Lecture 5: Who are the poor?

1. Lecture 5: Who are the poor? Today’s readings: Schiller Ch. 3: Counting the Poor, pp. 60-66 Current Population Report, P60-229, pp. 9-15, 24-25, 45-58 DeParle, Ch. 3: The Crossroads: Chicago, 1966-1991

2. Today’sTopics • Sen’s definition of poverty and its implications • What we learn from studying poverty spells--the dynamics of poverty • Who are America’s poor? • Calculating poverty rates

3. Sen’s Capability Deprivation • What definition of poverty does Sen propose? • Is it feasible to measure poverty using this definition? • Human Poverty Index, • For definition see: http://www.adb.org/Statistics/Poverty/H.asp • For for values, rankings, and trends, see: http://hdr.undp.org/reports/global/2005/pdf/HDR05_HDI.pdf (p. 228) • Human Development Index, http://en.wikipedia.org/wiki/Human_Development_Index#Top_thirty_countries • How do you think Sen might respond to the claims of some that by world standards, no Americans are poor?

4. Sen’s Capability Deprivation • What are the implications of Sen’s analysis for the formulation of policies to aid the poor? • Hint: consider the following quotation: “What the capability perspective does. . . . is to enhance the understanding of the nature and causes of poverty and deprivation by shifting primary attention away from the means [income] . . . . to ends and . . . . and to the freedom’s to be able to satisfy these ends.” (p. 90)

5. Poverty Spells Mary Jo Bane and David Ellwood,“Slipping into and Out of Poverty: The Dynamics of Spells,” The Journal of Human Resources, Vol. 21, No. 1 (Winter, 1986), 1-23. (Source for the following 6 slides.) • What are poverty spells? • Why study poverty spells? • What is the distribution of poverty spells by length? • How do poverty spells begin? • How do poverty spells end? • What does the analysis of poverty spells tell us about welfare dependency?

6. Bane and Ellwood “Slipping Into and Out of Poverty” • What are poverty spells? • Continuous periods during which income falls below the poverty line. • Why study poverty spells? • Because we need to distinguish between the larger population of people who are ever poor, and those who are poor at a point in time if we are the understand the effects of culture, dependency, and the allocation of assistance.

8. Poverty Spells: Bane and EllwoodDistribution of Completed Spells of Poverty

9. Poverty Spells: Bane and EllwoodDistribution of Completed and Uncompleted Spells of Poverty

11. Bane and EllwoodConclusions of “Slipping Into and Out of Poverty” • Most of those who ever become poor will have a short stay in poverty. • The majority of those who are poor at a given time will have very long spells of poverty. • Most people use aid programs briefly. • The bulk of aid goes to a small group that has very long stays in poverty. • Changes in family structure and life cycle events explain nearly one-half of spell beginnings. • A fall in the head’s earnings explain a small minority of beginnings. • Increase earnings of all household members is the primary route out of poverty. • The poverty population is extremely heterogeneous.

12. Poverty Spells • Consequences of Bane and Ellwood’s Work • Survey of Income and Program Participation (SIPP)--a longitudinal survey that allow the analyst to observe how the status of the same group of people changes over time; ie., to study the dynamics of poverty. http://www.census.gov/hhes/www/poverty/newguidance.html#sipphighlight • Methodology applied to spells of welfare receipt

13. Who are America’s Poor?Snapshots from the CPR • Schiller: Characteristics of the Poor (pp. 60-65) • Age and Family Status • Which age group has the highest poverty rates? • Which family type has the highest poverty rates? • Is the risk of poverty greater for recent immigrants or native-born Americans? • Rank the following racial categories from highest poverty rate to lowest poverty rate: American Indian/Alaskan Native, Asian, Black, Hispanic, White. • Geography and Residence: Where are you most likely to encounter the poor? • Northeast, Midwest, South, or West? • Metro or nonmetro areas?

14. Who are America’s Poor? Your answers should be: • Children (less than 18 years)--17.9 % • Female householder, no husband present--28.4% • Recent immigrants--21.6% vs. 12.1% • Black--24.6; American Indian/Alaskan Native--24.4; Hispanic--22.2; Asian--10.8%; White--10.6% (rates are 2 year average 2003-2004) • The South--one of every seven people is poor. • Nonmetro areas--14.2% vs. 11.6%. Applies to every racial category.

15. Who are America’s Poor? • Which families were most likely to be poor when family type and race are considered? Hint: 2 of every 5 of these families were poor in 2004. • True or False: Most poor adults do not work. • On average, how much income was needed to pull poor families out of poverty in 2004?

16. Calculating Poverty Rates(People in Thousands,Table B-1, P60-229, 2004)

17. Over and Under-representation Among the Poor • Which racial groups are over-represented among the poor? Which are under-represented? • Compare group’s poverty rate to overall poverty rate. • If PRG > PRall, Group is over-represented. • If PRG < PRall, Group is under-represented. • Compare columns (3) and (6) by row. • Conclusions: • Blacks and Hispanics are over-represented. • Whites are under-represented.