantaged Activities (Perkins Act)
			Other Service Programs
				Community Services Block Grant
				Legal Services
			Jobs and Training Programs
				Foster Grandparents
				Job Corps
				Senior Community Service Employment Program
				Senior Companions
				Summer Youth Employment and Training Program
				Training for Disadvantaged Adults and Youth
			Energy Programs
				Low-Income Home Energy Assistance Program (LIHEAP)
				Weatherization Assistance
			SELECTED PROGRAMS WITH THEIR OWN INCOME ELIGIBILITY STANDARDS
				Aid to Families with Dependent Children
				Earned Income Tax Credit
					Section 8 Low-Income Housing Assistance and Low-Rent Public Housing
				Supplemental Security Income
				Pensions for Needy Veterans, Their Dependents, and Survivors
References and Bibliography
Biographical Sketches of Panel Members and Staff
Index