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Viewpoint: Further results on measuring the well-being of the poor using income and consumption

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  • Bruce D. Meyer
  • James X. Sullivan

Abstract

We evaluate the relative merits of income- and consumption-based measures of well-being. Our results provide evidence that consumption better captures well-being for those with few resources. The bottom deciles of expenditures exceed those of income, suggesting under-reporting of income. The under-reporting rate for government transfers is high and rising. Overall non-response is more severe in U.S. income data than in expenditure data. Furthermore, a consumption data set requires fewer observations than an income data set to obtain the same level of precision for typical estimates. Finally, very low consumption is more strongly related to other bad outcomes than very low income.

Suggested Citation

  • Bruce D. Meyer & James X. Sullivan, 2011. "Viewpoint: Further results on measuring the well-being of the poor using income and consumption," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 52-87, February.
  • Handle: RePEc:cje:issued:v:44:y:2011:i:1:p:52-87
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    Citations

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    Cited by:

    1. Erling Røed Larsen, 2014. "Is the Engel curve approach viable in the estimation of alternative PPPs?," Empirical Economics, Springer, vol. 47(3), pages 881-904, November.
    2. Finlay Richard & Price Fiona, 2015. "Household saving in Australia," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 677-704, July.
    3. Gabriella Donatiello & Marcello D’Orazio & Doriana Frattarola & Antony Rizzi & Mauro Scanu & Mattia Spaziani, 2014. "Statistical Matching of Income and Consumption Expenditures," International Journal of Economic Sciences, University of Economics, Prague, vol. 2014(3), pages 50-65.
    4. Bruce Meyer & Wallace K. C. Mok, 2016. "Disability, Earnings, Income and Consumption," NBER Chapters,in: Social Insurance Programs (Trans-Atlantic Public Economic Seminar - TAPES) National Bureau of Economic Research, Inc.
    5. Jurgen Faik & Uwe Fachinger, 2013. "The decomposition of well-being categories: An application to Germany," Working Papers 307, ECINEQ, Society for the Study of Economic Inequality.
    6. Miriam Hortas-Rico & Jorge Onrubia & Daniele Pacifico, 2014. "Estimating the Personal Income Distribution in Spanish Municipalities Using Tax Micro-Data," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1419, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Adam Bee & Bruce D. Meyer & James X. Sullivan, 2013. "The Validity of Consumption Data: Are the Consumer Expenditure Interview and Diary Surveys Informative?," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 204-240 National Bureau of Economic Research, Inc.
    8. repec:nbr:nberch:14003 is not listed on IDEAS
    9. Miriam Hortas Rico & Jorge Onrubia Fern·ndez, 2014. "Renta personal de los municipios espanoles y su distribuciÛn: MetodologÌa de estimaciÛn a partir de microdatos tributarios," Studies on the Spanish Economy eee2014-12, FEDEA.
    10. repec:eee:jimfin:v:77:y:2017:i:c:p:18-38 is not listed on IDEAS
    11. Asadul Islam & Jaai Parasnis & Dietrich Fausten, 2013. "Do Immigrants Save Less than Natives? Immigrant and Native Saving Behaviour in Australia," The Economic Record, The Economic Society of Australia, vol. 89(284), pages 52-71, March.
    12. Philip Müller, 2016. "Poverty in Europe: Sociodemographics, Portfolios and Consumption of Wealth Poor Households," LWS Working papers 22, LIS Cross-National Data Center in Luxembourg.
    13. Ozge Gokdemir, 2015. "Consumption, savings and life satisfaction: the Turkish case," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(2), pages 183-196, June.
    14. Newman Carol & Kinghan Christina, 2015. "Economic transformation and the diversification of livelihoods in rural Viet Nam," WIDER Working Paper Series 064, World Institute for Development Economic Research (UNU-WIDER).
    15. Bruce D. Meyer & James X. Sullivan, 2012. "Identifying the Disadvantaged: Official Poverty, Consumption Poverty, and the New Supplemental Poverty Measure," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 111-136, Summer.

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