Volume 38, Supplement 2003
Meyer, Bruce D., and James X. Sullivan. 2003. "Measuring the Well-Being of the Poor Using Income and Consumption." Journal of Human Resources 38(S):1180-1220.
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 microdata from standard surveys to administrative microdata 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.
Bruce D. Meyer is a professor of economics and a faculty fellow of the
Institute for Policy Research at Northwestern University and a faculty research
fellow at the NBER. James X. Sullivan is an assistant professor of economics at
the University of Notre Dame. This paper was prepared for the Joint IRP/ERS
Conference on Income Volatility and Implications for Food Assistance, May 2-3,
2002 in Washington, D.C. The authors thank seminar participants at the
University of Colorado, the ERS, the University of Illinois at Chicago, the
University of Notre Dame, the NBER Labor Studies, University College London,
London School of Economics, and Consumer Expenditure Survey meetings, and
Northwestern University for their comments, and Richard Blundell, John Bound,
Charlie Brown. Angus Deaton, Thesia Gamer, Jonathan Gruber, Dean Jolliffe,
Joseph Lupton, Bruce Spencer, Frank Stafford and Robert Van Horn for
suggestions. This paper was revised while Meyer was a visitor at University
College London. The data used in this article can be obtained beginning May 2003
through April 2007 from James X. Sullivan at
sullivan.197@nd.edu .
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X