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True Household Equivalence Scales And Characteristics Of The Poor In The United States

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  • Jacques van der Gaag
  • Eugene Smolensky

Abstract

In this paper we deal with the question of which measures of economic well‐being are adequate to identify those groups of households in the U.S. whose economic conditions justify public concern and assistance. We derive a utility based measure of economic well‐being from the estimation of a complete set of consumer demand equations. The demand system is Lluch's Extended Linear Expenditure System (Lluch, 1973). Household characteristics are incorporated using the scaling method proposed by Barten (1966). Using the welfare indicator derived, we study the composition of the poorest part of the population, using data from the 1972–73 Consumer Expenditure Survey. We compare our results with those obtained using various other welfare indicators, including the official U.S. poverty line. We show that using different family composition adjustments significantly and systematically affects just who are considered to be at the bottom of the welfare distribution. We finally suggest that program designers therefore can improve their target efficiency by carefully selecting from among the acceptable indices of welfare when defining program eligibility.

Suggested Citation

  • Jacques van der Gaag & Eugene Smolensky, 1982. "True Household Equivalence Scales And Characteristics Of The Poor In The United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 28(1), pages 17-28, March.
    • Handle: RePEc:bla:revinw:v:28:y:1982:i:1:p:17-28
    DOI: 10.1111/j.1475-4991.1982.tb00603.x
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    Cited by:

    1. Michael D. Hurd, 1994. "The Economic Status of the Elderly in the United States," NBER Chapters, in: Aging in the United States and Japan: Economic Trends, pages 63-84, National Bureau of Economic Research, Inc.
    2. Justin T. Denney & Tim Wadsworth & Richard G. Rogers & Fred C. Pampel, 2015. "Suicide in the City: Do Characteristics of Place Really Influence Risk?," Social Science Quarterly, Southwestern Social Science Association, vol. 96(2), pages 313-329, June.
    3. Reuben Gronau, "undated". "The Intrafamily Allocation of Goods--How to Separate the Men from the Boys?," University of Chicago - Population Research Center 87-3, Chicago - Population Research Center.
    4. Mysikova, Martina & Zelinsky, Tomas, 2019. "On the Measurement of the Income Poverty Rate: the Equivalence Scale across Europe," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 99(4), pages 383-397.
    5. Bögenhold, Dieter & Fachinger, Uwe, 2000. "The Social Embeddedness of Consumption: Towards the Relationship of Income and Expenditures over Time in Germany," MPRA Paper 1128, University Library of Munich, Germany.
    6. Justin T. Denney & Jarron M. Saint Onge & Jeff A. Dennis, 2018. "Neighborhood Concentrated Disadvantage and Adult Mortality: Insights for Racial and Ethnic Differences," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 37(2), pages 301-321, April.
    7. Robert H. DeFina, 2002. "The impact of unemployment on alternative poverty measures," Working Papers 02-8, Federal Reserve Bank of Philadelphia.
    8. Luis Ayala & Rosa Martínez & Jesús Ruiz Huerta, 2003. "Equivalence scales in tax and transfer policies," Investigaciones Economicas, Fundación SEPI, vol. 27(3), pages 593-614, September.
    9. Joachim Merz & Thesia Garner & Timothy M. Smeeding & Jürgen Faik & David Johnson, 1994. "Two Scales, One Methodology - Expenditure Based Equivalence Scales for the United States and Germany," FFB-Discussionpaper 08, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    10. Disney, Richard & Whitehouse, Edward, 2001. "Cross-country comparisons of pensioners’ incomes," MPRA Paper 16345, University Library of Munich, Germany.
    11. Whitehouse, Edward, 2000. "How poor are the old? a survey of evidence from 44 countries," Social Protection Discussion Papers and Notes 23141, The World Bank.
    12. Ursicino Carrascal Arranz, 1996. "Estimación de escalas de equivalencia de consumo mediante un modelo de demenda casi ideal (AIDS) ampliado," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 6, pages 25-38, Diciembre.
    13. Robert E. Leu & Brigitte Buhmann & René L. Frey, 1986. "Die personelle Einkommens- und Vermögensverteilung der Schweiz 1982," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 122(II), pages 111-142, June.
    14. G. C. Lim & Sarantis Tsiaplias, 2015. "Financial Stress Thresholds and Household Equivalence Scales," Melbourne Institute Working Paper Series wp2015n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    15. Selden, Thomas M. & Wasylenko, Michael J., 1992. "Benefit incidence analysis in developing countries," Policy Research Working Paper Series 1015, The World Bank.
    16. Martina Mysíková & Tomáš Želinský & Michaela Jirková & Jiří Večerník, 2021. "Equivalence Scale and Income Poverty: Two Approaches to Estimate Country-specific Scale for the Czech Republic," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 156(1), pages 21-45, July.
    17. Justin T. Denney & Richard G. Rogers & Patrick M. Krueger & Tim Wadsworth, 2009. "Adult Suicide Mortality in the United States: Marital Status, Family Size, Socioeconomic Status, and Differences by Sex," Social Science Quarterly, Southwestern Social Science Association, vol. 90(5), pages 1167-1185, December.
    18. Jean-Michel Hourriez & Bernard Legris, 1995. "Le niveau de vie relatif des personnes âgées," Économie et Statistique, Programme National Persée, vol. 283(1), pages 137-158.

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