Income sufficiency v. poverty Results from the United States and The Netherlands

The purpose of this paper is to further the understanding of subjective measures used to assess poverty and to add to the literature on poverty measurement methodology. In particular, the paper focuses on the minimum income question (MIQ) first proposed by Goedhart and colleagues (1977). Data from the U.S. Consumer Expenditure Survey and from a Dutch newspaper survey are used. The primary contribution of the paper is the inclusion of household expenditures as additional explanatory variables of minimally necessary income. Significant differences between the coefficients of several categories of expenditures, particularly for leisure, appear to reveal differences in the interpretation of the minimum income question by respondents. Thus, we question the underlying assumption of the MIQ that everyone adheres the same welfare meaning to the phrase “minimally necessary income,” and conclude that the resulting thresholds should not be used as to measure poverty before further research has been carried out to explore what respondents are thinking when they answer questions such as the MIQ.