Measuring Poverty A New Approach (1995) / Chapter Skim
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C THE INTERDEPENDENCE OF TIME AND MONEY
C THE INTERDEPENDENCE OF TIME AND MONEY
Pages 421-432
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From page 421... ...
We stress at several points in the volume that this concept of poverty should not be considered the only relevant measure of deprivation. A measure of economic poverty should be supplemented by other measures that might reflect psychological deprivation, exposure to extreme risks of physical harm, illiteracy, lack of adequate medical care, and so forth.
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From page 422... ...
This wage rate permits the full-time earner in household A to achieve exactly the poverty threshold level of income. Subtracting that 40 hours from the discretionary weekly hours, the adult in that household has now 58 hours available for all remaining activities.
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From page 423... ...
This fact highlights the underlying issue: having; set poverty threshold levels of income for households A and B that reflect the economies of scale in living together (putting aside whether the scale economies are correctly measured or not) necessarily results in the larger household's having more discretionary time per adult than the smaller household.
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From page 424... ...
(Again, the point made here could be made with many other arbitrarily set nonmarket time valuations.) Regarding scale economies, we use two extreme assumptions to suggest bounds on the point: first, that there are no scale economies in nonmarket time use; second, that the economies of scale are the same as the scale economies In using money.
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From page 425... ...
These dollar values on the available discretionary time simply quantify the point made earlier: the household with more discretionary time appears to be better off than the other one. Expenditure Data The illustrative example depicts the logic that if both time and money have value, and if poverty thresholds are defined on the basis of equivalence in money income only, then no matter how the money equivalents are set, the combined value of the time and money that households have at their disposal is misspecified.
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From page 426... ...
15~: "when a wife becomes a second earner, husband-wife families spend more on work-related and timesaving items such as child care and food away from home." They exploit the quarterly data from the CEX and compare family spending patterns in the second quarter of the survey year to that in the fifth quarter, looking specifically at those families in which the wife began employment between those two times and comparing the changes to a control group in which the wife was not employed throughout the year. The results were inconclusive in this strategy, but when a multivariate regression model was used, controlling for household characteristics, they find Jacobs, Shipp, and Brown, 1989:21~: Families in which the wife is employed spend significantly more on food away from home, child care, women's apparel and gasoline and motor oil than do families in which the wife does not work outside the home.
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From page 427... ...
Consider the extreme example in which one family obtains the threshold level of money from labor market earnings and another family of identical structure and size receives the same income completely from government assistance programs. It is discomforting to characterize these two families as exactly equally well off: the second family has much more nonmarket time available than the working family, and somehow this should be taken into account.
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From page 428... ...
, who stressed the importance of time as a resource and suggested a two-dimensional poverty definition. As shown in Figure C-1, Vickery suggested that a poverty threshold should have both a minimum money level, such as Mo in that figure, and also a minimum time level, such as To' and with some tradeoff, as depicted by the curved line segment AB.
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From page 429... ...
Me ~.......................... · \\ O , ; To T1 Tm Time input 429 FIGURE C-1 Time and money tradeoffs in the poverty threshold for a household.
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From page 430... ...
, to estimate the earnings capacity of the families and unrelated individuals in the CPS and then to consider the composition and magnitude of poverty so defined. There can be philosophical differences about whether it is preferable to measure poverty on the basis of the actual income received or the potential income that might be received if the family unit "played by the rules" and worked for pay as much as some other family does.
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From page 431... ...
We encourage further research that might yield a better solution in the near future, but we see no way adequately to address this perplexing issue now. The earnings capacity estimate of available income, suggested by Haveman and colleagues, and the wage rate usage as suggested above in the context of Vickery's analytic figure, both address the issue, but they are not warranted as a replacement for the current strategy of estimating income directly.
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From page 432... ...
432 APPENDIX C end of the spectrum is concern that some families probably devote so much of their limited time and energy to earning money, that despite having income a little above the poverty threshold, they are "time poor" and quite impoverished. Both of these concerns, among others, need to be addressed by further work on the proper method for introducing the value of time into the measurement of poverty.
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