Income poverty and material hardship: How strong is the association?

Abstract

Material deprivation has been measured in a variety of ways, such as in terms of income shortfalls or the experience of different types of material hardship. This paper tests the extent to which indicators of hardship are associated with income poverty. Using a U.S. dataset with detailed income and poverty information observed over a few years, we find that timing, duration, and depth of poverty are all associated with material hardships (food insecurity, difficulty meeting basic needs, lack of consumer durables, housing problems, neighborhood problems, and fear of crime). Even very short spells of poverty have a measurable impact on material well-being, although not all types of well-being are affected in equal measures.

Introduction

Researchers have at their disposal a number of measures designed to capture the well-being of people facing economic deprivation of one sort or another. Among the most widely used measures is poverty, which often gauges shortfalls in family or household income available to meet basic needs in a given time period. Past research using longitudinal data has revealed that people experience poverty in very different ways: many people are poor for short periods of time while others are mired in poverty; some have incomes just below the poverty line while others are in “extreme” poverty; some experience a single bout of poverty while others have multiple spells (Proctor and Dalaker, 2003, Iceland, 2003a, Bane and Ellwood, 1986, Gottschalk et al., 1994, Rank and Hirschl, 2001, Stevens, 1999).

Some researchers, however, have argued that poverty should be viewed as more than merely the lowness of income, as income only indirectly captures people's capabilities and material deprivation (e.g., Sen, 1999, Brady, 2003). Other, perhaps more direct, measures of deprivation fall under the general rubric of well-being measures, where respondents are asked about their well-being along a variety of dimensions, including housing and neighborhood conditions, ability to pay bills, food security, and possession of basic consumer durables.

Past research has shown only a moderate association between poverty and hardship measures (Mayer and Jencks, 1989, Mayer and Jencks, 1993, Mayer, 1995, Rector et al., 1999, Beverly, 2000, Boushey et al., 2001, Perry, 2002, Bradshaw and Finch, 2003). This is not wholly surprising since these measures are, by design, meant to capture different dimensions of well-being. Poverty is usually a measure of transitory income deprivation, while reports of some types of material hardship (such as neighborhood problems) are likely to be more affected by longer-term income, while others (such as reports of food insecurity) are more affected by very short-term income flows.

This paper tests the extent to which indicators of hardship are associated with income poverty. Using data from the 1996 Survey of Income and Program Participation (SIPP), a longitudinal survey that followed respondents for 4 years, we explore how reports of material hardship varied by poverty spell length, timing, depth, and frequency of occurrence. We find that some measures of material hardship are indeed significantly associated with income poverty and by variations in its severity, and that the association is considerably stronger for some measures of material hardship than others. In addition, we find that short-term poverty's association with hardship is stronger than what would be predicted from its impact on longer-term income flows.