IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/9760.html
   My bibliography  Save this paper

Measuring the Well-Being of the Poor Using Income and Consumption

Author

Listed:
  • Bruce D. Meyer
  • James X. Sullivan

Abstract

We evaluate consumption and income measures of the material well-being of the poor. We begin with conceptual and pragmatic reasons that favor income or consumption. Then, we empirically examine the quality of standard data by studying measurement error and under-reporting, and by comparing micro-data from standard surveys to administrative micro-data and aggregates. We also compare low reports of income and consumption to other measures of hardship and well-being. The closer link between consumption and well-being and its better measurement favors the use of consumption when setting benefits and evaluating transfer programs. However, income retains its convenience for determining program eligibility.

Suggested Citation

  • Bruce D. Meyer & James X. Sullivan, 2003. "Measuring the Well-Being of the Poor Using Income and Consumption," NBER Working Papers 9760, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9760
    Note: LS PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w9760.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James M. Poterba, 1991. "Is the Gasoline Tax Regressive?," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 145-164, National Bureau of Economic Research, Inc.
    2. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843, Elsevier.
    3. Bound, John & Krueger, Alan B, 1991. "The Extent of Measurement Error in Longitudinal Earnings Data: Do Two Wrongs Make a Right?," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 1-24, January.
    4. Atkinson, Anthony B, 1991. "Comparing Poverty Rates Internationally: Lessons from Recent Studies in Developed Countries," World Bank Economic Review, World Bank Group, vol. 5(1), pages 3-21, January.
    5. Bollinger, C.R. & David, M.H., 1993. "Modeling Food Stamp Participation in the Presence of Reporting Errors," Working papers 9310, Wisconsin Madison - Social Systems.
    6. Richard Blundell & Ian Preston, 1998. "Consumption Inequality and Income Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 603-640.
    7. Bollinger, Christopher R & David, Martin H, 2001. "Estimation with Response Error and Nonresponse: Food-Stamp Participation in the SIPP," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(2), pages 129-141, April.
    8. Blundell, Richard William & Pistaferri, Luigi & Preston, Ian, 2002. "Partial Insurance, Information, and Consumption Dynamics," CEPR Discussion Papers 3666, C.E.P.R. Discussion Papers.
    9. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    10. David M. Cutler & Lawrence F. Katz, 1991. "Macroeconomic Performance and the Disadvantaged," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 1-74.
    11. V. J. Hotz & J. K. Scholz, "undated". "Measuring Employment and Income for Low-Income Populations with Administrative and Survey Data," Institute for Research on Poverty Discussion Papers 1224-01, University of Wisconsin Institute for Research on Poverty.
    12. Nancy Wemmerus & Kristin Porter, 1996. "An Ethnographic Analysis of Zero-Income Households in the Survey of Income and Program Participation," Mathematica Policy Research Reports fb85852141294588ad7dd0a27, Mathematica Policy Research.
    13. Susan E. Mayer & Christopher Jencks, 1989. "Poverty and the Distribution of Material Hardship," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 88-114.
    14. Bound, John & Brown, Charles & Duncan, Greg J & Rodgers, Willard L, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 345-368, July.
    15. Skinner, Jonathan, 1987. "A superior measure of consumption from the panel study of income dynamics," Economics Letters, Elsevier, vol. 23(2), pages 213-216.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, vol. 72(1), pages 1-32, January.
    2. Heathcote, Jonathan & Storesletten, Kjetil & Violante, Giovanni L, 2004. "The Cross-Sectional Implications of Rising Wage Inequality in the United States," CEPR Discussion Papers 4296, C.E.P.R. Discussion Papers.
    3. John Abowd & Martha Stinson, 2011. "Estimating Measurement Error in SIPP Annual Job Earnings: A Comparison of Census Bureau Survey and SSA Administrative Data," Working Papers 11-20, Center for Economic Studies, U.S. Census Bureau.
    4. Peter Gottschalk & Minh Huynh, 2010. "Are Earnings Inequality and Mobility Overstated? The Impact of Nonclassical Measurement Error," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 302-315, May.
    5. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    6. de Nicola, Francesca & Giné, Xavier, 2014. "How accurate are recall data? Evidence from coastal India," Journal of Development Economics, Elsevier, vol. 106(C), pages 52-65.
    7. Ingrid Woolard & Stephan Klasen, 2005. "Determinants of Income Mobility and Household Poverty Dynamics in South Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 865-897.
    8. Lisa M. Dragoset & Gary S. Fields, 2006. "U.S. Earnings Mobility: Comparing Survey-Based and Administrative-Based Estimates," Working Papers 55, ECINEQ, Society for the Study of Economic Inequality.
    9. Nicoletti, Cheti & Peracchi, Franco & Foliano, Francesca, 2011. "Estimating Income Poverty in the Presence of Missing Data and Measurement Error," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(1), pages 61-72.
    10. Ana Cinta G. Cabral & Norman Gemmell & Nazila Alinaghi, 2021. "Are survey-based self-employment income underreporting estimates biased? New evidence from matched register and survey data," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(2), pages 284-322, April.
    11. Bruce D. Meyer & James X. Sullivan, 2009. "Five Decades of Consumption and Income Poverty," Working Papers 0907, Harris School of Public Policy Studies, University of Chicago.
    12. Jonathan Fisher & David S. Johnson & Timothy M. Smeeding, 2015. "Inequality of Income and Consumption in the U.S.: Measuring the Trends in Inequality from 1984 to 2011 for the Same Individuals," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(4), pages 630-650, December.
    13. James X. Sullivan & Lesley Turner & Sheldon Danziger, 2008. "The relationship between income and material hardship," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(1), pages 63-81.
    14. Abay, Kibrom A. & Abate, Gashaw T. & Barrett, Christopher B. & Bernard, Tanguy, 2019. "Correlated non-classical measurement errors, ‘Second best’ policy inference, and the inverse size-productivity relationship in agriculture," Journal of Development Economics, Elsevier, vol. 139(C), pages 171-184.
    15. Yingyao Hu & Geert Ridder, 2012. "Estimation of nonlinear models with mismeasured regressors using marginal information," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(3), pages 347-385, April.
    16. Martin Browning & Thomas Crossley, 2009. "Are Two Cheap, Noisy Measures Better Than One Expensive, Accurate One?," American Economic Review, American Economic Association, vol. 99(2), pages 99-103, May.
    17. Kerwin Kofi Charles & Melvin Stephens, Jr., 2006. "The Level and Composition of Consumption Over the Business Cycle: The Role of "Quasi-Fixed" Expenditures," NBER Working Papers 12388, National Bureau of Economic Research, Inc.
    18. Donal O'Neill, 2015. "Correcting for Self-Reporting Bias in BMI: A Multiple Imputation Approach," Economics Department Working Paper Series n263-15.pdf, Department of Economics, National University of Ireland - Maynooth.
    19. Peter Gottschalk, 2005. "Downward Nominal-Wage Flexibility: Real or Measurement Error?," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 556-568, August.
    20. Krueger, Dirk & Perri, Fabrizio, 2002. "Does Income Inequality Lead to Consumption Inequality?," CEPR Discussion Papers 3583, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:9760. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.