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May 1996, Vol. 119, No. 5
Maya Federman, Thesia I. Garner, Kathleen Short, W Bowman Cutter IV, John Kiely, David Levine, Duane McDough, and Marilyn McMillen
To understand the relationship between poverty and living conditions, a multifaceted understanding of what it means to be poor is required. In one sense, the answer to the question "What does it mean to be poor?" is straightforward-having cash income below the official poverty line for a given family size. In a broader sense, the living conditions of the poor are difficult to measure, both because annual cash income is only one factor related to living conditions, and because the poor are, quite heterogeneous.
This article represents an effort to get closer to the answer by summarizing findings from nine national surveys that shed light on the living conditions of individuals living in poor and nonpoor families. It differs from earlier examinations of living conditions and the material well-being of American families in that it draws upon a broader set of household surveys and attempts to maximize uniformity in the definition of family types and poverty. This work represents a coordinated effort of representatives of various Federal agencies that produce and analyze data from nationally representative surveys.1 The aim in this process has been to produce measurements of material well-being for an expanded set of dimensions, following a methodology that would promote comparability across surveys as much as possible.
Related research 2
Although the official poverty measure in the United States is defined in terms of current before-tax cash income, some aspects of economic welfare can be more accurately gauged by measuring consumption or other dimensions of living conditions. Income measures ignore homeownership and other assets that can be important sources of consumption. Thus, some people, such as those who are retired or those whose incomes are only temporarily low, may be classified as poor based on income but do not have low consumption. Furthermore, the official poverty rate does not account for taxes or in-kind transfers such as food stamps or government provided medical insurance, which improve living conditions without affecting a family's official poverty status.3
To address some of the limitations of basing the measure of poverty solely on cash income, David M. Cutler and Lawrence R Katz compare poverty rates constructed using consumption expenditure data from the Consumer Expenditure Survey with the official poverty rates based on income from the Current Population Survey.4 They find that, while the poverty rate is lower when measured using expenditures, trends in poverty rates based on both income and expenditures are similar, and both rates rose during the 1980', particularly for the nonelderly.
Daniel T. Slenick also finds that consumption expenditure-based poverty rates are lower than income-based measures.5 He notes that the reported postwar trend poverty is sensitive to the equivalence scale used and, for the late 1970's and the 1980's, to the price indexes used for the analysis.
Other researchers have analyzed measures of specific dimensions of material and economic well-being such as housing, neighborhood quality, consumer durables, income sources, spending patterns, and health to study the living conditions of low-income children and families. For example, Robert Rector analyzes the 1989 American Housing Survey and finds that nearly 40 percent of all households with incomes below the official poverty line own their own homes, but that only 18 percent of poor, single-parent families are homeowners.6 The median value of homes owned by the poor is 58 percent of the median value of all homes owned in the United States. In addition, he reports that only 8 percent of poor households are over crowded (defined as more that one person per room), and 53 percent of poor households have some type of air conditioning.
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1 This article is drawn from a larger report containing results for additional variables and family types. The complete tables are available in Maya Federman and others, "Living Conditions of Individuals Living in Poor and Non-poor Families," Institute of Industrial Relations Working paper No. 64 (University of California at Berkley, May 1996).
2 The following works, although not referenced separately, also provided background for the present study: Robert Cage, Thesia I. Gerner, Richard Miller, William Passero, and Elizabeth Reise, "Data Comparability Across Federal Household Surveys," Working Document (Bureau of Labor Statistics, 1992); David M. Cutler and Lawrence F. Katz, "Macroeconomic Performance and the Disadvantaged,"Brookings Papers on Economic Activity, no. 2 (Washington, The Brookings Institution, 1991); Klass de Vos and Thesia I. Gerner, "An Evaluation of Subjective Poverty Definitions: Comparing Results from the U.S. and Netherlands,"Review of Income Wealth Series 37, no. 3 September 1991; Hiram E. Fitzgerald, Barry M. Lester, and Barry Zuckerman, eds., Children of Poverty: Research, Health Care, and Policy Issues (new York, garland, 1995); Aletha C. Huston, ed., Children on Poverty: Child Development and Public Policy (New York, Cambridge University Press, 1991); Aletha C. Hudson, Vonnie McLoyd, and Cynthia Garcia Coll, "Children and Poverty: Issues in Contemporary Research," Child Development (Special Issue: "Children and Poverty"), vol. 6, no. 2, 1994, pp. 275-82; Paul A Jargowsky, "Beyond the Street Corner: the hidden Diversity of Ghetto Neighborhoods," mimeo. (University of Texas at Dallas, 1995); Christopher Jenks and Kathryn Edin, "Do poor women have a right to bear children?" The American Prospect, Winter 1995, pp. 43-52; Susan Mayer and Christopher Jenks, "Recent Trends in Economic Inequality in the United States: Income versus Expenditure versus material Wellbeing," in Dimitri B. Papadimitriou and Edward N. Wolff, eds. Poverty and prosperity in the USA in the late twentieth century (New York, St. Martin's Press, 1993); C. T. Ramey, D.M. Bryant, B.H. Wasik, J.J. Sparling, K.H. Fendt, and L.M. LaVange, "The Infant Health and Development Program for low birth weight premature infants: Program elements, family participation, and child intelligence," Pediatrics, March 1992, pp. 454-56; Martha Shea, "Dynamics of Economic Well-Being: Poverty, 1990-1992," Current Population Reports Series P70-42 (Bureau of the Census, 1995); Peter Townsend, Poverty in the united Kingdom: A Survey of household Resources and Standards of Living (Harmondsworth, England, Penguin Books, 1979); and Peter Townsend, The Internation Analysis of Poverty (Hemel Hempstead, England, Harvester-Wheatsheaf, 1992).
3 The national Academy of Science Poverty Panel recently released a report recommending several changes to the official poverty measure, including adjusting for taxes and transfers. See Constance F. Citro and Robert T. Michael, eds., Measuring Poverty: A New Approach (Washington, national Academy Press, 1995).
4 David M. Cutler and Lawrence F. Katz, "Rising Inequality: Changes in the Distribution of Income and Consumption in the 1980's," American Economic Review, May 1992, pp. 546-51.
5 Daniel T Slesnick, "Gaining Ground: Poverty in the Postwar United States," Journal of political Economy, February 1993, pp. 1-38.
6 Robert Rector, "How the Poor Really Live: Lessons for Welfare Reform," Heritage Foundation Backgrounder No. 875 (The Heritage Foundation, Jan. 31, 1992).
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