The "Inability to be Self-Reliant" as an Indicator of Poverty: Trends for the U.S., 1975–97

In this paper we present a new concept of poverty, Self-Reliant poverty, which is based on the ability of a family, using its own resources, to support a level of consumption in excess of needs. This concept closely parallels the "capability poverty" measure that has been proposed by Amartya Sen. We use this measure to examine the trend and composition of the Self-Reliant poor population from 1975 to 1997. We find that Self-Reliant poverty has increased more rapidly over this period than has official poverty. Families considered to be the most vulnerable—those headed by minorities, single women with children, and individuals with low levels of education—have the highest levels of Self-Reliant poverty. However, these groups have also experienced the smallest increases in poverty. Conversely, families largely thought to be economically secure—those headed by whites, married men with children, and highly educated individuals—have the lowest levels of Self-Reliant poverty, but have experienced the largest increases in poverty. We also find that the Self-Reliant poor is increasingly composed of vulnerable groups relative to the composition of the official poor. The labor market, demographic, and policy sources of the divergent trends in Self-Reliant and official poverty, and of the gender, race and family structure changes in poverty rates are explored.     

THE SIZE AND DISTRIBUTION OF THE POVERTY GAP IN CANADA: A MICRO ANALYSIS OF VARIATIONS AMONG DEMOGRAPHIC GROUPS

Poverty is a much used term by politicians, economists, sociologists, the media and interest groups. Although there is some common consensus that the word poverty means some type of deprivation, there is a lack of comprehensive measures to quantify this term. Although deprivation can relate to a number of areas such as health and education, the focus in policy development has been aimed at economic deprivation or more specifically, income adequacy. Even in this perspective, the availability of comprehensive measures are limited. The United States is the only major industrial nation that has an official poverty line. Several unofficial poverty lines have been developed in Canada, but the poverty measures have not gone beyond head counts of people who fall below these lines. In an environment where the goal is to further progressive social development constrained by inadequate public resources, the emphasis has been on first directing scarce resources to those "most in need". To get a better perception of economic need, this paper provides a micro analysis of the size and distribution of the poverty gap so that meaningful comparisons can be made between demographic groups. The results of this analysis yield some interesting findings. For example, there are virtually no poor elderly couples and although there are a large number of poor single elderly, their income shortfalls are relatively small and are highly concentrated near the poverty line; the poverty rate among families with children is quite low but their incomes on average fall well below the poverty line and are widely dispersed; and single parents fare badly on all measures.     

POVERTY, NON-WHITE POVERTY, AND THE SEN INDEX

This paper investigates the impact of economic growth, and more specifically robust economic growth along with other macroeconomic determinants, on poverty levels using both the U.S. official measure of poverty and an estimated time series of Sen indices of poverty. The results reveal that the period of robust economic expansion that the U.S. economy experienced during the 1990s did not have a significant impact on poverty using either measure. In addition, we find that the impact of growth and other macro controls is dramatically different when a subset of the poverty population, namely non-white poverty, is investigated. The percentage of households headed by women is shown to be a significant factor in examining poverty for this subgroup.     

Sen measures of poverty in the United States: Cash versus comprehensive incomes in the 1990s

Recently developed statistical inference procedures for the Sen index and its components – the headcount, income gap and Gini index among the poor – are used to test explicit hypotheses concerning aggregate poverty in the United States for the period 1989 to 1997. Changes in Sen measures of poverty are investigated for cash and comprehensive income using the official poverty line and six additional poverty lines drawn using thresholds set at 50, 75, 125, 150, 175 and 200 percent of the official level. The paper also reports on the effects of using comprehensive income on subgroup poverty rates and on the demographic composition of the poor.     

IDENTIFYING THE POOR: POVERTY MEASUREMENT FOR THE U.S. FROM 1996 TO 2005

The poverty measure presented compares spending needs to resources available to meet those needs. The analysis is for the U.S.; however, lessons from other countries regarding desirable properties of a poverty measure are considered. A primary focus is internal consistency between thresholds and resources. This study is among the first for the U.S. to describe an internally consistent poverty measure, drawing from recommendations of the U.S. National Academy of Sciences (NAS). Thresholds reflect spending needs as “outflows.” Resources measure “inflows” available to meet spending needs. The U.S. Consumer Expenditure Survey is used for thresholds, and the Current Population Survey is the basis for resources. Trends are reported with comparisons to the official and a relative measure. An important finding is that increases in expenditures for shelter, captured in the NAS thresholds, suggest a greater increase in the number of families not able to meet basic needs than is reflected by official poverty statistics over this time period.     

Adjusting for family size in the supplemental poverty measure

We point out an anomaly in the adjustment for family size in the US Supplemental Poverty Measure (SPM). The equivalence scale for the SPM implies an instance of increasing marginal costs for an additional adult. A similar criticism of the official US poverty measure was one of several concerns that led to the creation of the SPM. We propose two possible solutions for the problem and show that eliminating the anomaly from the SPM has the greatest effect on the poverty rate for the elderly, as that group is more concentrated near the poverty line.     

NEW BUDGET STANDARD POVERTY LINES FOR MALAYSIA

In this paper, shortcomings of the official poverty line are examined. A new set of budget standard poverty lines were derived for various years between 1959 and 1981, by first estimating the food budget for Malaysian households. Then, an allowance for non-food items was obtained on the basis of the estimated food budget, and the relationship between the proportion of income allocated on food and non-food items, together yielding the poverty line. The results suggest that the official and other estimates of the poverty line income were generally higher, and thus have overestimated the extent of poverty in Malaysia.     

A methodology for measuring food poverty applied to Kenya

This paper proposes a new way of establishing a food poverty line taking into account regional food preferences and prices. It uses this poverty line to derive a food poverty measure which satisfies the desirable fundamental properties of such measures and has the additional advantage of being additively decomposable. The measurement of food poverty is further generalized to heterogeneous groups of households facing different sets of relative prices and exhibiting different food preferences. Finally, the above methodology is applied to the empirical estimation of food poverty among Kenyan smallholders, and the results contrasted with those obtained by two other methods.     

A preliminary theoretical examination of the targeted public distribution system in India

A theoretical model of targeting in the public distribution system is set out. In any system of targeting there could be inclusion and exclusion errors. These errors could be reduced by search by the state. The state aims to minimise the costs of food administration subject to keeping the magnitude of the exclusion error bounded. Targeting involves a consideration of the objective poverty level, the official poverty level and the targeted poverty level by the state. The targeted poverty level could be less than the official poverty level if the extent of search is not adequate. The objective poverty level is an increasing function of the above poverty line issue price of food due to exclusion errors, a decreasing function of the procurement price of food and by definition the below poverty line issue price of food. The instruments in the hands of the state are the official poverty level, the above poverty line issue price for food, the procurement price of food and the extent of search. The comparative static implications of the model are set out.     

Spatial differences in poverty: The case of Peru

This paper examines the implications of spatial differences in living costs for measures of poverty. Taking Peru as a case study, spatial price indices are used to calculate location-specific poverty lines, based on the local cost of a basket of basic needs. Applied to income distribution data, these poverty lines yield measures of the extent and location of poverty. The paper shows that these measures are significantly different from, and much more accurate than those obtained using a single countrywide poverty line; the latter can give a misleading picture of poverty by over- stating spatial differences, in general overestimating rural and underestimating urban poverty.     

中国农村扶贫资金投入与贫困减少的经验分析

本文分别以中国官方贫困线和国际贫困线为标准,利用向量自回归模型就中国政府的农村扶贫资金投入和贫困减少的长、短期关系和Granger因果关系进行了经验研究。结果表明农村扶贫资金对农村贫困减少具有短期的促进作用,但效果不显著。从长期看扶贫资金抑制了农村贫困的减少,但这两者之间不存在Granger因果关系;经济增长与贫困之间的关系比较复杂,经济增长在减少农村贫困人口的同时,加重了贫困深度指数和贫困强度指数。因此,进一步完善农村扶贫资金运行机制、提高扶贫项目的瞄准性,对于解决中国农村贫困问题具有重大意义。     

物价波动、收入增长和地区差距对中国贫困线的影响

我国贫困线的增长机制是只与物价挂钩,不与收入挂钩。由于食品价格增长高于消费价格指数增长,这种调整机制导致贫困线绝对购买力下降;同时,随着收入的快速增长,贫困线相对购买力急剧下降。另外,贫困线与地区经济发展水平高度相关,造成地区间受助穷人的生活质量相差巨大。     

More Relatively‐Poor People in a Less Absolutely‐Poor World

Relative deprivation, shame, and social exclusion can matter to the welfare of people everywhere. The paper argues that such social effects on welfare call for a reconsideration of how we assess global poverty. We argue for using a weakly‐relative measure as the upper‐bound complement to the lower‐bound provided by a standard absolute measure. New estimates of poverty are presented. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day, consistently with national poverty lines. We find that the incidence of both absolute and weakly‐relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981.     

Adding value through the mechanization of post-harvest cassava processing,and its impact on household poverty in north-eastern Zambia

This article investigates the impact of adopting a mechanized cassava processing system on household poverty levels in Zambia. An Foster, Greer and Thorbecke (FGT) poverty measure was used to compare poverty levels among households using a mechanized cassava processing system against those households using a nonmechanized process. Based on the FGT poverty measure’s specifications, a significantly lower poverty status of 49% was found among households using the mechanized process when compared to the 58% found among households using the nonmechanized process. The significant factors contributing to these differences in poverty levels include whether households are using a mechanized process or not, the number of years’ schooling among household members, the number of years’ farming experience, household income and membership of associations. The study concludes that the mechanization of cassava processing, particularly if done on the right scale, can transform primary production activities, in turn leading to higher incomes and reduced poverty levels in rural villages. Thus, policies should be introduced aimed at encouraging the promotion of mechanized post-harvest cassava processing technologies among rural households, so as to enhance crop productivity and household income levels, as well as reduce poverty among rural households.     

Imputing rent in consumption measures,with an application to consumption poverty in Canada, 1997–2009

We consider two econometric problems in the measurement of poverty, both relating to rent imputation. First, we account for quality differences correlated with selection into owner‐occupied versus rental tenure. This correction increases estimated household consumption by 5% over uncorrected estimates and decreases estimated poverty rates quite dramatically. Second, we propose that measurement error induced by the imputation be corrected by imputing a consumption distribution, rather than a consumption level, for each household. This correction increases estimated poverty rates slightly. We use our methods to measure consumption poverty in Canada, and find that the imputation strategy used influences the patterns observed. For example, measured poverty among the elderly barely declines when one uses our methods, in contrast to the almost 6 percentage point reduction we find using traditional methods. In our assessment of the over‐time evolution of consumption poverty, we find that substantial progress has been made on overall poverty and on child poverty, but that poverty among the elderly hardly changed.     

Income, Health and Happiness

This article utilises unit record data from the 1989–90 National Health Survey to explore the relationships between low income and perceptions of health and happiness. After describing how the key variables were constructed, attention is focused on the incidence of perceived poor health and unhappiness among those individuals living in income units on either side of a poverty threshold related to the Henderson poverty line. The results reveal that those in poverty generally have poorer health and are less happy than those above the poverty threshold. The observed differences are statistically significant for many income unit types, particularly non-aged single people and couples with children. Attention then turns to exploring how health and happiness vary across the deciles of the income distribution. Again, significant differences are revealed, particularly when more sophisticated distributional measures are employed. Finally, consideration is given to the possibility that the results reflect reverse causality, and that the observed correlations incorporate the role of intervening variables.     

Poverty among minorities in the United States: explaining the racial poverty gap for Blacks and Latinos

The two largest minorities in the United States, African Americans and people of Hispanic origin, show official poverty rates at least twice as high as those of non-Hispanic Whites. These similarly high poverty rates between the two minorities are, however, the result of different combinations of factors related to the specific characteristics of these two groups. In this article, we analyse the role of demographic and labour-related variables in the current differential of poverty rates among racial and ethnic groups in the United States and its recent evolution. Our results show, first, that these differentials are largely explained by differing family characteristics of the ethnic groups. Furthermore, we show that while labour market activity of family members and a preponderance of single mothers play a more significant role in the higher poverty rates of Blacks, a larger number of dependent children is closely associated with higher poverty among Latinos, who also suffer from a larger educational attainment gap and higher immigration rates.     

The Development of Government Policies on Poverty and Income Distribution

This paper discusses trends in poverty in Australia over the last two decades, as indicated by changes in the number and composition of income units with incomes below the Henderson poverty line as well as by trends in the circumstances of the population in receipt of social security payments. This analysis suggests that there have been significant changes in the nature of poverty in Australia, which has increased among those of workforce age. Families with children have been particularly affected by these developments. The paper describes the development of policies designed to achieve the government's pledge that by 1990 no child need live in poverty. Despite the usefulness of the Henderson poverty line in identifying trends in economic vulnerability, the paper identifies a number of practical objections to using this indicator to assess the total effect of government initiatives. The paper concludes with a discussion of a broad approach to poverty alleviation, which would include income support, labour market and community services policies.     

Local housing costs and basic household needs

The supplemental poverty measure (SPM)—which serves as an indicator of economic well-being in addition to the official poverty rate—was introduced in 2010 and explicitly adjusts for geographic differences in the cost of housing. By embedding housing costs, the SPM diverges from official measures in some instances, offering a conflicting view on family well-being. However, there is limited direct evidence of the impact of housing costs on household well-being, and virtually all of it focuses on food insecurity. This study examines the impact of local housing costs on household well-being using the “basic needs” data from the Survey of Income and Program Participation. Across a wide variety of specifications, no evidence is found that housing costs impact well-being. In contrast, local labor market conditions do impact the well-being measures in many specifications. The findings call into question one of the key motivations for the SPM—that geographic cost differences are a major factor for household well-being.     

中国的经济增长、贫困减少与政策选择

本文详细讨论了贫困分析常用的几个概念和衡量指标 ,并建立了它们之间的关系 ,从而建立起分析模型。进一步 ,本文提出了分解增长效应的方法和贫困减少指数 ,然后 ,本文将提出的模型、方法和指数应用于调查结果及其他官方资料 ,以分析 1 985年至 2 0 0 1年间增长与贫困减少的关系。实证结果与 1 985年以来中国贫困减少的经历相符。贫困减少指数表明 ,增长政策的选择应该使收入效应与不均等效应之和最大化 ,这为不同的发展阶段与不同的地区提供了政策选择。