European Lessons for U.S. Poverty Measurement

Deconstructing poverty measures in Europe and the United States

Richard V. Burkhauser

November 4, 2009

Table 1. European Poverty Rates by Member State Using Alternative Solidarity Group Medians

Table 2. State Child Poverty Rates in the United States Using Alternative Solidarity Group Medians

Table 2. State Child Poverty Rates in the United States Using Alternative Solidarity Group Medians

30000

31000

32000

33000

34000

35000

36000

37000

38000

39000

40000

1995 1997 1999 2001 2003 2005 2007

Size-adj Household Income Size-adj Household Income + Employer Health InsuranceSize-adj Household Income + All Health Insurance

Real Median Size-Adjusted Household Income of individuals in the USA, including and excluding health-insurance benefits: 1995 to 2007 (in 2007 dollars)

Table 1. Alternative Measures of Mean Income in 2007, by Decile

Decile Income EmployerHealth

Insurance

Medicaid Medicare Total Health

Insurance

Total Income

Share Health

InsuranceLowest 5,987 346 1,561 2,129 4,036 10,023 40.26

2 13,645 987 867 3,111 4,964 18,610 26.68

3 19,712 1,719 542 2,514 4,775 24,486 19.50

4 25,834 2,455 341 1,879 4,675 30,509 15.32

5 32,132 3,043 217 1,242 4,502 36,634 12.29

6 39,046 3,531 140 1,025 4,696 43,742 10.74

7 47,017 4,007 110 843 4,960 51,977 9.54

8 57,264 4,318 63 716 5,097 62,361 8.17

9 73,314 4,582 45 635 5,262 78,576 6.70

10 138,865 4,764 28 634 5,426 144,292 3.76

Mean 45,933 2,975 395 1,472 4,843 50,776 9.54

Table 2. Changes in Mean Income (with and without value of Health Insurance) 1995 to 2007

Decile Income 1995

Income 2007

PercentChange inIncome

Total Income 1995

Total Income 2007

PercentChange in Total Income

Share of Health Insurance 1995

Share of Health Insurance 2007

Lowest 5,314 5,987 12.66 8,162 10,023 22.80 34.89 40.26

2 11,817 13,645 15.47 15,021 18,610 23.89 21.33 26.68

3 17,118 19,712 15.15 20,025 24,486 22.28 14.52 19.50

4 22,419 25,834 15.23 25,266 30,509 20.75 11.27 15.32

5 27,815 32,132 15.52 30,675 36,634 19.43 9.32 12.29

6 33,716 39,046 15.81 36,628 43,742 19.42 7.95 10.74

7 40,556 47,017 15.93 43,609 51,977 19.19 7.00 9.54

8 49,462 57,264 15.77 52,740 62,361 18.24 6.21 8.17

9 63,386 73,314 15.66 66,779 78,576 17.67 5.08 6.70

10 120,721 138,865 15.03 124,122 144,292 16.25 2.74 3.76

Mean 40,378 45,933 13.76 43,455 50,776 16.85 7.08 9.54

Gini coefficients including health-insurance benefits

Year Income

Income plus Employer Health

InsuranceIncome plus

Medicaid Income plus Medicare

Total Income = income + all health insurance

benefits 1995 0.4222 0.4166 0.4137 0.4100 0.39631996 0.4266 0.4208 0.4188 0.4140 0.40081997 0.4291 0.4228 0.4226 0.4162 0.40371998 0.4263 0.4200 0.4202 0.4141 0.40191999 0.4267 0.4196 0.4216 0.4148 0.40272000 0.427 0.4193 0.4216 0.4144 0.40162001 0.4323 0.4243 0.4263 0.4188 0.40502002 0.4288 0.4206 0.4221 0.4144 0.40002003 0.4316 0.4236 0.4243 0.4170 0.40232004 0.433 0.425 0.4252 0.4178 0.40252005 0.4366 0.4282 0.4287 0.4210 0.40522006 0.438 0.4295 0.4302 0.4205 0.40462007 0.4301 0.4223 0.4217 0.4115 0.3959

YearPre-tax income(exclude health

insurance)Pre-tax income + all

health insurancePost-tax income +

all health insurance

Post-tax income + all health insurance + tax

employer-based health insurance

Gini increase from taxing

health insurance

1995 0.4222 0.3963 0.3352 0.3359 0.0007

1996 0.4266 0.4008 0.3379 0.3387 0.0008

1997 0.4291 0.4037 0.3411 0.3421 0.0010

1998 0.4263 0.4019 0.3356 0.3364 0.0007

1999 0.4267 0.4027 0.3344 0.3352 0.0008

2000 0.4270 0.4016 0.3332 0.3343 0.0011

2001 0.4324 0.4050 0.3359 0.3368 0.0009

2002 0.4288 0.4000 0.3354 0.3364 0.0011

2003 0.4316 0.4023 0.3471 0.3474 0.0004

2004 0.4330 0.4025 0.3462 0.3465 0.0003

2005 0.4366 0.4052 0.3507 0.3516 0.0009

2006 0.4380 0.4046 0.3539 0.3553 0.0014

2007 0.4301 0.3959 0.3458 0.3468 0.0010

Gini coefficients including taxes, and changing tax-policies