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MEASUREMENT, 3(4), 236260 Copyright 2005, Lawrence Erlbaum Associates, Inc.


Are the Worlds Poor Qualitatively Distinct From the Fortunate Few?
G. Scott Acton
Department of Psychology Rochester Institute of Technology

Icelands target article (this issue) provides much food for thought on the distinction between poverty and wealth, but one unexamined assumption warrants comment: that, properly defined, a poverty line exists. This commentary challenges that assumption on methodological grounds that invite empirical testing rather than further definitional refinement. It is argued that the basic problem is not absolute versus relative but categorical versus dimensional. Wealth and poverty may not be qualitatively distinct categories but may lie on a continuumthis hypothesis can and should be tested. Let us assume that investigators are able to identify a group of persons who are impoverished and another group who are not. The identification can be on the basis of expert consensus or a systematic algorithm. Let us also assume that investigators are able to identify indicators relevant to this distinction, such as the following basic human rights: food, clean water, shelter, health care, education. Then let us see whether the poor are qualitatively distinct from the wealthy (e.g., those who do not have to worry about whether they will eat tomorrow) on these indicators on the basis of differential item functioning or lack of factorial invariance (cf. De Boeck, Wilson, & Acton, 2005). To be merely quantitatively distinct, the poor would be lower than the rich on all the basic human rights to the same degree, but to be qualitatively distinct, the human rights would mean something completely different among the poor than among the rich. For example, the meaning of electricity may be different in poor countries than in rich ones; electricity may be so rare in
Correspondence should be addressed to G. Scott Acton, Department of Psychology, Rochester Institute of Technology, 92 Lomb Memorial Drive, Rochester, NY 14623. E-mail:



third-world countries that it is lacking even among community leaders, whereas in industrialized countries electricity may light the streets where the homeless live. We can also compare distributions of persons within a particular group, such as the impoverished, with respect to within-group heterogeneity as measured by Cronbachs . This distinction, although important conceptually, may be less important in practice because it seems evident that within the category of poverty people differ on the indicators. For example, one particular subset of the poor, such as those in many Third World countries, may live in abject misery, whereas another groups deprivation can be recognized only by way of comparison with the wealthy. Such heterogeneity would become important, however, if it were of a qualitative kind, in which case subtypes with different profiles of poverty should be considered. Such within-group heterogeneity, which could be revealed by latent profile analysis or a mixture model with different mean and covariance structures, depending on the mixture component, could have implications for the manner in which interventions should be deployed. Specifically, the most sensible intervention would be to provide preferentially for the poor who are worst off. For example, treatment-resistant tuberculosis has emerged as a serious problem in some Third World countries. These poor people differ from other poor people in that they carry a highly lethal infectious disease that, if left untreated, could become an epidemic (Farmer, 2003). The treatment for treatment-resistant tuberculosis involves bypassing traditional drugs in favor of a more expensive regimen. Such expense is justified on grounds of basic human rights, but it also happens that treatment-resistant tuberculosis promises to proliferate beyond the Third World and threaten the rich as well. Thus, infectious disease is very democratic in its effects, encouraging us to reduce the difference in health care between rich and poor and make effective treatments available to all.

De Boeck, P., Wilson, M., & Acton, G. S. (2005). A conceptual and psychometric framework for distinguishing categories and dimensions. Psychological Review, 112, 129158. Farmer, P. (2003). Pathologies of power: Health, human rights, and the new war on the poor. Berkeley: University of California Press.



A Case for Measures of Asset Poverty

Sondra G. Beverly and David Okech
School of Social Welfare University of Kansas

Iceland (this issue) defines poverty as economic deprivation and focuses on measures of income poverty. We agree with Iceland that there is a strong conceptual rationale for income-based measures, as well as some operational advantages, and that these measures are understood and accepted by researchers, policy makers, and the public. However, we argue here that there is an important place for asset-based measures of poverty as well. This emphasis on assets flows from work by Sherraden (1991). Making use of the alternative conceptions of poverty that Iceland has identified, we propose that measures of asset poverty are important indicators of economic deprivation, social exclusion, and perhaps capability deprivation. We close with some recommendations about using measures of poverty.

LACK OF ASSETS AS ECONOMIC DEPRIVATION Lack of income is a form of economic deprivation because income allows families to finance consumption. Lack of assets is a form of economic deprivation because income and expenses are not constant. Some income and expense shocks are unexpected. For example, income may drop precipitously when a primary earner is laid off, or consumption needs may increase dramatically due to a health crisis or vehicle breakdown. Other income decreases (e.g., retirement) or expense increases (e.g., special events like a wedding or funeral) may be anticipated. In either case, assets are an important resource. The most likely alternative to using assets is borrowing, but credit may not be available. Even when it is available, relying on credit is more expensive than spending down assets. Individuals take great comfort in knowing that they have rainy day savings. In fact, saving for emergencies is one of the most common saving motives for families in the United States (Aizcorbe,
Correspondence should be addressed to Sondra G. Beverly, 1545 Lilac Lane, School of Social Welfare, University of Kansas, Lawrence, KS 66044. E-mail:



Kennickell, & Moore, 2003). A concern for economic deprivation seems to underlie the measures of asset poverty proposed by Haveman and Wolff (2004). They defined households as asset-poor if they do not have enough assets (defined in multiple ways) to meet basic needs (as measured by the official income poverty line) for a period of 3 consecutive months. LACK OF ASSETS AS SOCIAL EXCLUSION The notion of social exclusion has been used in Europe for decades, but there is no consensus on a definition. Most definitions refer to low material means; an inability to participate in economic, social, and cultural life; and, in some aspects, alienation and distance from mainstream society (Duffy, 1995). Clearly, social exclusion is a broader conceptualization of poverty than economic deprivation. As much as income, assets may determine how much a family participates in economic, social, and cultural life in the United States. For example, in many places in the United States, it is difficult to find and maintain employment without a vehicle. In those places, it also may be difficult to perform other common activitiessuch as shopping for groceries, attending worship services, or getting together with friends and familywithout a car. In short, those without access to a vehicle may experience extreme social exclusion. Ownership of another asset, a home, can also have a large effect on economic, social, and cultural participation. Shapiro (2004) described how the ability to purchase homes in desirable neighborhoods (sometimes with financial help from family members) gives some families a head start, providing access to better schools, better services, better role models, and higher social status than they had when they rented. Alone, indicators of home ownership and vehicle ownership certainly do not provide enough information to assess social inclusion or exclusion, but under certain circumstances these indicators may provide important supplemental information. LACK OF ASSETS AS CAPABILITY DEPRIVATION As Iceland (this issue) mentions, Sen (1992, 1999) has argued that poverty should be defined as the deprivation of capabilities. From this perspective, income is not an end in itself but simply a means to the specific ends that each individual values. Some of the basic capabilities identified by Sen are the ability to be healthy, well fed, and housed; to participate in community and public life; and to experience self-respect. According to Sen, factors in addition to income, such as age, race, gender, and location, influence an individuals capabilities. We argue that assets also affect capabilities. First, for the reasons cited previously under economic deprivation, assets can help individuals maintain nutrition, health, and housing. Second, for the reasons cited under social exclusion, assets



can help individuals participate in community and public life. Third, certain assets can increase labor efficiency, reduce expenses, and even generate income, and this increased efficiency and income may help individuals achieve their desired ends. Washers and dryers are good examples of assets that increase efficiency and reduce expenses. Certainly, those who have these machines in their homes can use their time more efficiently. In addition, in in-depth interviews in the early 1990s, Edin (2001) found that low-income single mothers often spent about $40 a month (almost $500 a year) doing laundry in coin-operated machines. Assets that may be used to generate income include sewing machines, catering equipment, roofing tools, exterminating equipment, and lawn mowers (Edin, 2001). Finally, if Sherraden (1991) is correct that assets have positive psychological effects, assets may increase capabilities in other ways. More rigorous studies of the effects of assets are needed (Schreiner & Sherraden, in press), but some evidence suggests that having savings does indeed increase self-confidence, feelings of security, hope, and future orientation (Moore et al., 2001; Sherraden et al., 2005). In short, although measures of asset ownership or asset levels may not be direct indicators of basic capabilities (just as measures of income poverty are not), they might be considered indirect indicators or perhaps prerequisites of capabilities. This is an additional rationale for using measures of asset poverty (or asset adequacy) to supplement measures of income poverty.

RECOMMENDATIONS We have argued that there is an important conceptual rationale for measuring asset poverty. Although more work remains, we believe that measures of asset poverty are operationally feasible. For example, the measures of asset poverty developed by Haveman and Wolff (2004) are informative and fairly simple to compute. They do require information on assets and debts that is not always collected in large nationally representative surveys in the United States, but existing (or improved) questions from surveys such as the Survey of Income and Program Participation (U.S. Census Bureau, 2005) and the Survey of Consumer Finances (Federal Reserve Board, 2003) might be added to other large surveys. Like self-reported data on income, self-reported data on assets and debt will be subject to recall, social desirability, and other forms of bias. Despite these imperfections, we believe measures of asset poverty should supplement measures of income poverty for the purpose of monitoring well-being. Even as the federal government considers revising the official measure of income poverty, we would like to see it develop an official measure of asset poverty. The information gained from such a measure would provide new insight into the well-being of U.S. families; it would also informand show the need forongoing efforts to encourage asset building.



To determine eligibility for benefits such as temporary assistance for needy families and food stamps, we believe federal and state governments should continue using measures of income poverty (perhaps the NAS measure that Iceland [this issue] recommends) for the foreseeable future. As Iceland notes, procedures to assess income are in place and are politically accepted. However, consistent with the arguments presented here regarding the effect of assets on short-term and long-term well-being, we believe that the move to loosen asset restrictions in these and other means-tested programs is very desirable. Finally, like Iceland (this issue), we encourage ongoing efforts to expand measures of poverty beyond those associated with income poverty and even asset poverty. Poverty is a complex and multidimensional experience; by using multiple measures representing a variety of dimensions, we will increase our understanding of poverty and thus be more likely to make progress toward reducing it.

Aizcorbe, A. M., Kennickell, A. B., & Moore, K. B. (2003). Recent changes in U.S. family finances: Results from the 1998 and 2001 Survey of Consumer Finances. Federal Reserve Bulletin, 89, 132. Duffy, K. (1995). Social exclusion and human dignity in Europe. Strasbourg, France: Council of Europe. Edin, K. (2001). More than money: The role of assets in the survival strategies and material well-being of the poor. In T. M. Shapiro & E. N. Wolff (Eds.), Assets for the poor: The benefits of spreading asset ownership (pp. 206231). New York: Russell Sage Foundation. Federal Reserve Board. (2003). Survey of consumer finances. Available from pubs/oss/oss2/scfindex/html Haveman, R., & Wolff, E. N. (2004). The concept and measurement of poverty: Levels, trends and composition for the U.S., 19832001. Journal of Economic Inequality, 2, 145169. Moore, A., Beverly, S., Schreiner, M., Sherraden, M., Lombe, M., Cho, E. Y. N., et al. (2001). Saving, IDA programs, and effects of IDAs: A survey of participants. St. Louis, MO: Washington University in St. Louis, Center for Social Development. Schreiner, M., & Sherraden, M. (in press). Can the poor save? Saving and asset accumulation in individual development accounts. New York: de Gruyter. Sen, A. (1992). Inequality re-examined. New York: Russell Sage Foundation. Sen, A. (1999). Development as freedom. New York: Knopf. Shapiro, T. M. (2004). The hidden cost of being African American: How wealth perpetuates inequality. New York: Oxford University Press. Sherraden, M. (1991). Assets and the poor: A new American welfare policy. Armonk, NY: Sharpe. Sherraden, M., McBride, A. M., Johnson, E., Hanson, S., Ssewamala, F. M., & Shanks, T. R. (2005). Saving in low-income households: Evidence from interviews with participants in the American Dream Demonstration. St. Louis, MO: Washington University in St. Louis, Center for Social Development. U.S. Census Bureau. (2005). Survey of income and program participation. Available from http://



We Need a More Socially Relevant Metric

Sue Books
Department of Secondary Education State University of New York at New Paltz

John Iceland (this issue) offers a thorough assessment of income-based poverty measures and argues persuasively that they have a vital place (p. 220), provided they are socially relevant and conceptually and empirically sound (p. 220). I would like to add to his discussion by considering the meaning of socially relevant (p. 220) in the context of poverty measurement and commenting on the political significance of potentially adopting something more meaningful than the official U.S. metric.1 Between 2000 and 2003, poverty in the United States increased in terms of head count as well as severity. Not only did more people become poor, but also the poor became poorer. In 2003 the average amount by which poor people fell below the poverty line reached the highest level on record (Center on Budget and Policy Priorities, 2004).2 The increase in poverty was concentrated among children. In 2003 1 in every 3 poor persons was a child (Center on Budget and Policy Priorities, 2004). In 2003, almost 13 million children (younger than 18 years) lived below the official poverty line17.6% of all children or more than 1 in every 6 (Childrens Defense Fund, 2004). With a similar number in mind, former New Jersey Senator Bill Bradley evoked this picture: If gathered together, all the poor children in the United States would make up a city bigger than New Yorkand we would then see child poverty as the slow-motion national disaster that it is (Metropolis, 2000). Since 2002, the number of children living in extreme povertythat is, in
Correspondence should be addressed to Sue Books, Department of Secondary Education, Old Main 204, SUNY at New Paltz, New Paltz, NY 12561. E-mail: 1I make this argument more fully in Poverty and Schooling in the U.S.: Contexts and Consequences (Books, 2004, chapter 9). 2The data go back to 1975.



families with incomes of one half the poverty threshold or lesshas increased at almost twice the overall rate of child poverty (11.5% compared with 6%; Childrens Defense Fund, 2004).3 As alarming as these numbers are, they are based on an official definition of poverty as an income in 2004 of no more than $15,670 for a family of threeand no one can believe this is all it takes to feed, clothe, house, educate, and otherwise care for three people, regardless of where the family lives. By classifying only this level of deprivation as poverty, the official metric seriously distorts the hardship and suffering that come from having too little income to meet a familys most basic needs. A socially relevant income-based measure of poverty first and foremost would have to result in family thresholds that better reflect commonsense understandings of poverty. Even if the official metric technically does not measure economic hardship, that is what most people understand poverty to be, and they regard the poverty line as its measure. A U.S. Department of Agriculture (USDA) report shows that the typical U.S. household now spends 36% more than the cost of the USDAs Thrifty Food Plan (on which the poverty line is based). Food insecure households typically spend 4% more and still cannot provide everyone in the family with the food they need to live active, healthy lives (Nord et al., 2002). According to economists at the Economic Policy Institute, poor families in the United States overall are worse off today relative to the median family than they were in 1970 (Boushey, Brocht, Gundersen, & Bernstein, 2001). The official metric should make this apparent.

A WIDER ANGLE The National Research Council (NRC; 1995) study of the U.S. poverty measure found the official measure to be unacceptably flawed (p. 21). Researchers warned against letting a key social indicator become so frozen in place that, when societal conditions change, it can no longer adequately reflect what it was designed to measure (NRC, 1995, p. 43). That seemingly is exactly what has happened. Many advocacy organizations consequently do not use the poverty line at all in their efforts to document economic hardship. The organization Wider Opportunities for Women (n.d.), for example, has developed a methodology to cost out living expensesthat is, how much money families in different locations need to pay taxes and meet bare-bones expenses for housing, child care, food, health care, transportation, and other basic out-of-pocket expenses. This self-sufficiency standard assumes neither public subsidies (e.g., subsidized housing, food stamps, Medicaid, or subsi3This trend almost certainly reflects the revocation of a federal guarantee of support for families at the bottom of the economic scale, accomplished through the 1996 welfare legislation.



dized child care) nor private help (e.g., free baby-sitting by a friend or relative, canned goods from a food bank, or shared housing). A single mother of three in the Bronx would have needed $38,088 in 2000 to cover a no-frills budget, even after tax credits. This income is almost three times as much as the official poverty threshold for such a family and almost 60% more than a job requiring an average level of skills, experience, and education likely would pay (Greenhouse, 2000). The Economic Policy Institute (Boushey et al., 2001) similarly has published budgets for various family configurations in hundreds of communities across the United States. The budgets include housing, child care, health care, food, transportation, and taxes, but not restaurant meals, vacations, movies, or savings for education or retirement. The budgets for 1997 to 1999 range from $21,989 a year for one parent and two children in Hattiesburg, Mississippian amount 64% greater than the official poverty lineto $48,606 a year for the same family in Nassau-Suffolk County, New Yorkan amount equal to 362% of the poverty line. Boushey et al. (2001) found that almost 30% of families with one to three children under 12 years of age had incomes below the basic family budget levels. This included more than 56% of all African American and Latino families. Calculations based on realistic family budgets suggest how grossly the official poverty line distorts the scope of economic hardship in the United States. Along with this criticism, poverty scholars (e.g., Andre, 1998) have argued that poverty measures ought to account for the experience of poverty over time. How long do people tend to be poor, and how severe is the poverty they experiencethat is, how great is the gap between needs and resources? Is poverty generally experienced in short spells by many people or for long periods by a few? Questions like these challenge the idea on which the U.S. poverty measure restsnamely, that the population falls neatly into distinct categories of poor and not poor. In fact, when measures of the duration and severity of poverty are taken into account, a picture emerges not of a dichotomy between the permanently, desperately poor and the never poor, but rather of a variety of experiences among the poor, the near poor, and the once poor (Walker, 1998, p. 39). Because the official poverty line is calculated only annually, it tells nothing about the number of people experiencing either short spells of poverty or long, multiyear spells, or about how poverty affects households and individuals over time. Yet, taking duration into account recasts the picture significantly. Using the Panel Study of Income Dynamics, a longitudinal data set that tracked thousands of individuals and families in the United States starting in 1968, Devine and Wright (1993) found that over a 20-year period (19681987), 11% to 15% of families were poor in any given year. However, almost 40% were poor for at least 1 year during the 2 decades. If one could extend this analysis over the average lifetime of a family, the proportion experiencing at least a year of poverty would have to increase and might easily reach or exceed half, they concluded. In other words, Half the households in this affluent, postindustrial society are



destined to spend at least one of their years beneath the poverty line (Devine & Wright, 1993, p. 105). Using the same data set, Rank (1999) found that by age 6, 57% of all African American children are likely to live below the poverty line for at least 1 year, compared with 15% of all White children. By age 12, 67% of all African American children and 21% of all White children are likely to have been poor for at least a year, and by age 17, 69% of all African American youth and 26% of White youth are likely to have lived below the poverty line for at least a year. By age 75, 91% of all African Americans and 53% of all White Americans are likely to have experienced poverty at some point in their lives. These studies not only underscore the economic significance of race in this society but also suggest that living in poverty is a far more common experience than the official statistics imply. Because the official measure includes only two categories, poor and not poor, it tells nothing about the overall distribution of resources among the poor. Consequently, if income were taken from some very poor people to move a few less-poor persons out of poverty, the effect would be to reduce the head count, even though the depth of poverty had become worse (NRC, 1995, p. 87). Because the official poverty measure tallies the number of people who were poor in a given year, but not how many were in economic distress, even if not officially poor, it obscures not only further impoverishment of the poor but also the experience of all those on the margins of economic insecurity. As Heclo (1994) argues,
The unofficial poor may live beyond the official line most of the time, but they share the diverse insecurity of people, without much education, with jobs that do not pay very well or lead very far. They, like others, find their lives buffeted this way and that by joblessness, underemployment in a changing economy, illness that is uninsured or underinsured, day care that is a pastiche of unaffordable costs and improvisations, and any number of other problems. They need not cross a line to feel and be poor. (p. 420)

The U.S. poverty measure ignores in-kind benefits in calculating family resources, and so does not show declines in well-being due, for example, to cuts in food stamp benefits or to tighter restrictions on eligibility for Medicaid or Supplemental Security Income. The measure also ignores work-related expenses and so treats income from wages the same as income from welfare benefitswhich, of course, it is not, if the wage earner must pay for child care and transportation. Aside from the particular problems with the official U.S. poverty metric, there are those who argue, as Iceland (this issue) notes, that no income-based assessment tells much about the pervasive disparities and deprivations that shape peoples lives. Access to good schools, to health care, to reliable transportation, and to some measure of economic security; the ability to fulfill personal and family responsibilities, such as caring for children and other family members; the opportunity to gain



the education and training necessary to improve long-term economic prospects all this is related to, but cannot wholly be reduced to, family income. Along these lines, Boshara (2002) argues for a focus on assets as well as income, which offers a more completeand dishearteningpicture of poverty. One fourth of the U.S. population is now asset poor, meaning their net worth, including savings, home equity, and other assets, would enable them to survive at the poverty level for no more than three months. Take away home equity, or just consider liquid assets, and the poverty rate jumps to nearly 40 percent (Boshara, 2002, p. WK13). The bottom 60% of the population earns only 23% of the nations income, but has far less, only 5%, of its wealth. The bottom 40%, which earns 10% of the national income, has less than 1% of the national wealth (Boshara, 2002).

WHY CONTINUE? Given its multiple shortcomings, why do we still use the official metric? Because, I believe, it provides statistical justification for downplaying the physical, emotional, social, and educational consequences of poverty. In a society reluctant to confront what poverty does to children and familiesas, I would argue, ours isit is perhaps not surprising that an income-based and deeply flawed poverty measure has primacy as an index of social health and well-being. Quantified and related only to comparable indexes of years past, the hardship and suffering, defined as shortfalls in income, can be counted and in some sense then forgottencounted and accounted for. Concerns with poverty are reduced to concerns with income statistics, which reflect nothing more meaningful than estimates of food costs and the relationship these costs once held to overall costs of living. The official metric serves a purpose, albeit not one that is fundamentally educational or informative. According to former Secretary of Labor Robert Reich, The consensus [has been] not to change the standard for fear the poverty rate would look worse (as cited in Uchitelle, 2001, p. B7). Adopting a more socially relevant measure would indeed make poverty look worse and would require recognizing it as a major problem in the United States. Undergraduates in a seminar on education and poverty that I taught during the last presidential campaign were surprised to realize that, with the exception of vice presidential candidate John Edwards, none of the candidates addressed issues of poverty in any substantive way. Let me conclude with two caveats. First, as problematic as the official poverty metric is, the annual statistics do provide an index of real suffering. As family income decreases, damage to children increases (Books, 2004; Duncan & Brooks-Gunn, 1997; Polakow, 1993, 2000; Rothstein, 2004). For this reason, we need to know whether the numbers are going up or down, and how rapidly. Second, although I have focused primarily on the poverty metric itself, I believe that adopting something better is not fundamentally a technical problem but rather a moral and political challenge. A flawed measure of poverty stands as the official index of economic hardship



in this country not because a better measure eludes our collective intellectual grasp but rather because the official measure does exactly what many people want it to do. It reflects a reassuring picture of a majority that is prospering or at least getting by, juxtaposed to a less well-off minority, which, because of the way the population is defined and measured, appears fairly small, stable, and unthreatening. Meaningful numbers and straight talk about the level of poverty in this society would be extremely helpful in moving us beyond this distortion.

Andre, H. (Ed.). (1998). Empirical poverty research in a comparative perspective. Aldershot, England: Ashgate. Books, S. (2004). Poverty and schooling in the U.S.: Contexts and consequences. Mahwah, NJ: Lawrence Erlbaum Associates, Inc. Boshara, R. (2002, September 29). Poverty is more than a matter of income. The New York Times, p. WK13. Boushey, H., Brocht, C., Gundersen, B., & Bernstein J. (2001). Hardships in America: The real story of working families. Washington, DC: Economic Policy Institute. Center on Budget and Policy Priorities. (2004, August 27). Census data show poverty increased, income stagnated, and the number of uninsured rose to a record level in 2003. Retrieved September 27, 2004, from Childrens Defense Fund. (2004). Family income: Child poverty. Retrieved September 27, 2004, from Devine, J. A., & Wright, J. D. (1993). The greatest of evils: Urban poverty and the American underclass. New York: Aldine de Gruyter. Duncan, G. J., & Brooks-Gunn, J. (1997). Consequences of growing up poor. New York: Russell Sage Foundation. Greenhouse, S. (2000, August 6). Farm work by children tests labor laws. The New York Times, p. 12. Heclo, H. (1994). Poverty politics. In S. H. Danzinger, G. D. Sandefur, & D. H. Weinberg (Eds.), Confronting poverty: Prescriptions for change (pp. 396-437). Cambridge, MA: Harvard University Press. Metropolis of poor children. (2000, August 17). The New York Times, p. A30. National Research Council. (1995). Measuring poverty: A new approach (C. F. Citro & R. T. Michael, Eds.). Washington, DC: National Academy Press. Nord, M., Kabbani, N., Tiehen, L., Andrews, M., Bickel, G., & Carlson, S. (2002, February). Household food security in the United States, 2000 (Food Assistance and Nutrition Research Report No. 21). Washington, DC: U.S. Department of Agriculture, Economic Research Service. Polakow, V. (1993). Lives on the edge: Single mothers and their children in the other America. Chicago: University of Chicago Press. Polakow, V. (Ed.). (2000). The public assault on Americas children: Poverty, violence, and juvenile injustice. New York: Teachers College Press. Rank, M. R. (1999). The racial injustice of poverty. Journal of Law and Policy, 1(95), 9598. Rothstein, R. (2004). Class and schools: Using social, economic, and educational reform to close the BlackWhite achievement gap. Washington, DC: Economic Policy Institute. Uchitelle, L. (2001, May 26). How to define poverty? Let us count the ways. The New York Times, p. B7. Walker, R. (1998). Rethinking poverty in a dynamic perspective. In H. Andre (Ed.), Empirical poverty research in a comparative perspective (pp. 2949). Aldershot, England: Ashgate. Wider Opportunities for Women. (n.d.). Retrieved September 27, 2004, from http://www.



Comparative Policy Approaches to Understanding Poverty

David K. Jesuit
Department of Political Science Central Michigan University

The conceptual and methodological debate concerning poverty is not merely academic; the choice of one particular approach over another has important consequences both for identifying poverty and formulating policies that might best alleviate it (see Townsend, 1980). As such, the debate over how to define and quantify poverty is also a political debate. Accordingly, Iceland (this issue) provides a balanced overview of many of the theoretical choices confronting researchers and policy makers studying poverty. He also addresses several empirical challenges associated with measuring poverty in the United States. However, there are a few shortcomings in Icelands contribution. My first objection is that Iceland does not adequately describe cross-national efforts at measuring poverty, which offer both theoretical and empirical insights that should not be ignored. Second, the National Academy of Science (NAS) panels quasi-relative poverty measure, which Iceland prefers, bears little resemblance to most relative measures of poverty and is theoretically unsatisfying. Finally, Iceland overlooks the advantages of measuring market (pretax and pretransfer) income poverty in addition to disposable income poverty. By doing so, researchers may gain a better understanding of the relative importance of the market and the public sector in determining levels of economic well-being. In this brief commentary I address each of these concerns and illustrate them by reference to cross-national data made available by the Luxembourg Income Study (LIS; n.d.), which I hope will allow researchers to judge the effectiveness of American antipoverty policy with the experiences of other nations (Smeeding, Rainwater, & Burtless, 2000, p. 1). The first weakness of Icelands (this issue) summary is that it fails to adequately discuss cross-national efforts at measuring poverty. The World Bank has made sigCorrespondence should be addressed to David K. Jesuit, Department of Political Science, Central Michigan University, Anspach 313B, Mt. Pleasant, MI 48859. E-mail:



nificant progress in this area, especially with regard to less developed countries, and poverty estimates are available for nearly every country in the world (see World Bank, n.d.). At present, however, the most comprehensive source of comparable income survey data is the LIS, a nonprofit international organization.1 The LIS includes more than 125 data sets from 29 different countries, mostly in the developed world, covering 4 decades. Unlike other data sources, the LIS data are harmonized so that comparability between countries in measures of income poverty is enhanced. Furthermore, detailed household information, including individual sources of income from both the private and public sectors, is available. These efforts represent significant achievements in furthering our understanding of poverty in the United States and elsewhere and overcome many of the empirical challenges associated with estimating levels of economic well-being around the world. In an effort to demonstrate the utility of such comparative approaches, I offer cross-national poverty measures from the LIS in the concluding section of this commentary. A second problem I have with Icelands (this issue) summary stems from my theoretical preference for a purely relative approach to measuring poverty rather than the NAS panels quasi-relative measure. As Iceland initially acknowledges, what it means to be poor varies across time and place (p. 199). In fact, Adam Smith argued that poverty means being devoid of not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without (quoted in Kangas & Ritakallio, 2004, p. 1). In other words, what it means to be poor in the United States may differ from what constitutes poverty in Sweden. As Iceland notes, relative measures of poverty commonly compare a households economic status to a social reference group, most often the nation as a whole, and determine whether or not it is poor by its ranking in the income distribution. Thus, economic growth tends to result in increases in the poverty threshold as expectations about what constitutes a decent standard of living increase as well. This is how the European Unions and the United Kingdoms official poverty lines, at 60% of median and 50% of mean household equivalent income, respectively, are computed (see Eurostat, 2000). The quasi-relative measure, on the other hand, is ultimately an absolute measure of poverty because the poverty threshold is still defined primarily by a market basket of goods adjusted to reflect changes in patterns of consumption and costs of living by American families since the 1960s (thus the quasi-relative designation; see also Iceland, 2005, p. 28). In short, all of these changes simply offer a more accurate absolute poverty threshold, below which individuals and families are incapable of purchasing their minimum needs. Finally, the NAS poverty measure is not comparable to other common measures of poverty,


Atkinson, Rainwater, & Smeeding (1995) for detailed information.



two of which were just mentioned, which inhibits researchers from making cross-national comparisons. Indeed, the comparative poverty scores offered at the end of this commentary would not be feasible if we were to adopt the quasi-relative approach. In sum, for researchers theoretically wedded to relative definitions of poverty, the NAS panels poverty recommendation is not satisfactory. A third limitation of Icelands (this issue) overview is that although he is aware of the problem with the official U.S. poverty lines reliance on gross cash income and rightly praises the NAS recommendations in this area, he overlooks the potential advantages of calculating rates of poverty based on income from different sources. To reiterate, gross cash income does not include near-cash benefits such as food stamps, nor does it deduct income taxes or mandatory employee contributions from household income. The NAS panels solution is to add public transfer payments (e.g., retirement, family allowances, unemployment compensation, social assistance benefits, near-cash benefits) and deduct nondiscretionary spending such as income taxes, social security contributions, and essential medical expenditures. This approach, closely related to adjusted disposable income (see Statistics Canada, 2001, p. 18), captures the amount of income a household has available to spend. However, relying only on posttax and transfer income tells us little about the relative importance of the market and the public sector in generating and/or alleviating income poverty. For most persons and households, their primary income source is from the marketwhich includes earned income from wages, salaries, self-employmentand other cash income from private sources such as property, pensions, alimony, or child support. By estimating both market and disposable income poverty rates, we can provide a better gauge of antipoverty programs effectiveness. For example, how much of poverty is market generated? How much are public transfers reducing poverty? In this final section I hope to illustrate my main concerns by briefly focusing on cross-national comparisons of pretax and pretransfer (market) and post-tax and post-transfer (disposable) income poverty for four countries. Using data made available by the LIS, Figure 1 reports market and disposable income poverty rates for Canada, Germany, Sweden, and the United States in 2000. Beginning with market income poverty, Figure 1 shows that these countries all had relatively high rates of poverty. Indeed, an average of 1 in 4 persons would be considered poor if the market were their only source of income. Furthermore, there was a modest range of market income poverty levels among the countries, with almost 30% of Germans falling below the market income poverty line in 2000 compared with 22% of Canadians. When we take into account the effect of the public sector on relative poverty rates, it is clear that the greatest source of cross-national variation in the rate of poverty among these countries has to do with the size and effectiveness of government social programs. As clearly shown in Figure 1, despite the fact that the United States and Canada began with much lower rates of private income poverty than either Germany or Sweden, after public-sector adjustments to household



FIGURE 1 Pre- and posttax and pre- and posttransfer poverty in 2000. Sources: Disposable income poverty rates, Luxembourg Income Study (LIS) key figures (see http://www.lisproject. org/keyfigures/povertytable.htm). Poverty reduction rates are authors calculations using LIS figures. Poverty line is defined at 50% of median private and disposable equivalent income. Equivalency scale equal to square root of household size. All other methodological decisions are consistent with LIS key figures procedures (see

income these countries report higher levels of income poverty than the others. In fact, at 17.0% the United States had the highest rate of poverty within the developed world in 2000. At the other end of the spectrum, Swedens rate of poverty (6.5%)was only slightly more than a third of the U.S. level. This reversal in poverty rankings is due to the role of the public sector. In the United States and Canada, social transfers and taxes reduced the incidence of poverty by only 6.1% and 10.6%, respectively. By contrast, public policy intervention in Germany (21.5% reduction in poverty) and Sweden (21.2%) resulted in 2 to 3 times more people moving out of poverty.2 In sum, these figures suggest that the relatively high rate of poverty in the

2Some argue that the relatively high levels of private income poverty and low levels of disposable income poverty in Germany, Norway, and Sweden and vice versa in Canada and the United States reflect second-order effects such that antipoverty programs actually create poverty (see e.g., Bradley, Huber, Moller, Nielsen, & Stephens, 2003).



United States is due to the small role public policies play in alleviating poverty in the United States relative to other wealthy countries. In conclusion, Icelands (this issue) overview of the theoretical and methodological challenges associated with measuring poverty provides a good starting point for students interested in this field of research. However, as this commentary suggests, a more comprehensive approach would be cross-nationally comparative and estimate both market and disposable income poverty.

Atkinson, A. B., Rainwater, L., & Smeeding, T. M. (1995). Income distribution in OECD countries: Evidence from the Luxembourg Income Study. Paris: Organization for Economic Cooperation and Development. Bradley, D., Huber, E., Moller, S., Nielsen, F., & Stephens, J. D. (2003). Distribution and redistribution in postindustrial democracies. World Politics, 55, 193228. Eurostat. (2000). European social statistics: Income, poverty and social exclusion. Luxembourg: Author. Iceland, J. (2005). The CNSTAT workshop on experimental poverty measures, June 2004. Focus, 23(3), 2630. Kangas, O., & Ritakallio, V. (2004). Relative to what? Cross-national picture of European poverty measured by regional, national and European standards (LIS Working Paper 384). Syracuse, NY: Luxembourg Income Study. Retrieved May 20, 2005, from liswps/384.pdf Luxembourg Income Study. (n.d.). Key figures. Retrieved June 10, 2005, from http://www.lisproject. org/keyfigures.htm Smeeding, T. M., Rainwater, L., & Burtless, G. (2000). United States poverty in a cross-national context (LIS Working Paper 244). Syracuse, NY: Luxembourg Income Study. Retrieved May 20, 2005, from Statistics Canada. (2001). Expert group on household income statistics: The Canberra Group final report and recommendations. Ottawa, Ontario, Canada: Author. Townsend, P. (1980). Research on poverty. In A. B. Atkinson (Ed.), Wealth, income and inequality (pp. 299306). New York: Oxford University Press. World Bank. (n.d.). Povertynet home. Retrieved May 20, 2005, from poverty



In Search of the Best Poverty Measure

Daniel T. Lichter
Department of Policy Analysis and Management Cornell University

A decade ago, the National Academy of Sciences (NAS) commissioned a panel to evaluate how best to measure poverty (Citro & Michael, 1995). In Measuring Poverty: A New Approach, NAS panel members critiqued the absolute income measure of poverty first proposed by Orshansky in the mid-1960s (Orshansky, 1965). Based on an economy food plan, the Orshansky measure still provideswith only minor adjustments and corrections for changes in the cost of livingthe official poverty income thresholds for families of different sizes and compositions. The NAS report identified and critiqued several well known problems with the official poverty measure: (a) its failure to keep pace with improving national and local standards of living; (b) poorly justified income equivalencies between different-size families; (c) failures to adjust for taxes paid, in-kind income, and other benefits (e.g., Medicaid); (d) geographic variability in the cost-of-living and consumption patterns; and (d) the unequal costs of working (e.g., day care, transportation, etc.) and different family patterns (e.g., alimony and child support payments). The NAS panel recommended a new set of poverty thresholds that addressed many of these weaknesses. Ten years after the publication of Measuring Poverty and after much evaluation research, we apparently have come full circle. Icelands (this issue) discussion and analysis suggest that absolute and relative measures of poverty have serious shortcomings, and that the NASs quasi-relative measure of poverty is the single most informative income poverty measure. This positive judgment is apparently based on the NAS measures ability to track subjective and material hardship and address some of the most egregious conceptual problems with Orshanskys original formulation. In the end, Iceland does not offer any additional recommendations for measuring contemporary poverty, nor does he identify new limitations of the
Correspondence should be addressed to Daniel T. Lichter, 102 Martha Van Rensselaer Hall, Department of Policy Analysis and Management, Cornell University, Ithaca, NY 14853. E-mail: lichter.5@



NAS-recommended poverty measure made more than decade ago and subsequently endorsed in principle by other researchers (Short, 2001). Icelands general observations and careful critique of existing poverty measures are both useful and hard to dispute. His endorsement of the NASs quasi-relative measure of poverty seems mostly justified by his analyses and those of other analysts. The commentary also reinforces the idea shared by other scholars that different measures of poverty based on absolute income, material hardships, or other criteria (e.g., benchmarked to median income) have different and often complementary uses. Unfortunately, after 10 years, most poverty scholars, government analysts, and policy makers are either unwilling or unable to adopt the NAS recommendations. The reasons should surprise no one. The adoption of any new poverty measure creates unhappy discontinuities with the ongoing time series. The NAS measure is arguably impractical from the standpoint of data requirements and ease of construction. It also seems to generate much the same conclusions about past poverty trends and subgroup differentials as the original Orshansky measure, and any statistical correlation with measures of material hardship are similar to those with the current poverty measure (Short, 2003). And, perhaps most important, the new measure does not resolve fundamental disagreements about the absolute level of income that best defines the poor. In the final analysis, practical considerations weigh heavily in favor of the Orshansky measurehowever flawed and against the new and improved NAS measure. Unless these practical matters are sufficiently addressed in our statistical gathering system and the requisite data necessary to construct the new measure are routinely included in key ongoing periodic surveys (e.g., Current Population Survey, National Survey of Family Growth, Longitudinal Survey of Youth), there can be little hope that the NASs recommendationsor Icelands (this issue) endorsement of them will be accepted in practice by the wider social science and policy communities. The problem, ultimately, is that there is no agreed-on empirical standard by which to judge the merits of alternative relative and absolute poverty measures. And, although levels of poverty differ somewhat across experimental measures, most new measures, including the NASs recommended one, seem for most purposes to adequately track recent trends and differentials across population subgroups. On what conceptual or empirical basis should we accept one measure over another? Under these circumstances, it is highly unlikely that the scholarly and policy communities will soon agree on the specific dollar amount of income below which families or people are considered poor, which itself defies easy definitions (Short, 2003). At the moment, this does not disturb me. My questions concern the futurewhether the official poverty thresholds will continue in the years ahead to adequately track changes and differentials across groups in the increasingly diverse population of the United States. Previous research tells us that the official poverty line is associated unevenly with various measures of material hardship for different population groups (Mayer & Jencks, 1989). The so-called poor often



own material things (e.g., dishwashers, air conditioners, VCRs, etc.) that critics understandably find difficult to reconcile with ideas about what it means to be truly impoverished. My biggest fear, however, is that the official poverty measure will be unable to keep pace with demographic trends that increasingly undermine key assumptions built into Orshanskys measure. In this regard, two recent demographic changes seem especially important: the burgeoning immigrant population of the United States and the unprecedented rise in unmarried cohabitation. When Orshanskys poverty measure was first proposed and implemented, the foreign-born population constituted less than 5% of the U.S. population, a historic low (Gibson & Lennon, 1999). Since then, the immigrant population has expanded rapidly, and, unlike during the late 19th century and early 20th century, immigrants often come from poorer countries of the less developed world (mostly Latin America and Southeast Asia). Why does this matter? It matters because immigrantsfirst- and second-generationmake up a growing share of the poor population in the United States. They have social, economic, and cultural characteristics (e.g., family and household structure, income sharing practices, and mobility patterns) that often are at odds with many of the assumptions built into the original poverty measure. For example, income poverty, whether measured using the official thresholds or the NAS measure, is a family-based rather than a household-based measure (Iceland, 2000). That is, the combined income of all family members is benchmarked against the appropriate poverty income thresholds. Among immigrants, however, families may not be the relevant income-receiving unit. Immigrant households are larger and more complex, and often include nonfamily members (i.e., doubling up) who contribute to the well-being of household members. These secondary families or individuals are not counted among the poor, regardless of their incomes, which also are not counted as part of the family income of the householder or head. Immigrant families and households are often more fluid because members move into and out of the households, sometimes returning to the country of origin or seeking work in other labor markets, only to return later. Immigrant families are often asset poor; they have little wealth (e.g., not owning their homes or having savings) and therefore lack a secure safety net. Many immigrant families send remittances to their families in the country of origin; this is income that is not available for consumption here. At the same time, subjective poverty Do you consider yourself poor?is undoubtedly low among some immigrant groups (e.g., Mexican) who have experienced substantial upward mobility as a result of immigrating to the United States. Our current measure of poverty seems anachronistic in light of these concerns, which will only grow over the next decade or two with more immigration. At issue here is not only whether immigrants are truly poor but also whether they have distorted the conceptual and empirical linkage between measurement and reality and, by extension, the ability of the official measure to adequately map aggregate



trends and differentials in poverty. This is a question that cannot be ignored indefinitely in light of the new racial and ethnic diversity of the United States, brought on by unprecedented immigration from non-European and less developed countries. A simple analogy makes the point. The National Institutes of Health (NIH) now recognizes that the etiology of disease and the results of clinical studies may be quite different across population groups, such as men and women and racial minorities. Through institutional review boards and special initiatives at NIH (e.g., health disparities), a concerted effort to readdress the previous imbalances in medical research is now under way. In the same way, as a diagnostic tool for policy makers, our current measure of poverty was developed at a particular historical time and with a European-origin White population and specific cultural practices in mind. It may be less well suited for measuring the changing prevalence and etiology of poverty as the new immigrant minority population of the United States grows. The rise in cohabitation poses another kind of problem. Cohabiting partners and their children are not treated uniformly as families for the purpose of establishing whether members of the household are poor or not. Coresidential partners without children are defined as unrelated individuals. Couples with biological children are counted as single-parent families with children, but only if the householder is the biological parent of the coresident child. If not, the cohabiting partner and child are treated as individuals unrelated to the other cohabiting partner, regardless of whether they pool income and share expenses. Interestingly, cohabiting couples with biological children together are treated as familiessingle-parent families with childrenand the incomes of both partners are not combined when determining whether income is above or below the poverty threshold, even though in this instance the partners are likely to be sharing income (Carlson & Danziger 1999; Manning & Lichter, 1996). The measurement implications posed by the rise in cohabitation, especially if children are involved, can be dramatic. In 1999, for example, the official poverty rate for children living with a household headed by a cohabiting couple was 39.7% (Lichter, Qian, & Crowley, 2005). The poverty rate drops to 20.1% if each cohabiting couple is treated as a married couple, that is, the incomes of both partners are combined and compared to a new poverty threshold that adjusts for the family size. Which is the appropriate figure: nearly 40% or only 20%? The official measure assumes no income sharing, which is unrealistic, and the latter assumes complete income sharing in the household, which also is unrealistic. Obviously, the way resources are allocated within cohabiting-couple households varies from couple to couple, depending on the level of commitment, marital plans, shared fertility, and many other, less obvious factors. As with immigration, the measurement implications of rising cohabitation are important as we look to the future. In Northern and Western European countries, for example, rates of cohabitation are very high and childbearing is common. Cohabiting unions represent 48%, 36%, and 33% of all cohabiting and marital unions



in Sweden, Finland, and Denmark, respectively (Kiernan, 2004). In Sweden, about 45% of all births occur among unmarried cohabiting couples, and only 5% occur to single women (Thomson, 2005). Is this pattern of union and family formation in the future of the United States? If so, it will be important to evaluating poverty that definitions of the appropriate income-receiving unit be recalibrated. Whether cohabiting couples should be treated as families or not for the purpose of measuring poverty is a decision that will require a good deal more information about how cohabiting partners make decisions about work, income pooling, and household expenses, including how they allocate resources to other household members. To sum up, Iceland (this issue) has provided a useful service to the poverty research and policy community by reviewing the limitations of current and alternative measures of poverty and evaluating their validity in light of other measures of material hardship. But it is also probably time to move on. His is an interesting academic exercise, but one that probably has limited practical benefits for most poverty researchers and policy makers, who will continue to use the poverty measure that is most widely available to them, easy to compute, and readily understood the Orshansky measure. My purpose is not to suggest an end to our search for the best summary measure of poverty, but simply to acknowledge that finding a suitable or consensus replacement to the current measure is unlikely, especially if the data requirements are extreme. Instead, poverty measurement must begin with the Orshansky measure. Any changes should be introduced routinely but slowly and incrementally (and retrofitted to earlier time series) over a number of years to build acceptance. As I have argued here, one place to start is with adjustments for ongoing demographic changes that are remaking the population of the United States (e.g., immigration and cohabitation). The measurement of poverty has not kept pace with changing demographic and family realities. If we fail to act soon, then the clear and undisputed benefit of the current measureits ability to track trends and differentials in economic well-beingis not likely to last long.

Carlson, M., & Danziger, S. (1999). Cohabitation and the measurement of child poverty. Review of Income and Wealth, 45, 179191. Citro, C. F., & Michael, R. T. (1995). Measuring poverty: A new approach. Washington, DC: National Academy Press. Gibson, C. J., & Lennon, E. (1999). Historical census statistics on the foreign-born population of the United States: 18501990 (Population Division Working Paper No. 29). Washington, DC: U.S. Bureau of the Census. Iceland, J. (2000). The family/couple/household unit of measurement in poverty estimation. Journal of Economic and Social Measurement, 26, 113. Kiernan, K. (2004). Redrawing the boundaries of marriage. Journal of Marriage and Family, 66, 980987.



Lichter, D. T., Qian, Z., & Crowley, M. L. (2005). Child poverty among racial minorities and immigrants: Explaining trends and differentials. Social Science Quarterly, 86, 10371059. Manning, W. D., & Lichter, D. T. (1996). Parental cohabitation and childrens economic well-being. Journal of Marriage and the Family, 58, 9981010. Mayer, S. E., & Jencks, C. (1989). Poverty and the distribution of material hardship. Journal of Human Resources, 24, 88113. Short, K. (2001). Experimental poverty measures: 1999 (U.S. Census Bureau, Current Population Report, Consumer Income, pp. 60216). Washington, DC: U.S. Government Printing Office. Short, K. (2003, August). Material and financial hardship and alternative poverty measures, 1996. Paper presented at the annual meeting of the American Statistical Association, San Francisco. Thomson, E. (2005). Partnerships and parenthood: A comparative view of cohabitation, marriage, and childbearing. In Alan Booth & Ann C. Crouter (Eds.), The new population problem: Why families in developed countries are shrinking and what it means (pp. 129149). Mahwah, NJ: Lawrence Erlbaum Associates, Inc.

Measuring Poverty and Deprivation in a U.S. Context: Some Additional Considerations

Timothy M. Smeeding
Center for Policy Research and Luxembourg Income Study Syracuse University

In this neat little article, John Iceland (this issue) tries his best to find as much science as he can in what has become a highly political and subjective matter: the definition of a poverty line. There is much to like here, and young Iceland ends up just where the National Academy of Sciences experts end upwith a quasi-relative poverty definition. I would end up close to this point as well but would make additional arguments about why we should be there. While most rich nations share a concern over low incomes, poverty measurement began as an Anglo American social indicator. In fact, official measures of poverty (or measures of low-income status) exist in very few nations. Only the United States (U.S. Bureau of the Census, 2003) and the United Kingdom (DepartCorrespondence should be addressed to Timothy M. Smeeding, Center for Policy Research and Luxembourg Income Study, 426 Eggers Hall, Syracuse University, Syracuse, NY 132441020. E-mail:



ment of Social Security, 1996; Department of Work and Pensions, 2004) have regular official poverty series. Statistics Canada (2004) publishes the number of households with incomes below a series of low-income cutoffs on an irregular basis, as does Australia. In Northern Europe and Scandinavia the debate centers instead on the level of income at which minimum benefits for social programs should be set and on the issue of social exclusion (Atkinson, Cantillon, Marlier, & Nolan, 2002). In fact, Northern European and Scandinavian nations do not calculate low-income or poverty rates. Most recognize that their social programs already ensure a low poverty rate under any reasonable set of measurement standards (Bjrklund & Freeman, 1997). Instead they concentrate their efforts on social mobility and inequality (Erikson & Goldthorpe, 2002). Leaving aside that poverty measurement is an almost uniquely American issue, what else can be said? Iceland (this issue) spends much of his time in the setting of the poverty line per se, but says little on the types of demographic units that share resources and the incomes or resource measures that should be used to compare to these poverty lines. Indeed there should be consideration of the unit issue, and then some great deal of attention paid to the resources measure. For international treatments of poverty, the household is the only comparable income-sharing unit available for all nations. The American idea of families (all persons related by blood, marriage, or adoption) being separated from unrelated persons leaves nonrelated persons sharing living arrangements (beds, refrigerators, and televisions) and living together as cohabiters (of any gender combination) as unrelated single persons. While it would be useful to know if persons could afford to live in other, more desirable arrangements, to treat them as separate makes mockery of the idea of economies of scale. Two cannot live as cheaply as one, but two do live together more cheaply than do two alone. We should recognize the economies of scale apparent in such choices and treat cohabiting units as single units for poverty estimation. The resource measure for determining poverty should be wholly consistent with the resource measure encapsulated in the poverty line definition. The measure needs to be broad enough to capture all relevant forms of income, including the effects of taxes paid and tax policy (the Earned Income Tax Credit) and subsidies for relevant commodities (food stamps, housing subsidies, etc.). It also has to reflect the costs of earning an income. Clearly, in a work-oriented society such as ours, consumption of basic commodities comes after paying the costs of working, including child care costs in particular. These expenses need to be netted out. How about such things as health care access and medical care costs? I prefer to leave these as separate items. That is, a separate index to measure access to two key merit goods hard to measure in income terms: health care and education. As in the United Nations Human Development Index, the realms of health and education should be different from the realm of income poverty. There are some poor people whose children are in high-quality educational institutions and whose medical care



needs are well meet, just as there are many nonpoor persons who have bad schools and inadequate access to basic health care needs (e.g., due to lack of health insurance). These should be kept separate from income poverty. All three add to capabilities, but each in a different way. And we should track progress or lack thereof in these dimensions as well as in income poverty alone. Hardship measurement, which Iceland (this issue) also champions, is fine as long as one does not confuse choice with hardship. Housing is vexing because increasingly persons face higher costs for housingmore hardshipbut live in higher quality housesless hardship (Smeeding, 2004). Note that the health and education issues cannot be addressed simply by hardship questions related to unpaid bills, either. Some may be unable to pay large health care bills (registered hardship), whereas others are even worse off because they decided not to attend to medical needs because they could not afford to (no registered hardship) or to attend to medical needs that they are now indebted for (hardship of debt). The really important message that Iceland (this issue) sends in this article is that poverty measurement is multifaceted and complicated in rich societies. His reasoned approach is to be recommended to both politicians and policy analysts who want to define poverty away and to those who want to make it more than it really is. Poverty measures should be ones that reasonable people can agree to and should reflect the effects of our polices and practices on maintaining incomes, and our success or failure in providing key goods, such as health care and education, to all Americans at reasonable cost.

Atkinson, A., Cantillon, B., Marlier, E., & Nolan, B. (2002). Social indicators: The EU and social inclusion. New York: Oxford University Press. Bjrklund, A., & Freeman, R. (1997). Generating equality and eliminating povertythe Swedish way. In R. B. Freeman, R. Topel, & B. Swedenborg (Eds.), The welfare state in transition: Reforming the Swedish model (pp. 452501). Chicago: University of Chicago Press. Erikson, R., & Goldthorpe, J. H. (2002). Intergenerational inequality: A sociological perspective. Journal of Economic Perspectives, 16(3), 3144. Smeeding, T. M. (2004, November). Consumption among low-income families: Policy concerns. Paper presented at the ASPE-MichiganNPC Conference: Consumption Among Low Income Families, Washington, DC. Statistics Canada. (2004). Retrieved July 15, 2005, from 75F0002MIE/75F0002MIE2005003.pdf U.S. Census Bureau. (2003). Poverty in the United States 2002: Current population reports. Washington, DC: U.S. Department of Commerce, Economics, and Statistics Administration. United Kingdom Department of Social Security. (1996). Households below average income. London: Government Statistical Service. United Kingdom Department of Work and Pensions. (2004). Opportunity for all: Sixth annual report 2004. London: Department of Work and Pensions. Retrieved December 19, 2004, from http://