Poverty and the Distribution of Material Hardship

TLDR

Public concern about poverty stems from the belief that low‑income families cannot afford necessities, yet official poverty statistics measure income rather than material hardship. Two surveys of Chicago residents measured whether families could afford food, housing, and medical care. The official income‑to‑needs ratio accounts for 24 % of the variance in reported material hardship, with additional family‑size, age, health, non‑cash benefits, home ownership, and credit access explaining 15 % more, while permanent income contributes almost nothing; among families with identical ratios, hardship still varies by age, size, and composition.

Abstract

Public concern with poverty derives in large part from the assumption that low income families cannot afford necessities. Yet official poverty statistics focus on measuring income, not on measuring material hardship. Two surveys of Chicago residents measure whether families could afford food, housing and medical care. A family's official income-to-needs ratio explained 24 percent of the variance in the amount of material hardship it reported. Adjustments for family size, age, health, noncash benefits, home ownership, and access to credit explain another 15 percent. Variations in permanent income explain almost none of the remaining variance in hardship. Among families with the same official income-toneeds ratio, material hardship varies by age, family size and composition.