Are the World's Poor Qualitatively Distinct

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COMMENTARIES

Are the Worlds Poor QualitativelyDistinct From the Fortunate Few?

G. Scott ActonDepartment of Psychology

Rochester Institute of Technology

Icelands target article (this issue) provides much food for thought on the distinc-

tion between poverty and wealth, but one unexamined assumption warrants com-

ment: that, properly defined, a poverty line exists. This commentary challengesthat assumption on methodological grounds that invite empirical testing rather

than further definitional refinement. It is argued that the basic problem is not abso-

lute versus relative but categorical versus dimensional. Wealth and poverty may

not be qualitatively distinct categories but may lie on a continuumthis hypothe-

sis can and should be tested.

Let us assume that investigators are able to identify a group of persons who are

impoverished and another group who are not. The identification can be on the basis

of expert consensus or a systematic algorithm. Let us also assume that investiga-

tors are able to identify indicators relevant to this distinction, such as the followingbasic human rights: food, clean water, shelter, health care, education. Then let us

see whether the poor are qualitatively distinct from the wealthy (e.g., those who do

not have to worry about whether they will eat tomorrow) on these indicators on the

basis of differential item functioning or lack of factorial invariance (cf. De Boeck,

Wilson, & Acton, 2005). To be merely quantitatively distinct, the poor would be

lower than the rich on all the basic human rights to the same degree, but to be quali-

tatively distinct, the human rights would mean something completely different

among the poor than among the rich. For example, the meaning ofelectricity may

be different in poor countries than in rich ones; electricity may be so rare in

MEASUREMENT, 3(4), 236260Copyright 2005, Lawrence Erlbaum Associates, Inc.

Correspondence should be addressed to G. Scott Acton, Department of Psychology, Rochester In-

stitute of Technology, 92 Lomb Memorial Drive, Rochester, NY 14623. E-mail: [email protected]


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third-world countries that it is lacking even among community leaders, whereas in

industrialized countries electricity may light the streets where the homeless live.

We can also compare distributions of persons within a particular group, such asthe impoverished, with respect to within-group heterogeneity as measured by

Cronbachs . This distinction, although important conceptually, may be less im-

portant in practice because it seems evident that within the category of poverty

people differ on the indicators. For example, one particular subset of the poor, such

as those in many Third World countries, may live in abject misery, whereas another

groups deprivation can be recognized only by way of comparison with the

wealthy. Such heterogeneity would become important, however, if it were of a

qualitative kind, in which case subtypes with different profiles of poverty should

be considered. Such within-group heterogeneity, which could be revealed by latentprofile analysis or a mixture model with different mean and covariance structures,

depending on the mixture component, could have implications for the manner in

which interventions should be deployed. Specifically, the most sensible interven-

tion would be to provide preferentially for the poor who are worst off.

For example, treatment-resistant tuberculosis has emerged as a serious problem

in some Third World countries. These poor people differ from other poor people in

that they carry a highly lethal infectious disease that, if left untreated, could be-

come an epidemic (Farmer, 2003). The treatment for treatment-resistant tuberculo-

sis involves bypassing traditional drugs in favor of a more expensive regimen.Such expense is justified on grounds of basic human rights, but it also happens that

treatment-resistant tuberculosis promises to proliferate beyond the Third World

and threaten the rich as well. Thus, infectious disease is very democratic in its ef-

fects, encouraging us to reduce the difference in health care between rich and poor

and make effective treatments available to all.

REFERENCES

De Boeck, P., Wilson, M., & Acton, G. S. (2005). A conceptual and psychometric framework for distin-

guishing categories and dimensions. Psychological Review, 112, 129158.

Farmer, P. (2003). Pathologies of power: Health, human rights, and the new war on the poor. Berkeley:

University of California Press.

COMMENTARIES 237


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A Case for Measures of Asset Poverty

Sondra G. Beverly and David OkechSchool of Social Welfare

University of Kansas

Iceland (this issue) defines poverty as economic deprivation and focuses on mea-

sures of income poverty. We agree with Iceland that there is a strong conceptual ra-

tionale for income-based measures, as well as some operational advantages, and

that these measures are understood and accepted by researchers, policy makers,

and the public. However, we argue here that there is an important place for as-

set-based measures of poverty as well. This emphasis on assets flows from work by

Sherraden (1991). Making use of the alternative conceptions of poverty that Ice-

land has identified, we propose that measures of asset poverty are important indi-cators of economic deprivation, social exclusion, and perhaps capability depriva-

tion. We close with some recommendations about using measures of poverty.

LACK OF ASSETS AS ECONOMIC DEPRIVATION

Lack of income is a form of economic deprivation because income allows families

to finance consumption. Lack of assets is a form of economic deprivation because

income and expenses are not constant. Some income and expense shocks are un-expected. For example, income may drop precipitously when a primary earner is

laid off, or consumption needs may increase dramatically due to a health crisis or

vehicle breakdown. Other income decreases (e.g., retirement) or expense increases

(e.g., special events like a wedding or funeral) may be anticipated. In either case,

assets are an important resource. The most likely alternative to using assets is bor-

rowing, but credit may not be available. Even when it is available, relying on credit

is more expensive than spending down assets. Individuals take great comfort in

knowing that they have rainy day savings. In fact, saving for emergencies is one

of the most common saving motives for families in the United States (Aizcorbe,

238 COMMENTARIES

Correspondence should be addressed to Sondra G. Beverly, 1545 Lilac Lane, School of Social Wel-

fare, University of Kansas, Lawrence, KS 66044. E-mail: [email protected]


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Kennickell, & Moore, 2003). A concern for economic deprivation seems to under-

lie the measures of asset poverty proposed by Haveman and Wolff (2004). They

defined households as asset-poor if they do not have enough assets (defined inmultiple ways) to meet basic needs (as measured by the official income poverty

line) for a period of 3 consecutive months.

LACK OF ASSETS AS SOCIAL EXCLUSION

The notion of social exclusion has been used in Europe for decades, but there is no

consensus on a definition. Most definitions refer to low material means; an inabil-

ity to participate in economic, social, and cultural life; and, in some aspects, alien-

ation and distance from mainstream society (Duffy, 1995). Clearly, social exclu-

sion is a broader conceptualizationof poverty than economic deprivation. As much

as income, assets may determine how much a family participates in economic, so-

cial, and cultural life in the United States. For example, in many places in the

United States, it is difficult to find and maintain employment without a vehicle. In

those places, it also may be difficult to perform other common activitiessuch as

shopping for groceries, attending worship services, or getting together with friends

and familywithout a car. In short, those without access to a vehicle may experi-

ence extreme social exclusion. Ownership of another asset, a home, can also have a

large effect on economic, social, and cultural participation. Shapiro (2004) de-

scribed how the ability to purchase homes in desirable neighborhoods (some-

times with financial help from family members) gives some families a head start,

providing access to better schools, better services, better role models, and higher

social status than they had when they rented. Alone, indicators of home ownership

and vehicle ownership certainly do not provide enough information to assess so-

cial inclusion or exclusion, but under certain circumstances these indicators may

provide important supplemental information.

LACK OF ASSETS AS CAPABILITY DEPRIVATION

As Iceland (this issue) mentions, Sen (1992, 1999) has argued that poverty should

be defined as the deprivation of capabilities. From this perspective, income is not

an end in itself but simply a means to the specific ends that each individual values.

Some of the basic capabilities identified by Sen are the ability to be healthy, well

fed, and housed; to participate in community and public life; and to experience

self-respect. According to Sen, factors in addition to income, such as age, race,

gender, and location, influence an individuals capabilities.We argue that assets also affect capabilities. First, for the reasons cited previ-

ously under economic deprivation, assets can help individuals maintain nutrition,

health, and housing. Second, for the reasons cited under social exclusion, assets

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can help individuals participate in community and public life. Third, certain assets

can increase labor efficiency, reduce expenses, and even generate income, and this

increased efficiency and income may help individuals achieve their desired ends.Washers and dryers are good examples of assets that increase efficiencyand reduce

expenses. Certainly, those who have these machines in their homes can use their

time more efficiently. In addition, in in-depth interviews in the early 1990s, Edin

(2001) found that low-income single mothers often spent about $40 a month (al-

most $500 a year) doing laundry in coin-operated machines. Assets that may be

used to generate income include sewing machines, catering equipment, roofing

tools, exterminating equipment, and lawn mowers (Edin, 2001).

Finally, if Sherraden (1991) is correct that assets have positive psychological ef-

fects, assets may increase capabilities in other ways. More rigorous studies of theeffects of assets are needed (Schreiner & Sherraden, in press), but some evidence

suggests that having savings does indeed increase self-confidence, feelings of se-

curity, hope, and future orientation (Moore et al., 2001; Sherraden et al., 2005). In

short, although measures of asset ownership or asset levels may not be direct indi-

cators of basic capabilities (just as measures of income poverty are not), they might

be considered indirect indicators or perhaps prerequisites of capabilities. This is an

additional rationale for using measures of asset poverty (or asset adequacy) to sup-

plement measures of income poverty.

RECOMMENDATIONS

We have argued that there is an important conceptual rationale for measuring asset

poverty. Although more work remains, we believe that measures of asset poverty

are operationally feasible. For example, the measures of asset poverty developed

by Haveman and Wolff (2004) are informative and fairly simple to compute. They

do require information on assets and debts that is not always collected in large na-

tionally representative surveys in the United States, but existing (or improved)questions from surveys such as the Survey of Income and Program Participation

(U.S. Census Bureau, 2005) and the Survey of Consumer Finances (Federal Re-

serve Board, 2003) might be added to other large surveys. Like self-reported data

on income, self-reported data on assets and debt will be subject to recall, social de-

sirability, and other forms of bias.

Despite these imperfections, we believe measures of asset poverty should sup-

plement measures of income poverty for the purpose of monitoring well-being.

Even as the federal government considers revising the official measure of income

poverty, we would like to see it develop an official measure of asset poverty. Theinformation gained from such a measure would provide new insight into the

well-being of U.S. families; it would also informand show the need forongo-

ing efforts to encourage asset building.

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To determine eligibility for benefits such as temporary assistance for needy

families and food stamps, we believe federal and state governments should con-

tinue using measures of income poverty (perhaps the NAS measure that Iceland[this issue] recommends) for the foreseeable future. As Iceland notes, procedures

to assess income are in place and are politically accepted. However, consistent

with the arguments presented here regarding the effect of assets on short-term and

long-term well-being, we believe that the move to loosen asset restrictions in these

and other means-tested programs is very desirable.

Finally, like Iceland (this issue), we encourage ongoing efforts to expand mea-

sures of poverty beyond those associated with income poverty and even asset pov-

erty. Poverty is a complex and multidimensional experience; by using multiple

measures representing a variety of dimensions, we will increase our understandingof poverty and thus be more likely to make progress toward reducing it.

REFERENCES

Aizcorbe, A. M., Kennickell, A. B., & Moore, K. B. (2003). Recent changes in U.S. family finances:

Results from the 1998 and 2001 Survey of Consumer Finances. Federal Reserve Bulletin, 89, 132.

Duffy, K. (1995). Social exclusion and human dignity in Europe. Strasbourg, France: Council of Eu-

rope.

Edin, K. (2001). More than money: The role of assets in the survival strategies and material well-being

of the poor. In T. M. Shapiro & E. N. Wolff (Eds.),Assets for the poor: The benefits of spreadingasset

ownership (pp. 206231). New York: Russell Sage Foundation.

FederalReserveBoard.(2003).Surveyofconsumerfinances.Available fromhttp://www.federalreserve.gov/

pubs/oss/oss2/scfindex/html

Haveman, R., & Wolff, E. N. (2004). The concept and measurement of poverty: Levels, trends and com-

position for the U.S., 19832001. Journal of Economic Inequality, 2, 145169.

Moore, A., Beverly, S., Schreiner, M., Sherraden, M., Lombe, M., Cho, E. Y. N., et al. (2001). Saving,

IDA programs, and effects of IDAs: A survey of participants. St. Louis, MO: Washington University

in St. Louis, Center for Social Development.

Schreiner, M., & Sherraden, M. (in press). Can the poor save? Saving and asset accumulation in indi-

vidual development accounts. New York: de Gruyter.

Sen, A. (1992). Inequality re-examined. New York: Russell Sage Foundation.

Sen, A. (1999). Development as freedom. New York: Knopf.

Shapiro, T. M. (2004). The hidden cost of being African American: How wealth perpetuates inequality.

New York: Oxford University Press.

Sherraden, M. (1991). Assets and the poor: A new American welfare policy. Armonk, NY: Sharpe.

Sherraden, M., McBride, A. M., Johnson, E., Hanson, S., Ssewamala, F. M., & Shanks, T. R. (2005).

Saving in low-income households: Evidence from interviews with participants in the American

Dream Demonstration. St. Louis, MO: Washington University in St. Louis, Center for Social

Development.

U.S. Census Bureau. (2005). Survey of income and program participation. Available from http://www.bls.census.gov/sipp/

COMMENTARIES 241


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We Need a MoreSocially Relevant Metric

Sue BooksDepartment of Secondary Education

State University of New York at New Paltz

John Iceland (this issue) offers a thorough assessment of income-based poverty

measures and argues persuasively that they have a vital place (p. 220), provided

they are socially relevant and conceptually and empirically sound (p. 220). I

would like to add to his discussion by considering the meaning of socially rele-

vant (p. 220) in the context of poverty measurement and commenting on the polit-ical significance of potentially adopting something more meaningful than the offi-

cial U.S. metric.1

Between 2000 and 2003, poverty in the United States increased in terms of head

count as well as severity. Not only did more people become poor, but also the poor

became poorer. In 2003 the average amount by which poor people fell below the

poverty line reached the highest level on record (Center on Budget and Policy Pri-

orities, 2004).2 The increase in poverty was concentrated among children. In 2003

1 in every 3 poor persons was a child (Center on Budget and Policy Priorities,

2004). In 2003, almost 13 million children (younger than 18 years) lived below theofficial poverty line17.6% of all children or more than 1 in every 6 (Childrens

Defense Fund, 2004). With a similar number in mind, former New Jersey Senator

Bill Bradley evoked this picture: If gathered together, all the poor children in the

United States would make up a city bigger than New Yorkand we would then

see child poverty as the slow-motion national disaster that it is (Metropolis,

2000). Since 2002, the number of children living in extreme povertythat is, in

242 COMMENTARIES

Correspondence should be addressed to Sue Books, Department of Secondary Education, Old Main

204, SUNY at New Paltz, New Paltz, NY 12561. E-mail: [email protected] make this argument more fully in Poverty and Schooling in the U.S.: Contexts and Consequences

(Books, 2004, chapter 9).2The data go back to 1975.


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families with incomes of one half the poverty threshold or lesshas increased at

almost twice the overall rate of child poverty (11.5% compared with 6%; Chil-

drens Defense Fund, 2004).3As alarming as these numbers are, they are based on an official definition of

poverty as an income in 2004 of no more than $15,670 for a family of threeand

no one can believe this is all it takes to feed, clothe, house, educate, and otherwise

care for three people, regardless of where the family lives. By classifying only this

level of deprivation as poverty, the official metric seriously distorts the hardship

and suffering that come from having too little income to meet a familys most basic

needs. A socially relevant income-based measure of poverty first and foremost

would have to result in family thresholds that better reflect commonsense under-

standings of poverty. Even if the official metric technically does not measure eco-nomic hardship, that is what most people understandpoverty to be, and they regard

the poverty line as its measure.

A U.S. Department of Agriculture (USDA) report shows that the typical U.S.

household now spends 36% more than the cost of the USDAs Thrifty Food Plan

(on which the poverty line is based). Food insecure households typically spend 4%

more and still cannot provide everyone in the family with the food they need to live

active, healthy lives (Nord et al., 2002). According to economists at the Economic

Policy Institute, poor families in the United States overall are worse off today rela-

tive to the median family than they were in 1970 (Boushey, Brocht, Gundersen, &Bernstein, 2001). The official metric should make this apparent.

A WIDER ANGLE

The National Research Council (NRC; 1995) study of the U.S. poverty measure

found the official measure to be unacceptably flawed (p. 21). Researchers

warned against letting a key social indicator become so frozen in place that, when

societal conditions change, it can no longer adequately reflect what it was designedto measure (NRC, 1995, p. 43). That seemingly is exactly what has happened.

Many advocacy organizations consequently do not use the poverty line at all in

theirefforts todocumenteconomichardship.TheorganizationWiderOpportunities

for Women (n.d.), for example, has developed a methodology to cost out living ex-

pensesthat is, how much money families in different locations need to pay taxes

andmeet bare-bones expenses forhousing,child care, food, healthcare, transporta-

tion,andotherbasicout-of-pocketexpenses.Thisself-sufficiencystandardassumes

neither public subsidies (e.g., subsidized housing, foodstamps, Medicaid, or subsi-

COMMENTARIES 243

3This trend almost certainly reflects the revocation of a federal guarantee of support for families at

the bottom of the economic scale, accomplished through the 1996 welfare legislation.


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dized child care) nor private help (e.g., free baby-sitting by a friend or relative,

canned goods from a food bank, or shared housing). A single mother of three in the

Bronx would haveneeded$38,088 in 2000 to cover a no-frills budget, even after taxcredits. This income is almost three times as much as the official poverty threshold

forsuchafamilyandalmost60%morethanajobrequiringanaveragelevelofskills,

experience, and education likely would pay (Greenhouse, 2000).

The Economic Policy Institute (Boushey et al., 2001) similarly has published

budgets for various family configurations in hundreds of communities across the

United States. The budgets include housing, child care, health care, food, transpor-

tation, and taxes, but not restaurant meals, vacations, movies, or savings for educa-

tion or retirement. The budgets for 1997 to 1999 range from $21,989 a year for one

parent and two children in Hattiesburg, Mississippian amount 64% greater thanthe official poverty lineto $48,606 a year for the same family in Nassau-Suffolk

County, New Yorkan amount equal to 362% of the poverty line. Boushey et al.

(2001) found that almost 30% of families with one to three children under 12 years

of age had incomes below the basic family budget levels. This included more than

56% of all African American and Latino families.

Calculations based on realistic family budgets suggest how grossly the official

poverty line distorts the scope of economic hardship in the United States. Along

with this criticism, poverty scholars (e.g., Andre, 1998) have argued that poverty

measures ought to account for the experience of poverty over time. How long dopeople tend to be poor, and how severe is the poverty they experiencethat is, how

great is the gap between needs and resources? Is poverty generally experienced in

short spells by many people or for long periods by a few? Questions like these chal-

lenge the idea on which the U.S. poverty measure restsnamely, that the popula-

tion falls neatly into distinct categories of poor and not poor. In fact, when mea-

sures of the duration and severity of poverty are taken into account, a picture

emerges not of a dichotomy between the permanently, desperately poor and the

never poor, but rather of a variety of experiences among the poor, the near poor,

and the once poor (Walker, 1998, p. 39).Because the official poverty line is calculated only annually, it tells nothing

about the number of people experiencing either short spells of poverty or long,

multiyear spells, or about how poverty affects households and individuals over

time. Yet, taking duration into account recasts the picture significantly. Using the

Panel Study of Income Dynamics, a longitudinal data set that tracked thousands

of individuals and families in the United States starting in 1968, Devine and

Wright (1993) found that over a 20-year period (19681987), 11% to 15% of

families were poor in any given year. However, almost 40% were poor for at

least 1 year during the 2 decades. If one could extend this analysis over the av-erage lifetime of a family, the proportion experiencing at least a year of poverty

would have to increase and might easily reach or exceed half, they concluded.

In other words, Half the households in this affluent, postindustrial society are

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destined to spend at least one of their years beneath the poverty line (Devine &

Wright, 1993, p. 105).

Using the same data set, Rank (1999) found that by age 6, 57% of all AfricanAmerican children are likely to live below the poverty line for at least 1 year, com-

pared with 15% of all White children. By age 12, 67% of all African American

children and 21% of all White children are likely to have been poor for at least a

year, and by age 17, 69% of all African American youth and 26% of White youth

are likely to have lived below the poverty line for at least a year. By age 75, 91% of

all African Americans and 53% of all White Americans are likely to have experi-

enced poverty at some point in their lives. These studies not only underscore the

economic significance of race in this society but also suggest that living in poverty

is a far more common experience than the official statistics imply.Because the official measure includes only two categories, poor and not poor, it

tells nothing about the overall distribution of resources among the poor. Conse-

quently, if income were taken from some very poor people to move a few

less-poor persons out of poverty, the effect would be to reduce the head count, even

though the depth of poverty had become worse (NRC, 1995, p. 87). Because the

official poverty measure tallies the number of people who were poor in a given

year, but not how many were in economic distress, even if not officially poor, it ob-

scures not only further impoverishment of the poor but also the experience of all

those on the margins of economic insecurity. As Heclo (1994) argues,

The unofficial poor may live beyond the official line most of the time, but they

share the diverse insecurity of people, without much education, with jobs that do not

pay very well or lead very far. They, like others, find their lives buffeted this way and

that by joblessness, underemployment in a changing economy, illness that is unin-

sured or underinsured, day care that is a pastiche of unaffordable costs and improvi-

sations, and any number of other problems. They need not cross a line to feel and be

poor. (p. 420)

The U.S. poverty measure ignores in-kind benefits in calculating family resources,

and so does not show declines in well-being due, for example, to cuts in food stamp

benefits or to tighter restrictions on eligibility for Medicaid or Supplemental Secu-

rity Income. The measure also ignores work-related expenses and so treats income

from wages the same as income from welfare benefitswhich, of course, it is not,

if the wage earner must pay for child care and transportation.

Aside from the particular problems with the official U.S. poverty metric, there

are those who argue, as Iceland (this issue) notes, that no income-based assessment

tells much about the pervasive disparities and deprivations that shape peopleslives. Access to good schools, to health care, to reliable transportation, and to some

measure of economic security; the ability to fulfill personal and family responsibil-

ities, such as caring for children and other family members; the opportunity to gain

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the education and training necessary to improve long-term economic prospects

all this is related to, but cannot wholly be reduced to, family income. Along these

lines, Boshara (2002) argues for a focus on assets as well as income, which offers amore completeand dishearteningpicture of poverty. One fourth of the U.S.

population is now asset poor, meaning their net worth, including savings, home

equity, and other assets, would enable them to survive at the poverty level for no

more than three months. Take away home equity, or just consider liquid assets,

and the poverty rate jumps to nearly 40 percent (Boshara, 2002, p. WK13). The

bottom 60% of the population earns only 23% of the nations income, but has far

less, only 5%, of its wealth. The bottom 40%, which earns 10% of the national in-

come, has less than 1% of the national wealth (Boshara, 2002).

WHY CONTINUE?

Given its multiple shortcomings, why do we still use the official metric? Because, I

believe, it provides statistical justification for downplaying the physical, emo-

tional, social, and educational consequences of poverty. In a society reluctant to

confront what poverty does to children and familiesas, I would argue, ours isit

is perhaps not surprising that an income-based and deeply flawed poverty measure

has primacy as an index of social health and well-being. Quantified and relatedonly to comparable indexes of years past, the hardship and suffering, defined as

shortfalls in income, can be counted and in some sense then forgottencounted

and accounted for. Concerns with poverty are reduced to concerns with income

statistics, which reflect nothing more meaningful than estimates of food costs and

the relationship these costs once held to overall costs of living. The official metric

serves a purpose, albeit not one that is fundamentally educational or informative.

According to former Secretary of Labor Robert Reich, The consensus [has

been] not to change the standard for fear the poverty rate would look worse (as

cited in Uchitelle, 2001, p. B7). Adopting a more socially relevant measure wouldindeed make poverty look worse and would require recognizing it as a major

problem in the United States. Undergraduates in a seminar on education and pov-

erty that I taught during the last presidential campaign were surprised to realize

that, with the exception of vice presidential candidate John Edwards, none of the

candidates addressed issues of poverty in any substantive way.

Let me conclude with two caveats. First, as problematic as the official poverty

metricis,theannualstatisticsdoprovideanindexofrealsuffering.Asfamilyincome

decreases, damage to children increases (Books, 2004; Duncan & Brooks-Gunn,

1997; Polakow, 1993, 2000; Rothstein, 2004). For this reason, we need to knowwhetherthenumbersaregoingupordown,andhowrapidly.Second,althoughIhave

focused primarily on the poverty metric itself, I believe that adopting something

better is not fundamentallya technical problem but rathera moral and politicalchal-

lenge.Aflawedmeasureofpovertystandsastheofficialindexofeconomichardship

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in this country not because a better measure eludes our collective intellectual grasp

but rather because the official measure does exactly whatmanypeople want it todo.

It reflects a reassuring picture of a majority that is prospering or at least getting by,juxtaposed to a less well-offminority, which, because of the waythe population is

defined and measured, appears fairly small, stable, and unthreatening. Meaningful

numbers and straight talk about the level of poverty in this society would be ex-

tremely helpful in moving us beyond this distortion.

REFERENCES

Andre, H. (Ed.). (1998). Empirical poverty research in a comparative perspective. Aldershot, Eng-land: Ashgate.

Books, S. (2004). Poverty and schooling in the U.S.: Contexts and consequences. Mahwah, NJ: Law-

rence Erlbaum Associates, Inc.

Boshara, R. (2002, September 29). Poverty is more than a matter of income. The New York Times, p.

WK13.

Boushey, H., Brocht, C., Gundersen, B., & Bernstein J. (2001).Hardships in America: The real story of

working families. Washington, DC: Economic Policy Institute.

Center on Budget and Policy Priorities. (2004, August 27). Census data show poverty increased, in-

come stagnated, and the number of uninsured rose to a record level in 2003. Retrieved September 27,

2004, from http://www.cbpp.org/8-26-04pov.pdf

Childrens Defense Fund. (2004). Family income: Child poverty. Retrieved September 27, 2004, from

http://www.childrensdefense.org

Devine, J. A., & Wright, J. D. (1993). The greatest of evils: Urban poverty and the American

underclass. New York: Aldine de Gruyter.

Duncan, G. J., & Brooks-Gunn, J. (1997). Consequences of growing up poor. New York: Russell Sage

Foundation.

Greenhouse, S. (2000, August 6). Farm work by children tests labor laws.TheNewYorkTimes,p.12.

Heclo, H. (1994). Poverty politics. In S. H. Danzinger, G. D. Sandefur, & D. H. Weinberg (Eds.), Con-

frontingpoverty: Prescriptionsfor change(pp.396-437).Cambridge,MA:HarvardUniversityPress.

Metropolis of poor children. (2000, August 17). The New York Times, p. A30.

National Research Council. (1995). Measuring poverty: A new approach (C. F. Citro & R. T. Michael,Eds.). Washington, DC: National Academy Press.

Nord, M., Kabbani, N., Tiehen, L., Andrews, M., Bickel, G., & Carlson, S. (2002, February). House-

hold food security in the United States, 2000 (Food Assistance and Nutrition Research Report No.

21). Washington, DC: U.S. Department of Agriculture, Economic Research Service.

Polakow, V. (1993). Lives on the edge: Single mothers and their children in the other America. Chi-

cago: University of Chicago Press.

Polakow, V. (Ed.). (2000). The public assault on Americas children: Poverty, violence, and juvenile in-

justice. New York: Teachers College Press.

Rank, M. R. (1999). The racial injustice of poverty. Journal of Law and Policy, 1(95), 9598.

Rothstein, R. (2004). Class and schools: Using social, economic, and educational reform to close the

BlackWhite achievement gap. Washington, DC: Economic Policy Institute.Uchitelle, L. (2001, May 26). How to define poverty? Let us count the ways. The New York Times, p.

B7.

Walker, R. (1998). Rethinking poverty in a dynamicperspective. In H. Andre (Ed.),Empirical poverty

research in a comparative perspective (pp. 2949). Aldershot, England: Ashgate.

WiderOpportunitiesforWomen.(n.d.).RetrievedSeptember27,2004,fromhttp://www.wowonline.org

COMMENTARIES 247


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Comparative Policy Approachesto Understanding Poverty

David K. JesuitDepartment of Political Science

Central Michigan University

The conceptual and methodological debate concerning poverty is not merely aca-

demic; the choice of one particular approach over another has important conse-

quences both for identifying poverty and formulating policies that might best alle-

viate it (see Townsend, 1980). As such, the debate over how to define and quantify

poverty is also a political debate. Accordingly, Iceland (this issue) provides a bal-

anced overview of many of the theoretical choices confronting researchers andpolicy makers studying poverty. He also addresses several empirical challenges as-

sociated with measuring poverty in the United States. However, there are a few

shortcomings in Icelands contribution. My first objection is that Iceland does not

adequately describe cross-national efforts at measuring poverty, which offer both

theoretical and empirical insights that should not be ignored. Second, the National

Academy of Science (NAS) panels quasi-relative poverty measure, which Ice-

land prefers, bears little resemblance to most relative measures of poverty and is

theoretically unsatisfying. Finally, Iceland overlooks the advantages of measuring

market (pretax and pretransfer) income poverty in addition to disposable incomepoverty. By doing so, researchers may gain a better understanding of the relative

importance of the market and the public sector in determining levels of economic

well-being. In this brief commentary I address each of these concerns and illustrate

them by reference to cross-national data made available by the Luxembourg In-

come Study (LIS; n.d.), which I hope will allow researchers to judge the effec-

tiveness of American antipoverty policy with the experiences of other nations

(Smeeding, Rainwater, & Burtless, 2000, p. 1).

The first weakness of Icelands (this issue) summary is that it fails to adequately

discuss cross-national efforts at measuring poverty. The World Bank has made sig-

248 COMMENTARIES

Correspondence should be addressed to David K. Jesuit, Department of Political Science, Central

Michigan University, Anspach 313B, Mt. Pleasant, MI 48859. E-mail: [email protected]


14/25

nificant progress in this area, especially with regard to less developed countries,

and poverty estimates are available for nearly every country in the world (see

World Bank, n.d.). At present, however, the most comprehensive source of compa-rable income survey data is the LIS, a nonprofit international organization.1 The

LIS includes more than 125 data sets from 29 different countries, mostly in the de-

veloped world, covering 4 decades. Unlike other data sources, the LIS data are har-

monized so that comparability between countries in measures of income poverty is

enhanced. Furthermore, detailed household information, including individual

sources of income from both the private and public sectors, is available. These ef-

forts represent significant achievements in furthering our understanding of poverty

in the United States and elsewhere and overcome many of the empirical challenges

associated with estimating levels of economic well-being around the world. In aneffort to demonstrate the utility of such comparative approaches, I offer

cross-national poverty measures from the LIS in the concluding section of this

commentary.

A second problem I have with Icelands (this issue) summary stems from my

theoretical preference for a purely relative approach to measuring poverty rather

than the NAS panels quasi-relative measure. As Iceland initially acknowledges,

what it means to be poor varies across time and place (p. 199). In fact, Adam

Smith argued that poverty means being devoid of not only the commodities

which are indispensably necessary for the support of life, but whatever the customof the country renders it indecent for creditable people, even of the lowest order, to

be without (quoted in Kangas & Ritakallio, 2004, p. 1). In other words, what it

means to be poor in the United States may differ from what constitutes poverty in

Sweden. As Iceland notes, relative measures of poverty commonly compare a

households economic status to a social reference group, most often the nation as a

whole, and determine whether or not it is poor by its ranking in the income distri-

bution. Thus, economic growth tends to result in increases in the poverty threshold

as expectations about what constitutes a decent standard of living increase as well.

This is how the European Unions and the United Kingdoms official poverty lines,at 60% of median and 50% of mean household equivalent income, respectively, are

computed (see Eurostat, 2000). The quasi-relative measure, on the other hand, is

ultimately an absolute measure of poverty because the poverty threshold is still de-

fined primarily by a market basket of goods adjusted to reflect changes in patterns

of consumption and costs of living by American families since the 1960s (thus the

quasi-relative designation; see also Iceland, 2005, p. 28). In short, all of these

changes simply offer a more accurate absolute poverty threshold, below which in-

dividuals and families are incapable of purchasing their minimum needs. Finally,

the NAS poverty measure is not comparable to other common measures of poverty,

COMMENTARIES 249

1See Atkinson, Rainwater, & Smeeding (1995) for detailed information.


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two of which were just mentioned, which inhibits researchers from making

cross-national comparisons. Indeed, the comparative poverty scores offered at the

end of this commentary would not be feasible if we were to adopt the quasi-relativeapproach. In sum, for researchers theoretically wedded to relative definitions of

poverty, the NAS panels poverty recommendation is not satisfactory.

A third limitation of Icelands (this issue) overview is that although he is aware

of the problem with the official U.S. poverty lines reliance on gross cash income

and rightly praises the NAS recommendations in this area, he overlooks the poten-

tial advantages of calculating rates of poverty based on income from different

sources. To reiterate, gross cash income does not include near-cash benefits such

as food stamps, nor does it deduct income taxes or mandatory employee contribu-

tions from household income. The NAS panels solution is to add public transferpayments (e.g., retirement, family allowances, unemployment compensation, so-

cial assistance benefits, near-cash benefits) and deduct nondiscretionary spending

such as income taxes, social security contributions, and essential medical expendi-

tures. This approach, closely related to adjusted disposable income (see Statis-

tics Canada, 2001, p. 18), captures the amount of income a household has available

to spend. However, relying only on posttax and transfer income tells us little about

the relative importance of the market and the public sector in generating and/or al-

leviating income poverty. For most persons and households, their primary income

source is from the marketwhich includes earned income from wages, salaries,self-employmentand other cash income from private sources such as property,

pensions, alimony, or child support. By estimating both market and disposable in-

come poverty rates, we can provide a better gauge of antipoverty programs effec-

tiveness. For example, how much of poverty is market generated? How much are

public transfers reducing poverty?

In this final section I hope to illustrate my main concerns by briefly focusing on

cross-national comparisons of pretax and pretransfer (market) and post-tax and

post-transfer (disposable) income poverty for four countries. Using data made

available by the LIS, Figure 1 reports market and disposable income poverty ratesfor Canada, Germany, Sweden, and the United States in 2000. Beginning with

market income poverty, Figure 1 shows that these countries all had relatively high

rates of poverty. Indeed, an average of 1 in 4 persons would be considered poor if

the market were their only source of income. Furthermore, there was a modest

range of market income poverty levels among the countries, with almost 30% of

Germans falling below the market income poverty line in 2000 compared with

22% of Canadians. When we take into account the effect of the public sector on rel-

ative poverty rates, it is clear that the greatest source of cross-national variation in

the rate of poverty among these countries has to do with the size and effectivenessof government social programs. As clearly shown in Figure 1, despite the fact that

the United States and Canada began with much lower rates of private income pov-

erty than either Germany or Sweden, after public-sector adjustments to household

250 COMMENTARIES


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income these countries report higher levels of income poverty than the others. In

fact, at 17.0% the United States had the highest rate of poverty within the devel-

oped world in 2000. At the other end of the spectrum, Swedens rate of poverty(6.5%)was only slightly more than a third of the U.S. level. This reversal in poverty

rankings is due to the role of the public sector. In the United States and Canada, so-

cial transfers and taxes reduced the incidence of poverty by only 6.1% and 10.6%,

respectively. By contrast, public policy intervention in Germany (21.5% reduction

in poverty) and Sweden (21.2%) resulted in 2 to 3 times more people moving out of

poverty.2 In sum, these figures suggest that the relatively high rate of poverty in the

COMMENTARIES 251

FIGURE 1 Pre- and posttax and pre- and posttransfer poverty in 2000. Sources: Disposableincome poverty rates, Luxembourg Income Study (LIS) key figures (see http://www.lisproject.

org/keyfigures/povertytable.htm). Poverty reduction rates are authors calculations using LIS

figures. Poverty line is defined at 50% of median private and disposable equivalent income.

Equivalency scale equal to square root of household size. All other methodological decisions

are consistent with LIS key figures procedures (see http://www.lisproject.org/keyfigures/meth-

ods.htm).

2Some argue that the relatively high levels of private income poverty and low levels of disposable

income poverty in Germany, Norway, and Sweden and vice versa in Canada and the United States re-

flect second-order effects such that antipoverty programs actually create poverty (see e.g., Bradley,

Huber, Moller, Nielsen, & Stephens, 2003).


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United States is due to the small role public policies play in alleviating poverty in

the United States relative to other wealthy countries.

In conclusion, Icelands (this issue) overview of the theoretical and method-ological challenges associated with measuring poverty provides a good starting

point for students interested in this field of research. However, as this commentary

suggests, a more comprehensive approach would be cross-nationally comparative

and estimate both market and disposable income poverty.

REFERENCES

Atkinson, A. B., Rainwater, L., & Smeeding, T. M. (1995). Income distribution in OECD countries:Evidence from the Luxembourg Income Study. Paris: Organization for Economic Cooperation and

Development.

Bradley, D., Huber, E., Moller, S., Nielsen, F., & Stephens, J. D. (2003). Distribution and redistribution

in postindustrial democracies. World Politics, 55, 193228.

Eurostat. (2000). European social statistics: Income, poverty and social exclusion. Luxembourg: Au-

thor.

Iceland, J. (2005). TheCNSTAT workshop on experimental poverty measures, June 2004. Focus, 23(3),

2630.

Kangas, O., & Ritakallio, V. (2004). Relative to what? Cross-national picture of European poverty

measured by regional, national and European standards (LIS Working Paper 384). Syracuse, NY:

Luxembourg Income Study. Retrieved May 20, 2005, from http://www.lisproject.org/publications/liswps/384.pdf

Luxembourg Income Study. (n.d.). Key figures. Retrieved June 10, 2005, from http://www.lisproject.

org/keyfigures.htm

Smeeding, T. M., Rainwater, L., & Burtless, G. (2000). United States poverty in a cross-national con-

text(LIS Working Paper 244). Syracuse, NY: Luxembourg Income Study. Retrieved May 20, 2005,

from http://www.lisproject.org/publications/liswps/244.pdf

Statistics Canada. (2001). Expert group on household income statistics: The Canberra Group final re-

port and recommendations. Ottawa, Ontario, Canada: Author.

Townsend, P. (1980). Research on poverty. In A. B. Atkinson (Ed.), Wealth, income and inequality (pp.

299306). New York: Oxford University Press.

World Bank. (n.d.). Povertynet home. Retrieved May 20, 2005, from http://www.worldbank.org/

poverty

252 COMMENTARIES


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In Search of the Best Poverty Measure

Daniel T. LichterDepartment of Policy Analysis and Management

Cornell University

A decade ago, the National Academy of Sciences (NAS) commissioned a panel to

evaluate how best to measure poverty (Citro & Michael, 1995). In Measuring Pov-

erty: A New Approach, NAS panel members critiqued the absolute income mea-

sure of poverty first proposed by Orshansky in the mid-1960s (Orshansky, 1965).

Based on an economy food plan, the Orshansky measure still provideswith only

minor adjustments and corrections for changes in the cost of livingthe official

poverty income thresholds for families of different sizes and compositions. The

NAS report identified and critiqued several well known problems with the officialpoverty measure: (a) its failure to keep pace with improving national and local

standards of living; (b) poorly justified income equivalencies between differ-

ent-size families; (c) failures to adjust for taxes paid, in-kind income, and other

benefits (e.g., Medicaid); (d) geographic variability in the cost-of-living and con-

sumption patterns; and (d) the unequal costs of working (e.g., day care, transporta-

tion, etc.) and different family patterns (e.g., alimony and child support payments).

The NAS panel recommended a new set of poverty thresholds that addressed many

of these weaknesses.

Ten years after the publication ofMeasuring Poverty and after much evaluationresearch, we apparently have come full circle. Icelands (this issue) discussion and

analysis suggest that absolute and relative measures of poverty have serious short-

comings, and that the NASs quasi-relative measure of poverty is the single most

informative income poverty measure. This positive judgment is apparently based

on the NAS measures ability to track subjective and material hardship and address

some of the most egregious conceptual problems with Orshanskys original formu-

lation. In the end, Iceland does not offer any additional recommendations for mea-

suring contemporary poverty, nor does he identify new limitations of the

COMMENTARIES 253

Correspondence should be addressed to Daniel T. Lichter,102 Martha Van Rensselaer Hall, Depart-

ment of Policy Analysis and Management, Cornell University, Ithaca, NY 14853. E-mail: lichter.5@

sociology.osu.edu


19/25

NAS-recommended poverty measure made more than decade ago and subse-

quently endorsed in principle by other researchers (Short, 2001). Icelands general

observations and careful critique of existing poverty measures are both useful andhard to dispute. His endorsement of the NASs quasi-relative measure of poverty

seems mostly justified by his analyses and those of other analysts. The commen-

tary also reinforces the idea shared by other scholars that different measures of

poverty based on absolute income, material hardships, or other criteria (e.g.,

benchmarked to median income) have different and often complementary uses.

Unfortunately, after 10 years, most poverty scholars, government analysts, and

policy makers are either unwilling or unable to adopt the NAS recommendations.

The reasons should surprise no one. The adoption of any new poverty measure cre-

ates unhappy discontinuities with the ongoing time series. The NAS measure is ar-guably impractical from the standpoint of data requirements and ease of construc-

tion. It also seems to generate much the same conclusions about past poverty

trends and subgroup differentials as the original Orshansky measure, and any sta-

tistical correlation with measures of material hardship are similar to those with the

current poverty measure (Short, 2003). And, perhaps most important, the new

measure does not resolve fundamental disagreements about the absolute level of

income that best defines the poor. In the final analysis, practical considerations

weigh heavily in favor of the Orshansky measurehowever flawed and against

the new and improved NAS measure. Unless these practical matters are suffi-ciently addressed in our statistical gathering system and the requisite data neces-

sary to construct the new measure are routinely included in key ongoing periodic

surveys (e.g., Current Population Survey, National Survey of Family Growth,

Longitudinal Survey of Youth), there can be little hope that the NASs recommen-

dationsor Icelands (this issue) endorsement of them will be accepted in prac-

tice by the wider social science and policy communities. The problem, ultimately,

is that there is no agreed-on empirical standard by which to judge the merits of al-

ternative relative and absolute poverty measures. And, although levels of poverty

differ somewhat across experimental measures, most new measures, including theNASs recommended one, seem for most purposes to adequately track recent

trends and differentials across population subgroups. On what conceptual or em-

pirical basis should we accept one measure over another?

Under these circumstances, it is highly unlikely that the scholarly and policy

communities will soon agree on the specific dollar amount of income below which

families or people are considered poor, which itself defies easy definitions

(Short, 2003). At the moment, this does not disturb me. My questions concern the

futurewhether the official poverty thresholds will continue in the years ahead to

adequately track changes and differentials across groups in the increasingly di-verse population of the United States. Previous research tells us that the official

poverty line is associated unevenly with various measures of material hardship for

different population groups (Mayer & Jencks, 1989). The so-called poor often

254 COMMENTARIES


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own material things (e.g., dishwashers, air conditioners, VCRs, etc.) that critics

understandably find difficult to reconcile with ideas about what it means to be truly

impoverished. My biggest fear, however, is that the official poverty measure willbe unable to keep pace with demographic trends that increasingly undermine key

assumptions built into Orshanskys measure.

In this regard, two recent demographic changes seem especially important: the

burgeoning immigrant population of the United States and the unprecedented rise

in unmarried cohabitation. When Orshanskys poverty measure was first proposed

and implemented, the foreign-born population constituted less than 5% of the U.S.

population, a historic low (Gibson & Lennon, 1999). Since then, the immigrant

population has expanded rapidly, and, unlike during the late 19th century and early

20th century, immigrants often come from poorer countries of the less developedworld (mostly Latin America and Southeast Asia). Why does this matter? It mat-

ters because immigrantsfirst- and second-generationmake up a growing share

of the poor population in the United States. They have social, economic, and cul-

tural characteristics (e.g., family and household structure, income sharing prac-

tices, and mobility patterns) that often are at odds with many of the assumptions

built into the original poverty measure.

For example, income poverty, whether measured using the official thresholds

or the NAS measure, is a family-based rather than a household-based measure

(Iceland, 2000). That is, the combined income of all family members is bench-marked against the appropriate poverty income thresholds. Among immigrants,

however, families may not be the relevant income-receiving unit. Immigrant

households are larger and more complex, and often include nonfamily members

(i.e., doubling up) who contribute to the well-being of household members. These

secondary families or individuals are not counted among the poor, regardless of

their incomes, which also are not counted as part of the family income of the

householder or head. Immigrant families and households are often more fluid be-

cause members move into and out of the households, sometimes returning to the

country of origin or seeking work in other labor markets, only to return later. Immi-grant families are often asset poor; they have little wealth (e.g., not owning their

homes or having savings) and therefore lack a secure safety net. Many immigrant

families send remittances to their families in the country of origin; this is income

that is not available for consumption here. At the same time, subjective poverty

Do you consider yourself poor?is undoubtedly low among some immigrant

groups (e.g., Mexican) who have experienced substantial upward mobility as a re-

sult of immigrating to the United States. Our current measure of poverty seems

anachronistic in light of these concerns, which will only grow over the next decade

or two with more immigration.At issue here is not only whether immigrants are truly poor but also whether they

havedistortedtheconceptual andempirical linkage between measurementandreal-

ityand, byextension, theability of theofficial measure toadequately map aggregate

COMMENTARIES 255


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trends and differentials in poverty. This is a question that cannot be ignored indefi-

nitely in light of the new racial and ethnic diversity of the United States, brought on

by unprecedented immigration from non-Europeanandless developed countries. Asimpleanalogy makesthepoint.TheNational Institutes ofHealth(NIH)now recog-

nizes that the etiology of disease and the results of clinical studies may be quite dif-

ferent across population groups, such as men and women and racial minorities.

Throughinstitutional review boardsandspecial initiatives at NIH(e.g., health dis-

parities), a concerted effort to readdress the previous imbalances in medical re-

search isnow underway. In the sameway, asa diagnostic tool for policy makers, our

current measure of poverty was developed at a particular historical time and with a

European-originWhitepopulationandspecific culturalpractices in mind. Itmaybe

lesswellsuitedformeasuringthechangingprevalenceandetiologyofpovertyasthenew immigrant minority population of the United States grows.

The rise in cohabitation poses another kind of problem. Cohabiting partners and

their children are not treated uniformly as families for the purpose of establish-

ing whether members of the household are poor or not. Coresidential partners

without children are defined as unrelated individuals. Couples with biological chil-

dren are counted as single-parent families with children, but only if the house-

holder is the biological parent of the coresident child. If not, the cohabiting partner

and child are treated as individuals unrelated to the other cohabiting partner, re-

gardless of whether they pool income and share expenses. Interestingly, cohabitingcouples with biological children together are treated as familiessingle-parent

families with childrenand the incomes of both partners are not combined when

determining whether income is above or below the poverty threshold, even though

in this instance the partners are likely to be sharing income (Carlson & Danziger

1999; Manning & Lichter, 1996).

The measurement implications posed by the rise in cohabitation, especially if

children are involved, can be dramatic. In 1999, for example, the official poverty

rate for children living with a household headed by a cohabiting couple was 39.7%

(Lichter, Qian, & Crowley, 2005). The poverty rate drops to 20.1% if each cohabit-ing couple is treated as a married couple, that is, the incomes of both partners are

combined and compared to a new poverty threshold that adjusts for the family size.

Which is the appropriate figure: nearly 40% or only 20%? The official measure as-

sumes no income sharing, which is unrealistic, and the latter assumes complete in-

come sharing in the household, which also is unrealistic. Obviously, the way re-

sources are allocated within cohabiting-couple households varies from couple to

couple, depending on the level of commitment, marital plans, shared fertility, and

many other, less obvious factors.

As with immigration, the measurement implications of rising cohabitation areimportant as we look to the future. In Northern and Western European countries,

for example, rates of cohabitation are very high and childbearing is common. Co-

habiting unions represent 48%, 36%, and 33% of all cohabiting and marital unions

256 COMMENTARIES


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in Sweden, Finland, and Denmark, respectively (Kiernan, 2004). In Sweden, about

45% of all births occur among unmarried cohabiting couples, and only 5% occur to

single women (Thomson, 2005). Is this pattern of union and family formation inthe future of the United States? If so, it will be important to evaluating poverty that

definitions of the appropriate income-receiving unit be recalibrated. Whether co-

habiting couples should be treated as families or not for the purpose of measur-

ing poverty is a decision that will require a good deal more information about how

cohabiting partners make decisions about work, income pooling, and household

expenses, including how they allocate resources to other household members.

To sum up, Iceland (this issue) has provided a useful service to the poverty re-

search and policy community by reviewing the limitations of current and alterna-

tive measures of poverty and evaluating their validity in light of other measures ofmaterial hardship. But it is also probably time to move on. His is an interesting aca-

demic exercise, but one that probably has limited practical benefits for most pov-

erty researchers and policy makers, who will continue to use the poverty measure

that is most widely available to them, easy to compute, and readily understood

the Orshansky measure. My purpose is not to suggest an end to our search for the

best summary measure of poverty, but simply to acknowledge that finding a suit-

able or consensus replacement to the current measure is unlikely, especially if the

data requirements are extreme. Instead, poverty measurement must begin with the

Orshansky measure. Any changes should be introduced routinely but slowly andincrementally (and retrofitted to earlier time series) over a number of years to build

acceptance. As I have argued here, one place to start is with adjustments for ongo-

ing demographic changes that are remaking the population of the United States

(e.g., immigration and cohabitation). The measurement of poverty has not kept

pace with changing demographic and family realities. If we fail to act soon, then

the clear and undisputed benefit of the current measureits ability to track trends

and differentials in economic well-beingis not likely to last long.

REFERENCES

Carlson, M., & Danziger, S. (1999). Cohabitation and the measurement of child poverty. Review of In-

come and Wealth, 45, 179191.

Citro, C. F., & Michael, R. T. (1995). Measuring poverty: A new approach. Washington, DC: National

Academy Press.

Gibson, C. J., & Lennon, E. (1999). Historical census statistics on the foreign-born population of the

United States: 18501990 (Population Division Working Paper No. 29). Washington, DC: U.S. Bu-

reau of the Census.Iceland, J. (2000). The family/couple/household unit of measurement in poverty estimation. Journal of

Economic and Social Measurement, 26, 113.

Kiernan, K. (2004). Redrawing the boundaries of marriage. Journal of Marriage and Family, 66,

980987.

COMMENTARIES 257


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Lichter, D. T., Qian, Z., & Crowley, M. L. (2005). Child poverty among racial minorities and immi-

grants: Explaining trends and differentials. Social Science Quarterly, 86, 10371059.

Manning, W. D., & Lichter, D. T. (1996). Parental cohabitation and childrens economic well-being.

Journal of Marriage and the Family, 58, 9981010.

Mayer, S. E., & Jencks, C. (1989). Poverty and the distribution of material hardship. Journal of Human

Resources, 24, 88113.

Short, K. (2001). Experimental poverty measures: 1999 (U.S. Census Bureau, Current Population Re-

port, Consumer Income, pp. 60216). Washington, DC: U.S. Government Printing Office.

Short, K. (2003, August). Material and financial hardship and alternative poverty measures, 1996. Pa-

per presented at the annual meeting of the American Statistical Association, San Francisco.

Thomson, E. (2005). Partnerships and parenthood: A comparative view of cohabitation, marriage, and

childbearing. In Alan Booth & Ann C. Crouter (Eds.), The new population problem: Why families in

developed countries are shrinking and what it means (pp. 129149). Mahwah, NJ: Lawrence

Erlbaum Associates, Inc.

Measuring Poverty and Deprivationin a U.S. Context: Some Additional

ConsiderationsTimothy M. Smeeding

Center for Policy Research and Luxembourg Income Study

Syracuse University

In this neat little article, John Iceland (this issue) tries his best to find as much sci-

ence as he can in what has become a highly political and subjective matter: the def-inition of apoverty line. There is much to like here, and young Iceland ends up just

where the National Academy of Sciences experts end upwith a quasi-relative

poverty definition. I would end up close to this point as well but would make addi-

tional arguments about why we should be there.

While most rich nations share a concern over low incomes, poverty measure-

ment began as an Anglo American social indicator. In fact, official measures of

poverty (or measures of low-income status) exist in very few nations. Only the

United States (U.S. Bureau of the Census, 2003) and the United Kingdom (Depart-

258 COMMENTARIES

Correspondence should be addressed to Timothy M. Smeeding, Center for Policy Research and

Luxembourg Income Study, 426 Eggers Hall, Syracuse University, Syracuse, NY 132441020. E-mail:

[email protected]


24/25

ment of Social Security, 1996; Department of Work and Pensions, 2004) have reg-

ular official poverty series. Statistics Canada (2004) publishes the number of

households with incomes below a series of low-income cutoffs on an irregular ba-sis, as does Australia. In Northern Europe and Scandinavia the debate centers in-

stead on the level of income at which minimum benefits for social programs should

be set and on the issue of social exclusion (Atkinson, Cantillon, Marlier, & Nolan,

2002). In fact, Northern European and Scandinavian nations do not calculate

low-income or poverty rates. Most recognize that their social programs already en-

sure a low poverty rate under any reasonable set of measurement standards

(Bjrklund & Freeman, 1997). Instead they concentrate their efforts on social mo-

bility and inequality (Erikson & Goldthorpe, 2002).

Leaving aside that poverty measurement is an almost uniquely American issue,what else can be said? Iceland (this issue) spends much of his time in the setting of

the poverty line per se, but says little on the types of demographic units that share

resources and the incomes or resource measures that should be used to compare to

these poverty lines. Indeed there should be consideration of the unit issue, and

then some great deal of attention paid to the resources measure.

For international treatments of poverty, the household is the only comparable

income-sharing unit available for all nations. The American idea of families (all

persons related by blood, marriage, or adoption) being separated from unrelated

persons leaves nonrelated persons sharing living arrangements (beds, refrigera-tors, and televisions) and living together as cohabiters (of any gender combination)

as unrelated single persons. While it would be useful to know if persons could af-

ford to live in other, more desirable arrangements, to treat them as separate makes

mockery of the idea of economies of scale. Two cannot live as cheaply as one, but

two do live together more cheaply than do two alone. We should recognize the

economies of scale apparent in such choices and treat cohabiting units as single

units for poverty estimation.

The resource measure for determining poverty should be wholly consistent

with the resource measure encapsulated in the poverty line definition. The measureneeds to be broad enough to capture all relevant forms of income, including the ef-

fects of taxes paid and tax policy (the Earned Income Tax Credit) and subsidies for

relevant commodities (food stamps, housing subsidies, etc.). It also has to reflect

the costs of earning an income. Clearly, in a work-oriented society such as ours,

consumption of basic commodities comes afterpaying the costs of working, in-

cluding child care costs in particular. These expenses need to be netted out.

How about such things as health care access and medical care costs? I prefer to

leave these as separate items. That is, a separate index to measure access to two key

merit goods hard to measure in income terms: health care and education. As inthe United Nations Human Development Index, the realms of health and education

should be different from the realm of income poverty. There are some poor people

whose children are in high-quality educational institutions and whose medical care

COMMENTARIES 259


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needs are well meet, just as there are many nonpoor persons who have bad schools

and inadequate access to basic health care needs (e.g., due to lack of health insur-

ance). These should be kept separate from income poverty. All three add to capa-bilities, but each in a different way. And we should track progress or lack thereof in

these dimensions as well as in income poverty alone.

Hardship measurement, which Iceland (this issue) also champions, is fine as

long as one does not confuse choice with hardship. Housing is vexing because in-

creasingly persons face higher costs for housingmore hardshipbut live in

higher quality housesless hardship (Smeeding, 2004). Note that the health and

education issues cannot be addressed simply by hardship questions related to un-

paid bills, either. Some may be unable to pay large health care bills (registered

hardship), whereas others are even worse off because they decided not to attend tomedical needs because they could notafford to (no registered hardship) or to attend

to medical needs that they are now indebted for (hardship of debt).

The really important message that Iceland (this issue) sends in this article is that

poverty measurement is multifaceted and complicated in rich societies. His rea-

soned approach is to be recommended to both politicians and policy analysts who

want to define poverty away and to those who want to make it more than it really is.

Poverty measures should be ones that reasonable people can agree to and should

reflect the effects of our polices and practices on maintaining incomes, and our

success or failure in providing key goods, such as health care and education, to allAmericans at reasonable cost.

REFERENCES

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Bjrklund, A., & Freeman, R. (1997). Generating equality and eliminating povertythe Swedish way.

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Swedish model (pp. 452501). Chicago: University of Chicago Press.

Erikson, R., & Goldthorpe, J. H. (2002). Intergenerational inequality: A sociological perspective.Jour-

nal of Economic Perspectives, 16(3), 3144.

Smeeding, T. M. (2004, November). Consumption among low-income families: Policy concerns.Paper

presented at the ASPE-MichiganNPC Conference: Consumption Among Low Income Families,

Washington, DC.

Statistics Canada. (2004). Retrieved July 15, 2005, from http://www.statcan.ca/english/research/

75F0002MIE/75F0002MIE2005003.pdf

U.S. Census Bureau. (2003). Poverty in the United States 2002: Current population reports. Washing-

ton, DC: U.S. Department of Commerce, Economics, and Statistics Administration.

United Kingdom Department of Social Security. (1996). Households below average income. London:Government Statistical Service.

United Kingdom Department of Work and Pensions. (2004). Opportunity for all: Sixth annual report

2004. London: Department of Work and Pensions. Retrieved December 19, 2004, from http://

www.dwp.gov.uk/ofa/reports/2004/pdf/report_04.pdf

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Are the World's Poor Qualitatively Distinct