Poverty Summary. Plan: What does it mean to be poor Relationship between different measures and deprivation Have we lost the war on poverty? Subjective.

Poverty Summary

Plan:

• What does it mean to be poor• Relationship between different measures and

deprivation• Have we lost the war on poverty?• Subjective measures• U.S. Food insecurity: measures• Effects of social assistance on Insecurity• Next Time: Intergenerational Transmission of

Inequality

Theoretical Models of Poverty

• Economic Restructuring– Post agricultural in developing nations

• The Kuznets’ Inequality Curve– U shaped

• research provided general support for this model in the US and other advanced societies

• The patterns started to break down in the 70s– Post-industrialized Society– Middle income jobs are exported – High returns to Human Capital

What it Means I

What it means II

What it means IV

What it Means Summary

Changes in 10 years:

Home ownership hasn’t changed

Nothing has gone really down

Air conditioning and telephones have jumped up

Computers have gone from 2-5% to 36%

Internet access is new to all

So have we lost the war on poverty?

• Answer depends on measure– By measures with “semi-objective” thresholds and

income-based resource measures the war has most definitely been lost!

– By expenditure/consumption based measures the answer may be “no”

– Jorgenson argues we have seen “consumption poverty” drop to 2.5 percent

• But measure depends, in part, on a society's philosophy– Perhaps we need more than one measure– Think about Scope-Specific measures

Self-Reported Measures

• Can identify aspects of deprivation that objective measures fail to do

• Bypass the need for: – surveys with high recall demands (like expenditure

surveys)– Adjusting for prices across locations and other aspects

(credit worthiness, housing discrimination, food deserts, etc.)

– Collecting (sometimes sensitive) income data– Quantifying non-monetary income and home

production– Defining poverty lines

Self Reported Measure Problems

• Cannot be used for social assistance• Difficult to make interpersonal comparisons – Although “vignettes” make this easier. These are

ways to standardize subjective answers• Can be responsive to other questions in the

survey or clues from interviewer – “Priming” literature

Food Insecurity

• Food security—access by all people at all times to enough food for an active, healthy life—is one requirement for a healthy, well-nourished population.

• Insecurity is lack of Food Security

• 12.6 million households (11 percent of all U.S. households) reported FI

• 4.4 million, (3.9 percent of all U.S. households) reported “hunger”

General categories(old and new labels are the

same)

Detailed categories

Old label New labelDescription of conditions in the

household

Food security Food security

High food security

No reported indications of food-access problems or limitations

Marginal food security

One or two reported indications—typically of anxiety over food sufficiency or shortage of food in the house. Little or no indication of changes in diets or food intake

Food insecurity

Food insecurity without hunger

Low food security

Reports of reduced quality, variety, or desirability of diet. Little or no indication of reduced food intake

Food insecurity

with hunger

Very low food security

Reports of multiple indications of disrupted eating patterns and reduced food intake

Food Insecurity--Categories

Impact of Assistance on FI

• Food Stamps (FSP) are expected to reduce FI but mixed evidence on impacts– Efforts include OLS, propensity score estimators,

panel data models, Instrumental variable and structural simultaneous equation models

– Studies find strong self selection of FI households into FSP

• Primary concern is how to figure out what would participants look like if FSP was interrupted now.

• Lack of opportunity to experiment

Stats on FI

--Much higher among participants

--Inversely proportional to

income

Identification of FSP Impact on FI

• IV methods:– Borjas (2004) State regulations on Immigrants• After 1996 reform some states protected immigrants

– Mykerezi & Mills 2010 state errors in FSP allotments • State errors can randomly and mistakenly bring families

in and out of the program (quasi lottery)

• Self-reported Involuntary exit– Ask if government interrupted FSP

Correlates of FI

Inter-Generational Transmission“People differ markedly in their views concerning the appropriate role of government in reducing economic inequality. Self-interest and differences in values explain part of the conflict over redistribution. But by far the most important fault line is that people hold different beliefs about why the rich are rich and the poor are poor.

Survey data show that people—rich and poor alike—who think that “getting ahead and succeeding in life” depends on “hard work” or “willingness to take risks” tend to oppose redistributive programs.

Conversely, those who think that the key to success is “money inherited from family,” “parents and the family environment,” “connections and knowing the right people,” or being white, support redistribution.

Handing down success strikes many people as unfair even if the stakes are small, while differences in achieved success may be unobjectionable even with high stakes, as long as the playing field is considered level.

How level is the intergenerational playing field? What are the causal mechanisms that underlie the intergenerational transmission of economic status? Are these mechanisms amenable to public policies in a way that would make the attainment of economic success more fair? These are the questions we will try to answer

Bowles & Gintis (2002)