The measurement of transient poverty: Theory and application to Pakistan

The present paper investigates the measurement of transient poverty when each person's welfare level fluctuates due to exogenous risk. The paper namely characterizes the sensitivity of transient/chronic poverty decomposition with respect to the poverty line and to the expected welfare level so that the decomposition analysis will be based on solid theoretical foundations and be robust empirically. Theoretical results show that poverty measures associated with prudent risk preferences perform better than other measures in assuring that the value of transient poverty increases with the depth of chronic poverty and that the decomposition is not highly sensitive to the poverty line. Poverty measures such as those associated with constant relative risk aversion are thus superior to popular Foster–Greer–Thorbecke (FGT) measures such as headcount, poverty gap, and squared poverty gap indices. These theoretical arguments are confirmed empirically by the application of the decomposition to a two-period household panel dataset from rural Pakistan. The relative magnitudes of transient versus chronic poverty are more robust to changes in the poverty line when poverty measures associated with constant relative risk aversion are used than when FGT poverty measures are used.     

A model based approach for predicting annual poverty rates without expenditure data

The primus inter pares of the UN-approved Millennium Development Goals is to reduce poverty. The only internationally accepted method of estimating poverty requires a measurement of total consumption based on a time-consuming and resource-demanding measure of household expenditure in an integrated survey over 12 months. Rather than measuring poverty, say, only every fifth year, a model is presented to predict poverty based on a small set of household variables to be collected annually between two 12-monthly household surveys. Information obtained from these “light” surveys might then be used to predict poverty rates. The key question is whether the inaccuracy in these predictions is acceptable. It is recommended that these models be tested at a country level and if the test results are similar to those found here, that this approach be adopted.      

Three perspectives on the mismatch between measures of material poverty

The two most prominent measures of material poverty within contemporary European poverty analysis are low income and material deprivation. However, it is by now well‐known that these measures identify substantially different people as being poor. In this research note, I seek to demonstrate that there are at least three ways to understand the mismatch between low income and material deprivation, relating to three different forms of identification: identifying poor households, identifying groups at risk of poverty and identifying trends in material poverty over time. Drawing on data from the British Household Panel Survey, I show that while low income and material deprivation identify very different households as being poor, and display distinct trends over time, in many cases they identify the same groups at being at risk of material poverty.     

Poverty dynamics corrected for measurement error

We use latent class models to correct measurement error in estimates of the dynamics of relative income poverty in ten EU countries measured over four waves of the European Community Household Panel. A latent mover-stayer Markov model gives an acceptable fit to all ten transition tables. We focus in more detail on four countries – Denmark, the Netherlands, Italy and the UK – and show that mobility in poverty transition tables is over-estimated by between 25 and 50 percent if measurement error is ignored. In addition, once error is corrected, poverty rates show less cross-national variation.     

“Time to Do the Chores?” Factoring Home-Production Needs into Measures of Poverty

Currently, income is the only resource that the government uses to measure poverty. However, in order for a family to maintain an adequate standard of living, its members must have the money and the time to do certain kinds of work in the home, such as child care, food shopping, meal preparation, laundry, housecleaning, and other similar household tasks. In this article, poverty rates are recalculated using a method developed by Vickery (1977) in which time is incorporated as a resource. Findings show that poverty rates increase dramatically when time is incorporated as a resource because working parents, especially single parents, often do not have enough time to perform essential tasks. Data are from the 1985 American Time Use Survey.     

The Individual Deprivation Measure: measuring poverty as if gender and inequality matter

As inequality deepens globally and within countries it is vital that we know how poverty shapes, constrains, and often destroys the lives of women and men. We know from decades of research that poverty is experienced differently by women and men, yet existing mainstream measures of poverty have been blind to gender. This article focuses on the Individual Deprivation Measure (IDM), a multi-dimensional measure of poverty and inequality designed to illuminate rather than obscure gender differences. Developed over the past five years by an inter-disciplinary research team based at the Australian National University, the IDM is grounded in research with women and men across 18 sites in six countries. Unlike most mainstream measures of poverty, the IDM takes the individual, rather than the household, as the unit of analysis. As a result, the IDM is able to capture gendered differences in the ways poverty is experienced, and also differences according to other markers of identity or social status, such as age, ethnicity, or geographic location.     

Are the Effects of the Macroeconomy and Social Policies on Poverty Different in Nonmetro Areas in the United States?*

Abstract The macroeconomy and social policies can have substantial influences on poverty in the United States. In this paper, I investigate whether these influences differ across metro and nonmetro areas. To do so, using a 16‐year panel of state‐level data, I estimate state and year fixed effects models separately for metro and nonmetro areas to see if the effects of the macroeconomy and social policies differ between these two areas. These models are estimated using two measures—the poverty rate and the squared poverty gap—and by family type. I find that cyclical forces have a much stronger effect on the poverty rate in nonmetro areas in comparison to metro areas, but the effects are similar for the squared poverty gap; wage growth has a pronounced effect on poverty in metro areas but no effect in nonmetro areas; and state‐level social policies have slightly larger effects in nonmetro areas, but the effects are small.     

Explaining Black‐White Disparity in Maltreatment: Poverty,Female‐Headed Families,and Urbanization

The purpose of the current study was to assess a structural level explanation of racial disparity in child maltreatment. Using data from Florida counties (1998–2001) and the 2000 census, the effects of poverty, concentrated poverty, and female‐headed families in poverty on Black, White, and the difference between Black‐White rates of child maltreatment were assessed (N= 67). Results suggested that the structural covariates of maltreatment vary by race and that differences in female‐headed families in poverty can explain some, but not all, of the Black‐White racial disparity in child maltreatment. Increasing programs that focus on reducing poverty among female‐headed Black families and the exposure of Black families to concentrated poverty should decrease some of the overrepresentation of Black children in the child welfare system.     

Comparing poverty and deprivation dynamics: Issues of reliability and validity

In this paper we seek to establish if earlier findings relating to the relationship between income poverty persistence and deprivation persistence could be due to a failure to take measurement error into account. To address this question, we apply a model of dynamics incorporating structural and error components. Our analysis shows a general similarity between latent poverty and deprivation dynamics. In both cases we substantially over-estimate the probability of exiting from poverty or deprivation. We observe a striking similarity across dimensions for both observed and latent outcomes. In both cases levels of poverty and deprivation persistence are higher for the latent case. However, there is no evidence that earlier results relating to the differences in the determinants of poverty and deprivation persistence are a consequence of differential patterns of reliability. Taking measurement error into account seems more likely to accentuate rather than diminish the contrasts highlighted by earlier research. Since longitudinal differences relating to poverty and deprivation cannot be accounted for by measurement error, it seems that we must accept that we are confronted with issues relating to validity rather than reliability. Even where we measure these dimensions over reasonable periods of time and allow for measurement error, they continue to tap relatively distinct phenomenon. Thus, if measures of persistent poverty are to constitute an important component of EU social indicators, a strong case can be made for including parallel measures of deprivation persistence and continuing to explore the relationship between them.     

Region-specific versus country-specific poverty lines in analysis of poverty

An analysis of poverty based on a country-specific income poverty line suffers from disregarding regional differences in prices and needs within a country and may, therefore, produce results that give a misleading picture of the extent of poverty as well as the geographic and demographic composition of the poor. To account for differences in prices and needs, this paper introduces an alternative method for identifying the poor based on a set of region-specific poverty lines. Applying Norwegian household register data for 2001 we find that the national level of poverty is only slightly affected by the change in definition of poverty line. However, the geographic as well as the demographic poverty profiles are shown to depend heavily on whether the method for identifying the poor relies on region- or country-specific thresholds. As expected, the results demonstrate that an analysis of poverty based on a country-specific threshold produces downward biased poverty rates in urban areas and upward biased poverty rates in rural areas. Moreover, when region-specific poverty thresholds form the basis of the poverty analysis, we find that the poverty rates among young singles and non-western immigrants are significantly higher than what is suggested by previous empirical evidence based on a joint country-specific poverty line.     

Poverty at a Racial Crossroads: Poverty Among Multiracial Children of Single Mothers

Although multiracial youth represent a growing segment of children in all American families, we have little information on their well‐being within single‐mother households. This article examines multiracial children's level of poverty within single‐mother families to identify the degree to which they may stand out from their monoracial peers. Using data from the 2006–2008 American Community Survey (3‐year estimates), we explore the level of racial disparities in child poverty between monoracial White children and monoracial and multiracial children of color. Fully adjusted multivariate logistic regression analyses (n = 359,588) reveal that nearly all children of color are more likely to be poor than White children. Yet many multiracial children appear to hold an in‐between status in which they experience lower rates of poverty than monoracial children of color. The high level of variation across groups suggests that the relationship between race and childhood poverty is more complicated than generally presumed.     

Children in poverty in germany: reflections on recent social work research

This project focuses on children growing up in impoverished life circumstances, originating from an increasing level of poverty in Germany. There are two perspectives in social work research on children living in poverty: first, current research on childhood recognises that children are social agents in their own practices of life; second, research on poverty draws attention to the issue of social inequality, and broaches the question of the structural constraints and limitations of daily life. We report on current German research on children living in poverty, and focus on the role of peer relationships in coping with discrimination. This research is substantiated with the results of our own research project. We find that children develop strategies to mitigate the effects of poverty. The family can also help by providing the child with an interpretation of their poverty, and through daily coping mechanisms. Additionally, children can gain support from their peers. However, bridging social capital and gaining access to other social milieus is seldom successful. We conclude with a discussion of strategies that point the way out of child poverty. Such an optimistic goal, however, would require an alliance of practice, research and policy in the field of social work.     

Beyond averages: Child well-being in Kazakhstan

With the majority of poor people now living in middle-income countries and the post-millennium development goals framework taking shape, the issue of inequality has gained prominence in many policy debates. Although detailed assessments of poverty and well-being are crucial for formulating adequate policies, all too often such assessments focus on average outcomes. In this paper we present an analysis of child well-being for Kazakhstan that moves beyond averages in two ways: first, it explicitly reports on the situations of different socioeconomic groups of children in society; second, it applies a method that is diversified by age group and thereby accounts for differences among children across stages of childhood. Kazakhstan illustrates the need for more nuanced and in-depth analyses, given the significant but far from universal economic growth within the country. We find that there are large discrepancies in child well-being outcomes between different regions and that high levels of economic output do not necessarily go hand in hand with improved outcomes in terms of poverty and well-being. We argue that child well-being studies need to be more in depth, thereby ensuring that levels of inequity across socioeconomic groups and between children in different age groups are given due consideration.     

Urban poverty,economic restructuring and poverty reduction policy in urban China: Evidence from Shanghai, 1978–2008

This article uses the city of Shanghai as a case study to analyze the changing institutional mechanisms for the new urban poverty stratum in China. Specifically, the article examines urban poverty in relation to economic restructuring and the transformation of the welfare provision system in three stages of market reforms. The article first examines the overall economic growth strategies at the national level, and then examines local government policy outcomes at the city level. The impacts of institutional changes on urban poverty and social inequality are subsequently. Finally, the article assesses the current poverty reduction policies and proposes a “social inclusion” framework to alleviate urban poverty in China.     

A New Scale of Poverty: How the Officially Recorded Poor People in Turkey Perceive Themselves

Governments adopt policies to prevent and address the socioeconomic problem of poverty. This article examines how officially recorded poor people perceive themselves and the causes of their poverty. It is based on a sample of 531 officially recorded poor people living in the Turkish province of Çankiri. A questionnaire was administered comprising 69 characteristics of poverty. The findings suggest that there are four main causal explanations for poverty attributions: fatalism, discrimination, moral deficiencies and personal deficiencies. The measure developed for this research can be tested and applied to different cultural groups with a high level of validity and reliability.     

Flat rate taxes and relative poverty measurement

We provide a systematic analysis of the impact of revenue-neutral changes to the parameters of a flat rate tax system on the level of relative poverty (where the poverty line is some fraction of either the mean or the median post-tax income level). We also perform a similar analysis for a negative income tax system. We find that the choice of poverty line type has important consequences in respect of how changes to the tax parameters affect the level of relative poverty. Our results are illustrated with a numerical simulation, in which we allow the pre-tax income distribution to be either given exogenously or determined endogenously.     

On intertemporal poverty measures: the role of affluence and want

This paper proposes classes of intertemporal poverty measures which take into account both the debilitating impact of prolonged spells in poverty and the mitigating effect of periods of affluence on subsequent poverty. The weight assigned to the level of poverty in each time period depends on the length of the preceding spell of poverty or of non-poverty. The proposed classes of intertemporal poverty measures are quite general and allow for a range of possible judgements as to the overall impact on a poor period of preceding spells of poverty or affluence. We discuss the properties of the proposed classes of measures and axiomatically characterize these measures.     

Survey nonresponse and the distribution of income

The paper examines the distributional implications of selective compliance in sample surveys, whereby households with different incomes are not equally likely to participate. Poverty and inequality measurement implications are discussed for monotonically decreasing and inverted-U compliance-income relationships. We demonstrate that the latent income effect on the probability of compliance can be estimated from information on response rates across geographic areas. On implementing the method on the Current Population Survey for the U.S. we find that the compliance probability falls monotonically as income rises. Correcting for nonresponse appreciably increases mean income and inequality, but has only a small impact on poverty incidence up to poverty lines common in the U.S. Martin Ravallion: Corresponding author.     

A validity assessment of the Progress out of Poverty Index (PPI)™

Development organisations need easy-to-use and quick-to-implement indicators to quantify poverty when requested to measure program impact. In this paper we assess the validity of the Progress out of Poverty Index (PPI)™, a country-specific indicator based on ten closed questions on directly observable household characteristics, by its compliance to the SMART criteria. Each response receives a pre-determined score, such that the sum of these scores can be converted into the likelihood the household is living below the poverty line. We focus on the PPI scorecard for Rwanda, which was validated using two national household surveys conducted in 2005/06 and 2010/11. The PPI is Specific, Measurable, Available cost effectively, and Timely available. Yet, its Relevance depends on the way it is used. Although it accurately distinguishes poor from non-poor households, making it a useful reporting tool, its limited sensitivity to changes in poverty status restricts its usefulness for evaluating the impact of development projects.     

The concept and measurement of asset poverty: Levels, trends and composition for the U.S., 1983–2001

American prosperity in the second half of the 1980s together with the booming economy of the 1990s created the impression that American households have done well, particularly in terms of wealth acquisition. In this paper, we develop the concept of “asset poverty” as a measure of economic hardship, distinct from and complementary to the more commonly used concept of “income poverty.” We define a household with insufficient assets to enable it to meet basic needs (as measured by the income poverty line) for a period of three months to be asset poor. The results reveal that in the face of the large growth in overall assets in the U.S. and a fall in standard income poverty over the period from 1983 to 2001, the level of asset poverty increased from 22.4 to 24.5 percent. We also find that asset poverty rates for blacks and Hispanics are over twice those for whites; that asset poverty rates fall monotonically with both age and education; that they are much higher for renters than homeowners; and that by family type they range from a low of 5 percent for elderly couples to 71 percent for female single parents.