Date of Award

Spring 5-30-2018

Document Type

Thesis

Degree Name

B.A.

Program of Study

Economics

Language

English

First Advisor

Sanders Korenman

Second Advisor

Theodore Joyce

Third Advisor

Diane Gibson

Abstract

This thesis seeks to replicate the findings of a 2012 study published by Meyer and Sullivan in the Journal of Economic Perspectives using data provided by the Columbia University Longitudinal Wellness Survey. That study found that a poverty measure based on consumption predicted material hardship better than both the Official (OPM) and Supplemental Poverty Measures (SPM). This was found to be the case because a well-constructed consumption poverty measure (CPM) captures in-kind benefits that the OPM neglects. Such a measure also avoids issues inherent in the SPM that arise from respondents underreporting their income and includes the ability to consume out of savings, which neither the SPM nor OPM do.

This replication study was of particular interest given New York City’s high cost of living relative to the rest of the country, which is reflected in the poverty thresholds of both the Census Bureau’s SPM and the City’s own SPM. I sought to use methods similar to those in the Meyer and Sullivan study to determine if a CPM is in fact a more accurate measure of poverty in New York City. My analysis consists of two parts. The first analysis compared respondents classified as in poverty to how these different poverty measures are defined. The other does this according to the bottom 21.8% of each poverty measure. I found the supplemental poverty rate to be higher than the official and consumption poverty rates. I also found the consumption poverty rate to be much lower than either the OPM and SPM for reasons identical to those in the Meyer and Sullivan study.

I also found that the OPM was unexpectedly effective at identifying hardship despite its noted shortcomings as a poverty measure. Descriptive statistics and regressions showed that hardships are more highly associated with official poverty than supplemental or consumption poverty before considering demographic characteristics such as age, gender, education, and race. While these hardships still appeared more highly related to official poverty after controlling for these demographic parameters, these results were not shown to be statistically significant. My results do not confirm Meyer and Sullivan’s findings that a CPM is strictly the better measure. This is possibly due to the difficulty of measuring housing consumption in an area with so much non-market housing like NYC. Rather, they show that the OPM is a relatively effective indicator and predictor of hardship in NYC.

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