Lecture_24___Poverty - December 1 2008 Poverty Issues What...

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December 1, 2008 Poverty
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Issues What does it mean to be poor? What are the problems with the official US (Orshansky) measure? What are some alternatives? What about international comparisons?
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Who is poor?
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Who is poor? “A person is considered poor if his or her consumption or income level falls below some minimum level necessary to meet basic needs. This minimum level is usually called the "poverty line". What is necessary to satisfy basic needs varies across time and societies. Therefore, poverty lines vary in time and place, and each country uses lines which are appropriate to its level of development, societal norms and values.” WORLD BANK
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Why do we need to know?
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Why do we need to know what the poverty line is? Eligibility for programs Targeting communities, people, or groups Social indicator (like GNP)
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Orshansky Measure: Income Poverty
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Orshansky Measure: Income Poverty Office of Management and Budget's (OMB) Statistical Policy Directive 14: a set of money income thresholds that vary by family size and composition to determine who is in poverty. If a family’s total income is less than the family’s threshold, then that family and every individual in it is considered in poverty. The official poverty definition uses money income of all family members before taxes
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How much income do you need to escape poverty? Poverty thresholds were originally derived in 1963-1964, using: U.S. Department of Agriculture food budgets designed for families under economic stress Data about what portion of their income families spent on food Updated annually to take into account inflation
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Poverty thresholds
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Demography of Poverty? How is poverty shaped by: Fertility, mortality, migration? Demographic composition?
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Problems 1. Money income rather than in-kind benefits 2. Geographic differences in the cost of living differences ignored 3. Equivalence scales are problematic (slide) 4. How to adjust for annual inflation 5. Family vs. household as consumption unit 6. Costs (taxes, working, child support, alimony) 7. Some people are missing – unrelated individuals under age 15.
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