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Impacts of Adding Net Worth to the Poverty Definition


  • Donald L. Lerman
  • James J. Mikesell


This paper estimates changes in the level and composition of poverty that would result from modifying the conventional income-based poverty measure to include the annuity value of household net worth. Under the new income/wealth measure, 13 percent of those currently measured as poor have enough assets to be removed from poverty. Among those more often found to be in poverty under the new measure are young, renters, and large central city residents. Age, home ownership, farm employment, education, retirement status, public assistance participation, and residence in the West are significant factors in explaining the divergence of the alternative poverty measures.

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  • Donald L. Lerman & James J. Mikesell, 1988. "Impacts of Adding Net Worth to the Poverty Definition," Eastern Economic Journal, Eastern Economic Association, vol. 14(4), pages 357-370, Oct-Dec.
  • Handle: RePEc:eej:eeconj:v:14:y:1988:i:4:p:357-370

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    References listed on IDEAS

    1. Habib, Jack & Kohn, Meir & Lerman, Robert, 1977. "The Effect on Poverty Status in Israel of Considering Wealth and Variability of Income," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(1), pages 17-38, March.
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    1. Edward Wolff & Ajit Zacharias, 2009. "Household wealth and the measurement of economic well-being in the United States," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(2), pages 83-115, June.
    2. Robert Haveman & Edward Wolff, 2005. "The concept and measurement of asset poverty: Levels, trends and composition for the U.S., 1983–2001," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(2), pages 145-169, January.
    3. Edward N. Wolff & Ajit Zacharias & Asena Caner, 2005. "Household wealth, public consumption and economic well-being in the United States," Cambridge Journal of Economics, Oxford University Press, vol. 29(6), pages 1073-1090, November.
    4. Kuypers, Sarah & Marx, Ive, 2016. "Estimation of Joint Income?Wealth Poverty: A Sensitivity Analysis," IZA Discussion Papers 10391, Institute for the Study of Labor (IZA).

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