European nations apply a “relative” poverty threshold, typically 50% or 60% of median income, that is higher than in the US, and that they also do a better job of reducing poverty. Unlike the European model, the “absolute” US poverty threshold does not increase in real value when the nation's standard of living rises, even though what we think of as living in poverty today would not have been a sign of poverty a century ago. The 1995 National Academy of Sciences report advised the United States to emulate Europe and adopt a relative, or at least a “quasi-relative,” threshold, indexed each year by changes in spending on food, clothing, and shelter between the 30th and 35th percentiles of couples with two children. Couples in this range have incomes above US$50,000 and most own their own homes. So indexing a poverty threshold to their spending on basics would tend to reflect economic gains among families who are well above what most people regard as poverty. This chapter asks: Is this the lesson about poverty measurement that the United States should learn from Europe?
Keywords: poverty measurement; Europe; United States; poverty threshold; standard of living
Chapter. 3859 words.
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