Poverty in the United States and Different Poverty Measure free essay sample

There is no universally acceptable definition of poverty, although there are several connotations and definitions in vogue. Poverty implies a condition of life characterised by deprivation some sort or the other, and perceived as undesirable by the person concerned or others. It is a multidimensional concept and phenomenon. Generally, there is a consensus among scholars about poverty being conceived and defined as absolute or relative. Absolute poverty implies a person’s lack of access to objectively determined, reasonably adequate quantities of goods and services, to satisfy his/her material and non-material basic needs. Relative poverty, on the other hand, means that a person’s access to the basic needs of life is relatively lower, as compared to some reference group of people. Between two households or two persons, one may be considered as poor, while the other in comparison may not be so, even though both may be in a position to fulfill their basic needs. Following the Office of Management and Budgets (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. If a family’s total income is less than the family’s threshold, then that family and every individual in it is considered in poverty. The official poverty thresholds do not vary geographically, but they are updated for inflation using Consumer Price Index (CPI-U). The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps). Income used to compute poverty status: Money income Includes earnings, unemployment compensation, workers’ compensation, Social Security, Supplemental Security Income, public assistance, veterans’ payments, survivor benefits, pension or retirement income, interest, dividends, rents, royalties, income from estates, trusts, educational assistance, alimony, child support, assistance from outside the household, and other miscellaneous sources. Noncash benefits (such as food stamps and housing subsidies) do not count. Before taxes. Excludes capital gains or losses. If a person lives with a family, add up the incomeof all family members. (Non-relatives, such as housemates, do not count. ) Measure of need (poverty thresholds): Poverty thresholds are the dollar amounts used to determine poverty status Each person or family is assigned one out of 48 possible poverty thresholds Thresholds vary according to: Size of the family Ages of the members The same thresholds are used throughout the United States(do not vary geographically) Updated annually for inflation using the Consumer Price Index for All Urban Consumers (CPI-U). Although the thresholds in some sense reflect families needs, they are intended for use as a statistical yardstick, not as a complete description of what people and families need to live many government aid programs use a different poverty measure, the Department of Health and Human Services (HHS) poverty guidelines, or multiples thereof Poverty thresholds were originally derived in 1963-1964, using: U. S. Department of Agriculture food budgets designed for families under economic stress Data about what portion of their income families spent on food Computation: If total family income is less than the threshold appropriate for that family, the family is in poverty all family members have the same poverty status for individuals who do not live with family members,their own income is compared with the appropriate threshold If total family income equals or is greater than the threshold,the family (or unrelated individual) is not in poverty Example: Family A has five members: two children, their mother, father, and great-aunt. Their threshold was $26,338 dollars in 2008. (See poverty thresholds for 2008) Suppose the members incomes in 2008 were: Mother: $10,000 Father: 7,000 Great-aunt: 10,000 First child: 0 Second child: 0 Total family income: $27,000 Compare total family income with their familys threshold. Income / Threshold = $27,000 / $26,338 = 1. 03 Since their income was greater than their threshold, Family A is not in poverty according to the official definition. The income divided by the threshold is called the Ratio of Income to Poverty. Family As ratio of income to poverty was 1. 03. The difference in dollars between family income and the familys poverty threshold is called the Income Deficit (for families in poverty) or Income Surplus (for families above poverty) Family A’s income surplus was $663 (or $27,000 $26,338). People whose poverty status cannot be determined: Unrelated individuals under age 15 (such as foster children) income questions are asked of people age 15 and older if someone is under age 15 and not living with a family member, we do not know their income since we cannot determine their poverty status, they are excluded from the â€Å"poverty universe† (table totals) People in: institutional group quarters (such as prisons or nursing homes) college dormitories military barracks living situations without conventional housing (and who are not in shelters) Authority behind official poverty measure: The official measure of poverty was established by the Office of Management and Budget (OMB) in Statistical Policy Directive 14. To be used by federal agencies in their statistical work. Government aid programs do not have to use the official poverty measure as eligibility criteria. Many government aid programs use a different poverty measure, the Department of Health and Human Services (HHS) poverty guidelines, or variants thereof Each aid program may define eligibility differently Official poverty data come from the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC), formerly called the Annual Demographic Supplement or simplythe March Supplement. SELECTED CONCEPT ON POVERTY OF BANGLADESH 1. Poor Household: A household which has below poverty line expenditure. 2. Poverty-CBN (Cost of Basic Needs): Poverty is the degree of poorness. It refers to various forms of economic, social and psychological deprivation among the people who lack adequate ownership, control or access to resources for achieving a minimum level of living. It is a multidimensional problem involving income, consumption, nutrition, health, education, housing, crisis coping capacity, access to credit and other aspects of living. 3. Poverty-Absolute: The minimum level of income that is needed in physical survival. 4. Poverty-DCI (Direct Calorie Intake), absolute: For measuring the degree of poverty in DCI method, a person whose daily calorie intake is lower than 2122k. cal is considered in the absolute poverty. 5. Poverty-DCI, Hard-core: For measuring the degree of poverty in DCI method, a person whose daily calorie intake is lower than 1805 k. cal is considered in the hard-core poverty. 6. Poverty-DCI, Hard ultra: For measuring the degree of poverty in DCI method, a person whose daily calorie intake is lower than1600 k. cal is considered in the ultra poverty. 7. Poverty Line Calorie Intake: Is defined as being the amount of calorie intake which satisfies minimum nutritional requirement from foods consumed. For urban areas, it is 2112 k. cal per person per day and for rural people, it is 2122k per person per day. 8. Poverty Line: The minimum level of household income that can purchase a bundle of goods and services to satisfy the basic needs of household. 9. Poverty Line Expenditure: Is defined as monthly per capita expenditure on both food non-food combined at the poverty line calorie intake 2112/2122 k. cal per capita per day. SOME COMMON MEASURES AND INDICATORS OF POVERTY We now indicate some commonly used measures/indicators of poverty. These are given below: a. Poverty Ratio or Head Count: This is the most commonly used single measures of poverty. This measure estimates the percentage of population below a specified poverty line. To compute this measure, it is necessary to define and determine a poverty line. Figure: Some Common Measures and Indicators of Poverty Besides per capita income/consumption expenditure, there are quite a few other commonly used single variant measures of poverty or human development. They include- (a) Life expectancy at birth (b) Literacy rate (c) Birth rate (d) Death rate; and (e) Infant mortality rate. b. Housing Index: Gibbons (1997) proposed this index as a cost-effective measure/tool for identifying the poor. He asserts that index has been found to be valid and useful in a number of countries, such as China, Vietnam, Philippines, Indonesia, India and Bangladesh, and that the index can experienced field assistant to use the index properly. The Housing Index has three components, namely; (a) The size of the house; (b) The physical condition of the house, as reflected in the materials used in its construction; and (c) The type of materials used for making the roof of the house c. Human Poverty Index (HPI): The Human Development Report 1997 (UNDP 1997) presents a Human Poverty Index (HPI) and ranks 78 poor countries using it. The report asserts that poverty is multidimensional, and poverty measures based on the income criterion do not capture deprivation of many kinds. The HPI is based on the following three different types of deprivation (UNDP 1997: 17-23). (a) Survival deprivation, as measured by the percentage of people (in a given country) not expected to survive to age years (P1) (b) Deprivation in education and knowledge, as measured by the adult literacy rate (P2) (c) Deprivation in economic provisioning (P3), which is compute as the mean of three variables:- ?Population without access to safe water (P31), ?People without access to health services (P32), and ?Underweight children under the age of 5 years (P33) All three expressed in percentages.