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POVERTY MEASURES FDR: "one-third of a nation ill-housed, ill- clad, ill-nourished" US Poverty Rate: absolute standard Ireland, Smeeding “relative poverty rate” Canada: Low-income limit, based on disposable income World Bank: Consumption levels below $1 or $2 per day.
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Absolute Poverty Standard: World Bank
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What is Poverty? In 1963-1964, Molly Orshansky based poverty thresholds on the “thrifty food plan”, Thrifty food budget (family of 4) = $1,033 Families spent 1/3 of their budget on food. 1963 Poverty level = $3,100 Subsequent years, adjusted for CPI inflation index
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Poverty thresholds
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Problems with definition of Poverty Wealth and debt not counted Unusual family expenditures not counted. Regional living costs Families now spend only 1/6 th income on food MEASURING INCOME……….
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Measuring Income money income before taxes, including wages, salaries, interest, dividends, self- employment income, welfare payments (TANF), unemployment insurance, and social security payments. Poverty Report from March Current Population Survey, 50,000 householdsPoverty Report
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Problems with the Definition of Family Income Income not counted: Food Stamps, Medicaid & Medicare, Public Housing Persons not counted: the institutionalized, Army barracks, unrelated individuals under 15
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Problems defining “Family” Must be related Family defined in March, BUT Income, defined in previous year Unrelated children individual counted as neither poor nor non-poor.
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Overcounting the poor? Inflation adjustment overestimates inflation. Food stamps not counted as income. Other in-kind benefits (which have increased overtime) not counted. (Housing, Medical). Earned Income Tax Credit not counted. Under reporting of income.
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Undercounting the Poor? Food now takes 1/6 of typical budget. High regional living costs Unusual family living costs (e.g., medical) Increased FICA (social security) taxes Sample under-represents poor
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