Measurement and Use of Subjective Poverty Lines

Abstract

In this study, I estimated subjective poverty measures—i.e., minimum living costs—for households of different sizes and types, and, by comparing them with official poverty measures, drew policy implications. I estimated these thresholds using the Leyden methodology, applying regression analysis to subjective responses to survey questions about the least amount of income needed to “eke out a living,” “make ends meet,” or “maintain an acceptable level of living.” Several findings are of note. First, during the period 2003 to 2021, the subjective poverty measure that increased at the highest rate was the minimum ‘make-ends-meet’ living cost for one-person households. Second, the official poverty line, while still below even the ‘eke-out’ minimum, has improved in adequacy as its distance from the latter has narrowed by a great margin over the years. Third, the ratio of the subjective minimum ‘make-ends-meet’ cost to the social- assistance poverty line was considerably higher for one-person households than for larger households. Fourth, the subjective poverty thresholds were consistently higher across households headed by young or middle-aged persons than across those headed by older adults. The differences in these measures between the two groups narrowed over the years. It may be worth considering employing subjective poverty measures, useful as they are in judging the adequacy of benefit levels and of eligibility criteria, in policy assessment.