Measurement and identification of asset-poor households: a cross-national comparison of Spain and the United Kingdom

This paper is concerned with the analysis of the wealth dimension of poverty in developed countries, which cannot be measured by means of information on household income. We focus on identifying the group of households that lack enough wealth holdings to sustain them during a period of economic crisis in order to quantify asset poverty, and its demographic weight, in two industrialized countries with particularly different household demographics and saving attitudes such as Spain and the United Kingdom. Our results show that the age profile of the asset poor is remarkably similar in the two countries. In both it is individuals in households whose head is under 45 years old who are more likely to be asset poor. However, some country-specific differences also arise. For instance, the incidence of wealth poverty in the United Kingdom is about twice that of Spain. Using counterfactual analysis we find that, although the different household demographics clearly contribute importantly to this result, there remains a significant part of the asset-poverty gap which is not explained by this relevant factor.     

Measuring the impact of price changes on poverty

This paper develops a methodology to measure the impact of price changes on poverty measured by an entire class of additive separable poverty measures. This impact is captured by means of the price elasticity of poverty. The total effect of changes in price on poverty is explained in terms of two components, income and distribution effects. The income effect measures the change in poverty when all prices increase uniformly, whereas the distribution effect captures the change in poverty because of changes in relative prices. Using this decomposition, the paper derives an empirically operational index, which reveals whether the price changes have been pro-poor or anti-poor. The paper also derives a new price index for the poor. While this index can be computed for any poverty measures, our empirical analysis applied to Brazil is based on three poverty measures, the head-count ratio, the poverty gap ratio and the severity of poverty. The empirical analysis shows that price changes in Brazil during the 1999–2006 periods have been anti-poor. Nevertheless, during the last 2 to 3 years, the price changes have affected the poor less adversely than the non-poor.     

Estimating international poverty lines from comparable national thresholds

The World Bank’s international poverty line (IPL) of $1.90/day at 2011 PPPs is based on a collection of national poverty lines provided in Ravallion et al. (World Bank Econ. Rev. 23(2), 163–184, 2009), originally used to set the IPL of $1.25/day at 2005 PPPs. This paper proposes an approach for estimating a more recent, complete and comparable collection of national poverty thresholds from reported national poverty rates, and then presents a set of IPLs based on this new database of national poverty lines. In contrast to the lines used to estimate the $1.90 IPL, this approach produces national poverty lines that are (1) consistent with national poverty rates, (2) expressed in common units, and (3) provide greater support to the estimated IPL. These national poverty lines are used to estimate an extreme IPL, and three higher IPLs that are more relevant to higher-income countries. We provide evidence of the robustness and relevance of the $1.90 IPL as a measure of extreme poverty for low-income countries.     

Rural structural change,poverty and income distribution: evidence from Peru

Some rural regions of Peru showed remarkable rates of poverty reduction and inequality reduction between 2004 and 2012, while others lagged behind. Using microsimulation-based decompositions, we analyse the driving forces behind these trends, finding that rural poverty and inequality reductions are mainly attributable to increasing labour incomes in Peru’s agricultural sector and, to a smaller extent, increasing public transfers. In earlier years, higher returns to experience drive these results, while in later years, increasing staple-crop yields and prices are of key importance. Further, remuneration of working hours increases in reaction to labour-supply shortages in rural areas. The accompanying rising incomes and non-agricultural job creation is less pro-poor than would be ideal, as they benefit more highly skilled workers. Further, shrinking farm sizes hampers poverty reduction and income-inequality reduction. Policies should target the participation of the poor in high-value (non-)agricultural activities, especially if positive trends in commodity prices are only transitory.     

Unifying the poverty line: a critique of maintaining lower poverty standards for the elderly

Since 1982, the elderly poverty rate reported by the U.S. Census Bureau has fallen below the rate for the nonelderly population. This is cited as evidence of the success of U.S. social policies to benefit the elderly. But lower elderly poverty rates are an artifact of the fact that a lower, more stringent poverty line is applied to the elderly living in one- and two-person households, who constitute 85% of elderly persons. If the same poverty standard is applied to the elderly as to the nonelderly, the poverty rates are the same or slightly higher. The poverty line was originally based on the cost of an adequate diet. The lower standard for the elderly was based on the fact that the elderly consume fewer calories than nonelderly adults. This article shows there is no justification for this lower standard, and recommends its elimination. The overall nutrient requirements of the elderly are not lower, and the elderly spend a higher proportion of their budgets on food and on other necessities (shelter, health care) than the nonelderly. Alternative units of analysis examined under different income-pooling assumptions also show that poverty rates are not lower among the elderly than the nonelderly.     

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.     

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.     

International income poverty measurement: which way now?

We critically review conceptual and empirical issues surrounding the derivation of the international poverty line, expressed in PPP-adjusted dollars and linked to various rounds of the International Comparison Program (ICP). We find that there are some limitations in the current estimation of these lines, but show that statistically superior methods lead to lines that are relatively robust and confirm the $1.25 using 2005 PPPs and suggest $1.67–1.71 using 2011 PPPs (or close to the $1.90 proposed by the World Bank if we follow the World Bank’s approach of adjusting inflation rates in some countries); they also roughly confirm the current shape of the proposed ‘weakly relative’ poverty line. Using the new absolute line based on 2011 PPPs would lead to substantially lower poverty in our estimation. The extent of the decline depends on whether and how one treats China, India, and Indonesia differently from other countries in the 2005 and 2011 PPPs. More seriously, we note that the dependence on successive ICP rounds creates conceptual and empirical problems that have become worse over time so that we suggest that it would be best to consider alternatives to the current reliance on ICP rounds and the resulting PPPs. As a short-term solution we propose to fix the international poverty line in national currencies using either the 2005 or 2011 level; in the medium term, we argue for global poverty measurement based on internationally coordinated national poverty measurement.     

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.     

Changing Economic Opportunities,Family Structure,and Poverty in Rural Areas1

Abstract Instrustrial restructuring in the 1980s ushered in a new pattern of growing economic diversity over geographic space. The objective of this study is to examine the extent and etiology of changing spatial inequality between and within metropolitan (metro) and nonmetropolitan (nonmetro) areas, as measured by increasing or decreasing county poverty rates. Results based on data from the 1980 and 1990 census summary tape files suggest several conclusions. First, poverty rates increased more rapidly in nonmetro than metro counties during the 1980s; historical patterns of metro-nonmetro economic convergence slowed over the past decade. Second, poverty rates tended to decline in nonmetro counties with traditionally high rates of poverty, thus providing counter-evidence to arguments suggesting that the gap between traditionally poor and nonpoor nonmetro counties has widened. Third, spatial differences in poverty rates and relative increases in county poverty rates over the 1980s were most strongly associated with women's employment and headship status. The results raise questions about the extent to which traditional rural economic development strategies address the potentially deleterious economic effects of rising percentages of poor female-headed families.     

Impact of Rising World Rice Prices on Poverty and Inequality in Burkina Faso

Between January 2006 and April 2008, the prices of most agricultural products rose considerably in international markets. Empirical studies show that this spike in world food prices increased the number of poor households in developing countries, but the extent was not the same in all countries. This article assesses the impact of rising rice prices on poverty and income inequality in Burkina Faso, using a methodology based on the concept of compensating variation combined with the net benefit ratio (NBR) developed by Deaton (1989) and a living standard survey (QUIBB, 2003). The results show that higher prices have a negative impact on income and poverty in the regions with a large proportion of households that are net buyers of rice. The poverty rate increases by 2.2 to 2.9 percentage points depending on the assumptions, the increase being higher in urban areas than in rural areas. Rising rice prices also increase income inequality, which increases particularly in urban areas and in relatively rich regions, but decreases in poor regions with a large proportion of rice producers.     

A multidimensional child poverty index in China

This paper analyses the multidimensional child poverty status and its dynamic changes in China from 1989 to 2009 using the China Health and Nutrition survey data. Built on the Alkire–Foster methodology, the adjusted child poverty headcount ratio is calculated which measures not only the traditional headcount ratio of child poverty but also the average deprivation intensity among poor children. The overall poverty rates declined over years from 1989 to 2009 in national wide and among provinces, where the key driver was the reduction of the poverty headcount ratio. With the property of decomposition for the adjusted headcount ratio, this study also examines the provincial and regional contribution to the national poverty reduction. Provinces in the middle region of China received the biggest reduction of child poverty rate, and the regional gap of child poverty has been narrowed down, but more effort of poverty reduction should be made to the poorest provinces and rural areas.     

Charitable conservatism, poverty radicalism and inequality aversion

In his Presidential Address to the European Economic Association, Tony Atkinson introduced the idea of a “charitable conservatism” position in public policy, which “exhibits a degree of concern for the poor, but this is the limit of the redistributional concern and there is indifference with respect to transfers above the poverty line.” This contrasts with the perspective of poverty indices, which give zero weight to those above the poverty line, which we call “poverty radicalism,” and with standard “inequality aversion” where the weights decline smoothly as we move up the income scale. The object of this paper is, first, to clarify the interrelationships between charitable conservatism, poverty radicalism and inequality aversion. We do this by showing how the patterns of welfare weights to which each of these gives rise are related to each other. Secondly, we are concerned to demonstrate the implications of these different views for optimal income taxation. In terms of levels and patterns of marginal tax rates, we show that charitable conservatism and poverty radicalism are on a continuum, and by choice of low or high inequality aversion one can approximate either outcome fairly well.     

Subjective poverty equivalence scales for Euro Zone countries

We estimate subjective equivalence scales for the whole Euro Zone as well as its individual constituent countries using the European Income and Living Conditions (SILC) data. Importantly, by using minimum needs income question our approach does not require the specification of a complete social welfare function. Our subjective scales increase consistently with household size and countries with well-developed welfare states (Netherlands, Germany, France, and Belgium) show greater economies of scale than less developed welfare states (Spain, Portugal, and Greece). Our approach also allows us to estimate the marginal cost of a child; we find that for the Eurozone adding the first child is more costly than adding a third adult and that the marginal cost of children declines. Comparing modified OECD and our subjective poverty rates we find that the subjective scales ‘redistribute poverty’ away from larger to smaller households.     

Politics by numbers: poverty reduction discourse,contestations and regime legitimacy in Ethiopia

There are contradictory statistics about the number of poor people and changes in number of poor people in Ethiopia with statistics ranging from 26 to 86% of the total population in 2013. This paper analyzed how such contradictory statistics feed into national politics focusing on who uses which statistics and based on what justifications of authoritativeness. Drawing from data collected from print newspapers, blogs, websites, published articles, party publications, and interviews with four key informants and combining an actor’s centered discourse analysis (ACDA) with Van Dick’s (1997) approach of identifying and analyzing political discourses, the paper deconstructed the poverty statistics debate in Ethiopia to understand the basic contestations. Synthesis of the data shows that poverty numbers are being used as tools for, and manifestations of, ongoing power struggles in Ethiopia whereby different actors selectively use poverty statistics that promote their political agenda. While doing so, the underlying rationale of actors for choosing one statistics over another was not based on the merit of their preferred set of statistics over the others but on the suitability of the data for their political purpose. As such, the government disregards statistics except its own which portray rapid poverty decline in the country while opposition groups actively use and promote statistics coming from international organizations that depict increasing poverty or a slow rate of reduction of poverty. The paper argues that the underlying cause of such politicization of numbers is linked with the developmental statism ideology of the ruling party in Ethiopia and how it tries to justify its rule in Ethiopia – claiming that it is reducing poverty and bringing development in Ethiopia and therefore should be allowed to continue in power. Therefore, in debating poverty numbers what is being debated is not just the statistics but the legitimacy of the government, hence politics by numbers.     

Multidimensional poverty in Latin America and the Caribbean: new evidence from the Gallup World Poll

This paper studies poverty in Latin America and the Caribbean from a multidimensional perspective, exploiting the Gallup World Poll, a survey that provides a unique opportunity to perform intercountry comparisons. By applying factor analysis we find that welfare can be appropriately summarized by three dimensions: income, subjective welfare and “basic needs”. Another finding is that the US$ 1 line appears to be a reasonable cut-off value to measure food deprivation.     

Poverty status probability: a new approach to measuring poverty and the progress of the poor

Poverty measurement and the analysis of the progress (or otherwise) of the poor, whether it is societies, families or individuals, is beset with difficulties and controversies surrounding the definition of a poverty line or frontier. Here, borrowing ideas from the mixture model literature, a new approach to assigning poverty-non poverty status is proposed which avoids specifying a frontier, the price is that an agent’s poverty status is only determined to the extent of its chance of being poor. Invoking variants of Gibrat’s law to give structure to the distribution of outcomes for homogeneous subgroups of a population within the context of a finite mixture model of societal outcomes facilitates calculation of an agent’s poverty status probability. From this it is straightforward to calculate all the usual poverty measures as well as other characteristics of the poor and non poor subgroups in a society. These ideas are exemplified in a study of 47 countries in Africa over the recent quarter century which reveals among other things a growing poverty rate and a growing disparity between poor and non poor groups not identified by conventional methods.     

Neighborhood poverty and children's food insecurity

Food insecurity among children and their families negatively affects children's health and well-being. While the link between household resources and food insecurity is well-established, family income alone does not explain food insecurity; neighborhood disadvantage, shown to affect other areas of children's development, may also play a role in food insecurity. This study examines associations between neighborhood poverty and children's food insecurity, and whether family characteristics account for identified associations. We merge data on kindergarten-age children from the Early Childhood Longitudinal Study-Kindergarten 2010–11 Cohort (ECLS-K:2011) with data on poverty rates from the American Community Survey (ACS) and on food access from the USDA's Food Environment Atlas using children's residential census tracts (N = 12.550 children in 3750 tracts). Using a series of multilevel models, we test for associations between neighborhood poverty, household economic, demographic, and parenting characteristics, and food insecurity at the child, adult, and household levels. Children living in higher-poverty neighborhoods are more likely to experience food insecurity than those in lower-poverty neighborhoods. Associations between neighborhood poverty and household- and adult-level food insecurity disappear when household characteristics are controlled. However, living in a very high poverty neighborhood remains predictive of child-level food insecurity, which may be an indicator of severe hardship. Findings indicate that neighborhood poverty may be a useful proxy to identify vulnerable children.     

Intervention and representation of poverty

Any intervention against poverty is not so much an administrative process as a social relation between categories of actors that are partly defined by it. Being a social action, it implies a construction of meaning that will guide the behavior of the actors. This semantic network needs an interpretation. This article presents a simplified model (an "ideal-type") of this meaningful interaction. It will contrast the way the professional actors of the poverty field present poverty and poor people and the way poor people themselves present their situation and the difficulties they face. This comparison will show the great distance between these discourses.