Alternatives to Income-Based Measures of Poverty

Kenneth A. Couch

in Counting the Poor

Published in print June 2012 | ISBN: 9780199860586
Published online September 2012 | e-ISBN: 9780199932948 | DOI:

Series: International Policy Exchange Series

Alternatives to Income-Based Measures of Poverty

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This chapter discusses the symmetrical problems that arise in developing an income or consumption-based measure of economic well-being. In theory, direct measures of consumption are preferable as a measure of well-being, particularly for low-income households, because they are more likely to reflect the end result of the many paths individuals may take to sustain themselves. In practice, however, problems of valuation of nonmarket goods arise both when an analyst begins with income as a measure of resources but then wishes to augment it with non-purchased items, and when consumption expenditures is the ultimate analytical goal but individuals access goods in many ways other than market transactions. The analytical problems encountered in constructing a comprehensive measure of disposable income begin with accurately measuring the components of the standard definition. Many components of the disposable income concept are not measured accurately. One is self-reported income. Excise and sales taxes are also totally neglected both in the United States and Europe.

Keywords: economic well-being; income; consumption; taxes; self-reported income; market transactions

Chapter.  3060 words. 

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