Economic Well-Being at Older Ages: Income- and Consumption-Based Poverty Measures in the HRS / Michael D. Hurd, Susann Rohwedder.

Format:

Book

Author/Creator:

Hurd, Michael D.

Contributor:

National Bureau of Economic Research.

Rohwedder, Susann.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12680.

NBER working paper series no. w12680

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Economic Well-Being at Older Ages

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

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.

Notes:

Print version record

November 2006.