Working Paper: NBER ID: w9760
Authors: Bruce D. Meyer; James X. Sullivan
Abstract: We evaluate consumption and income measures of the material well-being of the poor. We begin with conceptual and pragmatic reasons that favor income or consumption. Then, we empirically examine the quality of standard data by studying measurement error and under-reporting, and by comparing micro-data from standard surveys to administrative micro-data and aggregates. We also compare low reports of income and consumption to other measures of hardship and well-being. The closer link between consumption and well-being and its better measurement favors the use of consumption when setting benefits and evaluating transfer programs. However, income retains its convenience for determining program eligibility.
Keywords: Wellbeing; Income; Consumption; Poverty; Transfer Programs
JEL Codes: D12; I32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Consumption (E21) | Material wellbeing (I31) |
| Income fluctuations (D31) | Material wellbeing (I31) |
| Consumption captures long-term welfare levels (E21) | Material wellbeing (I31) |
| Consumption performance (E21) | Economic status (P46) |
| Income (D31) | Material wellbeing (I31) |