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Income sufficiency v. poverty Results from the United States and The Netherlands

Abstract

The purpose of this paper is to further the understanding of subjective measures used to assess poverty and to add to the literature on poverty measurement methodology. In particular, the paper focuses on the minimum income question (MIQ) first proposed by Goedhart and colleagues (1977). Data from the U.S. Consumer Expenditure Survey and from a Dutch newspaper survey are used. The primary contribution of the paper is the inclusion of household expenditures as additional explanatory variables of minimally necessary income. Significant differences between the coefficients of several categories of expenditures, particularly for leisure, appear to reveal differences in the interpretation of the minimum income question by respondents. Thus, we question the underlying assumption of the MIQ that everyone adheres the same welfare meaning to the phrase “minimally necessary income,” and conclude that the resulting thresholds should not be used as to measure poverty before further research has been carried out to explore what respondents are thinking when they answer questions such as the MIQ.

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The editor of this paper was Greg J. Duncan, University of Michigan. Earlier versions of paper presented at the Fifth Karlsruhe Seminar on Models and Measurement of Welfare and Inequality, August 12–19, 1990, Karlsruhe, Federal Republic of Germany, and at the Allied Social Sciences Associations Meetings in Washington, DC, December 28, 1990. The views expressed in this paper are those of the authors and do not reflect the policies of the U.S. Bureau of Labor Statistics. The research of De Vos was partly made possible by a grant from the Dutch Foundation for the Advancement of Research in the Economic Sciences (ECOZOEK), part of the Netherlands Organization for Scientific Research. Thanks are extended to Gordon Fischer, Dennis Fixler, Mary Kokoski, Marshall Reinsdorf, Patricia Ruggles, Connie Sorrentino, Kimberly D. Zieschang, and other colleagues at the Bureau of Labor Statistics for comments, and to Anna Sanders and Richard Miller for assistance in manuscript preparation and research assistance, respectively. The authors also thank the editor and referees of this paper for stimulating comments but they remain solely responsible for any errors. Final revisions to the manuscript were made when Garner was a visiting Fulbright scholar at the Institute of Sociology, Czech Academy of Sciences, in Prague and De Vos was a researcher at the Economics Institute Tilburg (E.IT., P.O. Box 90153, 5000 LE Tilburg).

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Garner, T.I., de Vos, K. Income sufficiency v. poverty Results from the United States and The Netherlands. J Popul Econ 8, 117–134 (1995). https://doi.org/10.1007/BF00166646

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Keywords

  • Explanatory Variable
  • Subjective Measure
  • Household Expenditure
  • Underlying Assumption
  • Newspaper Survey