Economic Well-Being at Older Ages: Income- and Consumption-Based Poverty Measures in the HRS
Year: 2006
Type: report
Abstract: According to economic theory, well-being or utility depends on consumption.However, at the household level, total consumption is rarely measured because its collection requires a great deal of survey time.As a result income has been widely used to assess economic well-being and poverty rates.Yet, because households can use wealth to consume more than income, an income-based measure of well-being could yield misleading results for many households, especially at older ages.We use data from the Health and Retirement Study to find income-based poverty rates which we compare with poverty rates as measured in the Current Population Survey.We use HRS consumption data to calculate a consumption-based poverty rate and study the relationship between income-based and consumption-based poverty measures.We find that the poverty rate based on consumption is lower than the income-based poverty rate.Particularly noteworthy is the much lower rate among the oldest single persons such as widows.The explanation for the difference is the ability to consume out of wealth.
DOI: 10.3386/w12680
Authors: Michael Hurd, Susann Rohwedder
Institutions: RAND Corporation, National Bureau of Economic Research
Language: English
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1485832361