Nonincome Poverty

Measures of Nonincome Poverty

Official measures of poverty typically focus only on income levels, underestimating the importance of household wealth, skills, and opportunities to overall economic health. While considerable literature suggests various ways to measure nonincome poverty (for example, material hardship, social deprivation, isolation, civil conflict), no single variable yields a complete picture.

In the United States, where the official poverty measure is strictly linked to income, other factors associated with hardship suggest that the official measure is not sufficient to identify the extent and nature of human deprivation. Some scholars, for example, found that the incidence of material hardship was differentially correlated with income across different demographic groups, leading to suggestions that noncash benefits, homeownership, and access to credit, among other factors, should be included in calculating official measures of poverty.

A study of household net worth and liquid wealth finds that, despite a sharp decline in the official measure of poverty, which is based on income, the asset-poverty rate in the United States barely changed over the 1984-to-1999 period and the severity of American poverty increased despite economic growth and a booming stock market.

The asset-based poverty rates are, on average, two to four times higher than the official poverty rates for almost all U.S. groups. The underlying theme is that in all nations income-based poverty measures alone are insufficient to capture the true nature and extent of poverty. Moreover the poverty experience varies, depending on culture, asset wealth, and social infrastructure of a society.

Effects of Nonincome Poverty

Structural factors such as economies, social policies, and political decision-making create conditions that reduce or preclude the building of household assets and human capabilities. Moreover nonincome poverty is often the outcome of inequity in the control of resources, reflecting lack of legal rights, political instability, and conflict. It also can result from cultural instability stemming from threats posed to ethnic, racial, and religious groups.

[Page 782]A key source of nonincome poverty is the movement of people from stable living situations. Globalization, for example, produces changes in structural conditions in societies that, in turn, lead to the movement of people between and within countries. Populations also move for security reasons, such as when refugees must flee war zones. Dislocation of populations also stems from environmental factors such as droughts. The changes associated with population movements impact traditional community and family structures based on kinship, ethnicity, and religion. As these structures break down, they often result in a loss of social capital and an increase in non-income-related poverty.

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