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Demography
Published in: Demography 6/2020

15-10-2020 | Commentary

Further Analyses Reinforce Our Conclusions About Extreme Poverty

Authors: David Brady, Zachary Parolin

Published in: Demography | Issue 6/2020

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Excerpt

Our study (presented earlier in this issue of Demography) shows that deep and extreme poverty have increased in the United States from 1993 to 2016, particularly for childless households. In his response, James Sullivan raises concerns that (1) the Transfer Income Model, version 3 (TRIM3) overallocates Supplemental Nutrition Assistance Program (SNAP) benefits to lower-income households, and (2) earnings among lower-income households are underreported. Sullivan largely sidesteps that as a direct response to his reviewer concerns, we had already incorporated these issues in our study. Our online appendix demonstrates that our conclusions hold even after we address these issues. …
previous article A Cautionary Tale of Using Data From the Tail
next article Another Plea for Caution When Using Survey Income Data From the Far-Left Tail

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Footnotes
1
One may be concerned that our use of TRIM3 accounts for why our estimates of $2/day poverty are far below those of Edin and Shaefer (2015). However, Fig. 2 in this reply illustrates that even if we do not use TRIM3 at all, our estimates of extreme or $2/day poverty (available upon request; see Parolin and Brady 2019) remain far below those of Edin and Shaefer (2015).
 
2
In his footnote 6, Sullivan argues (1) that Meyer et al. used the Social Security Administration Detailed Earnings Records (DER) to prove earnings are underreported among the survey-coded extreme poor but (2) that we should not trust the DER when others show more overreporting than underreporting of earnings in the far left tail. We encourage readers to consult the studies we cited.
 
3
Meyer et al. (2019: tables 3a, 3b, and 5 and their figure 2) always corrected earnings before (in the survey and/or with administrative data) using administrative data to correct OASDI/SSI, housing assistance, and SNAP. They did not show what happens if one corrects only those income transfers or corrects income transfers before correcting earnings. Given that we arrive at almost identical estimates of $2/day poverty, it is plausible that using TRIM3 makes earnings corrections redundant and less consequential than Sullivan and Meyer et al. implied.
 
4
Illustrating the value of trends, figure 6 in our earlier article shows that 2011 had one of the lowest $2/day poverty rates from 1993 to 2016 (only 2010 was significantly lower; 1996 was insignificantly lower). Because Meyer et al. (and Edin and Shaefer (2015)) analyzed only 2011, they did not appear to appreciate that 2011 was an unrepresentatively low year.
 
5
We conjecture that any measurement error from omitting homeless individuals dwarfs Sullivan’s (and probably Meyer et al.’s) measurement concerns. Even if some of the homeless are not extreme/deep poor, we conjecture that any nonpoor homeless are trivial compared with the larger homeless population that is missed by the national point-in-time counts. We are also comfortable assuming that over the course of a year, most homeless individuals are actually extremely poor (i.e., <10% of median).
 
Literature
Brady, D., & Burton, L. M. (2016). The Oxford handbook of the social science of poverty. New York, NY: Oxford University Press.
Brady, D., Giesselmann, M., Kohler, U., & Radenacker, A. (2018). How to measure and proxy permanent income: Evidence from Germany and the U.S. Journal of Economic Inequality, 16, 321–345.CrossRef
Edin, K. J., & Shaefer, H. L. (2015). $2.00 a day: Living on almost nothing in America. New York, NY: Mariner Books.
Meyer, B. D., Mok, W. K. C., & Sullivan, J. X. (2015). Household surveys in crisis. Journal of Economic Perspectives, 29(4), 199–226.
Meyer, B. D., Wu, D., Mooers, V., & Medalia, C. (2019). The use and misuse of income data and extreme poverty in the United States (NBER Working Paper No. 25907). Cambridge, MA: National Bureau of Economic Research.
Parolin, Z., & Brady, D. (2019). Extreme child poverty and the role of social policy in the United States. Journal of Poverty and Social Justice, 27, 3–22.CrossRef
Metadata
Title
Further Analyses Reinforce Our Conclusions About Extreme Poverty
Authors
David Brady
Zachary Parolin
Publication date
15-10-2020
Publisher
Springer US
Published in
Demography / Issue 6/2020
Print ISSN: 0070-3370
Electronic ISSN: 1533-7790
DOI
https://doi.org/10.1007/s13524-020-00925-0

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