Distribution Sensitive Measures Of Poverty In The United States: Comment

Abstract

This paper by John Bishop, John Formby, and Buhong Zheng begins with the postulate that there are serious flaws in the way in which poverty is officially defined and measured and, therefore, in the estimates of poverty which are published by U.S. Bureau of the Census. I agree. Four areas are troublesome for the authors and their paper addresses each in turn. First, the official definition of poverty raises fundamental questions as to how physical needs are defined and measured. Second, the income definition used to classify a person or family as poor is not sufficiently comprehensive. Third, differences in the cost of living in different parts of the country are not and never have been incorporated in the official poverty standard. Fourth, the official standard is not sensitive to the fact that the hardship of poverty is greater for some persons and families than for others. I agree with the authors in all four instances by and large but the devil, as they say, is in the details. My comments, however, are selective rather than comprehensive. FIRST FLAW: DEFINING AND MEASURING POVERTY As to the first flaw, Bishop et al. assert that: 1 the problem originates in the definition of poverty 2 the definition must be grounded in basic human physical needs 3 defining poverty is arbitrary. I agree with the first two, but not the third. The official poverty income threshold is defined in terms of the cost of the food necessary for a nutritionally adequate diet (referred to as the Economy Food Plan). In turn, the poverty income threshold - the income just sufficient to purchase the goods and services which meet all human physical needs - is estimated at three times the cost of the Economy Food Plan. The multiple of three derives from survey research on consumer expenditures conducted in the 1950s which indicated that households at that time spent about one third of their income on food. In 1965 Mollie Orshansky, the original architect of the official poverty standard, called the 3:1 income-food relationship an interim guide (Orshanky 1965:3). There are no direct estimates of any other basic human physical needs, such as shelter, clothing, health care, transportation, included in the official poverty statistics. This shortcut in the construction of the poverty income threshold reduces the difficulty of estimating poverty but deals with unmet human physical needs superficially. The authors' inevitably however, is misleading because it suggests that ultimately there is no way to reach agreement as to how to improve the definition of poverty used in the official U.S. estimates of poverty. Although this term has widespread and long-standing use in poverty research, it does not serve us well. There is nothing arbitrary, for instance, about grounding the definition of poverty in human physical needs, even though mainstream economics construes consumption strictly in terms of human physical wants. Further, there is nothing arbitrary about the recommendation that the official poverty income threshold should be based squarely on actual estimates of all of the elements of human physical needs, not just the cost of food, difficult though that may be. Rather than being arbitrary, the definition of poverty properly understood is inherently value-laden, that is, it unavoidably reflects the value systems of the persons using it. The student of poverty is free to use whatever definition or income threshold suits his/her purposes provided he/she can show clearly that the statistical evidence forthcoming leads to a clearer understanding of unmet human physical needs and therefore represents a better definition of poverty. Otherwise the results have no practical meaning. In their paper, Bishop et al. use several alternative thresholds, such as 75 percent or 125 percent of the official poverty income threshold, but they are not convincing as to how their statistical evidence improves our understanding of unmet human physical needs and thereby contributes to an improvement in the present definition of poverty. …