Lecture 8: Definitions and measurement of poverty Flashcards
What is poverty?
Depends on how you define it
As we have been discussing
- Defining the problem is a political process
- The outcome has marked consequences
How the US govt defines poverty will lead to
- Statistic about both the magnitude and scope of poverty
- Statistics about rates of poverty over time
Types of poverty measures
Relative poverty measure
- Standing relative to some central tendency; ex. considered poor in income is 50% (or 40%) of the median national income
Absolute poverty measure
- Calculated based on assumptions of costs for purchasing bundle of goods considered “necessary”
- ex. US Federal Poverty Threshold
Relative Poverty
- Income below some point on the distribution
- – Below half of median income (e.g.)
- – Ex., if median income is $50,000 then; 50% of median income is $25,000 vs. 22,811 (PL - ~2008)
- Advantages
- – Reflects that individuals live in social contexts (inequality; social distance; social inclusion)
- – Allows for direct international comparison
- Disadvantages
- – Can never “end” poverty
- – No sense of need
Absolute poverty
- Income below some dollar amount
- Advantages
- – Easy to measure
- – East to see trends
- Disadvantages
- – What about changing standard of living?
- – Doesn’t include in-kind benefits
- – Which income do we count?
Median Household Income
Some recent number in the US to give you context
- Median household income in 2014: ~$53,657
- 50% of median income, then, $26,828
US Poverty Measures
There are two slightly different versions of the federal poverty measure
- Poverty thresholds
- Poverty guidelines
The poverty thresholds are the original version of the federal poverty measure
- Updated each year by the Census Bureau
Both the poverty thresholds and the poverty guidelines are updated annually for price changes using the Consumer Price Index for all Urban Consumers (CPI-U)
Poverty thresholds are used…
Mainly for statistical purposes
- Preparing estimates of the number of Americans in poverty each year
- All official poverty population figures are calculated using the poverty thresholds
To determine program eligibility
Program using the guidelines
- or percentage multiples of the guidelines (125%, 150%, 185% of guidelines) in determining eligibility include; Head Start, Supplemental Nutrition Program, National School Lunch Program, Low-Income Home Energy Assistance Program, Children’s Health Insurance Program
US Poverty Measure
The official measure of poverty in the US is framed in terms of family income
It is an absolute threshold to distinguish those who are poor from those considered to have enough for the necessities of life
History of the poverty thresholds
The poverty thresholds were originally developed in 1963-64 by Mollie Orshansky of the Social Security Administration
- Orshansky based her poverty thresholds on the economy food plan
- – The cheapest of four food plans developed by the Department of Agriculture
- – The Agriculture Department described the economy food plan as being “designed for temporary or emergency use when funds are low”
- – Orshansky also developed a second set of poverty thresholds based on the Agriculture Department’s somewhat less stringent low-cost food plan, but relatively little use was ever made of these higher thresholds
Methodology of poverty thresholds
The Department of Agriculture’s 1955 Household Food Consumption Survey revealed that families of three or more persons spent about 1/3 of their after-tax money income on food in 1955
- A “multiplier” is used to adjust figures for families of various sizes
- This method assumed
- – When food expenditures reached the cost of the economy food plan, the amount the family would then be spending on non-food items would also be minimal but adequate
- – Procedure did not assume specific dollar amounts for any budget category besides food
Mollie Orshansky
Miss Orshansky did graduate work in economics and statistics in Washington. In 1939, she became a research clerk with the federal Children’s Bureau, doing statistical analyses of child health, growth and nutrition. In 1942, as a statistician for the New York City Department of Health, she helped develop a survey on the incidence and treatment of pneumonia. Beginning in 1945, she spent 13 years at the Agriculture Department, collecting and analyzing records on household spending and food consumption. In the 1960s, at the request of the Justice Department, she testified at hearings that led to the elimination of poll taxes, which had been used to keep black Americans from voting. She said that a poll tax of $2, for example, would be enough to cost many poor families an entire day’s meals. Miss Orshansky received honors from the Social Security Administration, the American Statistical Association and the American Political Science Association. For most of her career, she lived in an apartment on the waterfront in Washington. She traveled extensively and loved to cook.”•http://www.nytimes.com/2007/04/17/us/17orshansky.html
Poverty thresholds approximate need in following wats
They vary by family size
They are adjusted for inflation
They are based on food consumption and assume that families spend 1/3 of their income on food
They do not vary by geographic region expect for HI and Alaska
International Comparisons
Relative Poverty measure is
- Used in the rest of the developed world
- Incomes < half of the median income
US poverty and child poverty rates would be higher under this measure
Comparative perspective
