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POVERTY MEASURES

POVERTY MEASURES. FDR: "one-third of a nation ill-housed, ill-clad, ill-nourished" US Poverty Rate: absolute standard Ireland, Smeeding “relative poverty rate” Canada: Low-income limit, based on disposable income World Bank: Consumption levels below $1 or $2 per day.

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POVERTY MEASURES

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  1. POVERTY MEASURES • FDR: "one-third of a nation ill-housed, ill-clad, ill-nourished" • US Poverty Rate: absolute standard • Ireland, Smeeding “relative poverty rate” • Canada: Low-income limit, based on disposable income • World Bank: Consumption levels below $1 or $2 per day.

  2. Absolute Poverty Standard: World Bank

  3. What is Poverty? • In 1963-1964, Molly Orshansky based poverty thresholds on the “thrifty food plan”, • Thrifty food budget (family of 4) = $1,033 • Families spent 1/3 of their budget on food. • 1963 Poverty level = $3,100 • Subsequent years, adjusted for CPI inflation index

  4. Poverty thresholds

  5. Problems with definition of Poverty • Wealth and debt not counted • Unusual family expenditures not counted. • Regional living costs • Families now spend only 1/6th income on food • MEASURING INCOME……….

  6. Measuring Income • money income before taxes, including wages, salaries, interest, dividends, self-employment income, welfare payments (TANF), unemployment insurance, and social security payments. • Poverty Reportfrom March Current Population Survey, 50,000 households

  7. Problems with the Definition of Family Income • Income not counted: Food Stamps, Medicaid & Medicare, Public Housing • Persons not counted: the institutionalized, Army barracks, unrelated individuals under 15

  8. Problems defining “Family” • Must be related • Family defined in March,BUT Income, defined in previous year • Unrelated children individual counted as neither poor nor non-poor.

  9. Overcounting the poor? • Inflation adjustment overestimates inflation. • Food stamps not counted as income. • Other in-kind benefits (which have increased overtime) not counted. (Housing, Medical). • Earned Income Tax Credit not counted. • Under reporting of income.

  10. Undercounting the Poor? • Food now takes 1/6 of typical budget. • High regional living costs • Unusual family living costs (e.g., medical) • Increased FICA (social security) taxes • Sample under-represents poor

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