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Viewpoint: Further results on measuring the well‐being of the poor using income and consumption

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  • Bruce D. Meyer
  • James X. Sullivan
Abstract
We evaluate the relative merits of income‐ and consumption‐based measures of well‐being. Our results provide evidence that consumption better captures well‐being for those with few resources. The bottom deciles of expenditures exceed those of income, suggesting under‐reporting of income. The under‐reporting rate for government transfers is high and rising. Overall non‐response is more severe in U.S. income data than in expenditure data. Furthermore, a consumption data set requires fewer observations than an income data set to obtain the same level of precision for typical estimates. Finally, very low consumption is more strongly related to other bad outcomes than very low income. On évalue les mérites relatifs des mesures de bien‐être fondées sur le revenu et la consommation. Les résultats montrent que la consommation mesure mieux le bien‐être de ceux qui ont peu de ressources. Les déciles au bas de la distribution des dépenses dépassent les déciles de la distribution des revenus – ce qui suggère qu’il y aurait des revenus non rapportés. Le taux de sous‐déclaration des transferts gouvernementaux est élevé et croissant. Le taux global de non‐réponses est plus important aux Etats‐Unis pour les revenus que pour les dépenses. De plus, les bases de données sur la consommation requièrent moins d’observations que celles sur le revenu pour obtenir le même degré de précision des évaluations typiques. Finalement, une très basse consommation est plus fortement co‐reliée à d’autres mauvaises conditions qu’un très bas niveau de revenu.

Suggested Citation

  • Bruce D. Meyer & James X. Sullivan, 2011. "Viewpoint: Further results on measuring the well‐being of the poor using income and consumption," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(1), pages 52-87, February.
    • Handle: RePEc:wly:canjec:v:44:y:2011:i:1:p:52-87
    DOI: 10.1111/j.1540-5982.2010.01623.x
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