Events at CERGE-EI

Prof. Bruce D. Meyer

University of Chicago, United States

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Authors: Bruce D. Meyer, Derek Wu, Brian Curran

Abstract: Individuals are often thought to be more disadvantaged in higher-cost areas. As a result, geographic adjustments for local prices are embedded in many federal payments to states, localities, and individuals and have been proposed or implemented for various poverty measures. This paper proposes a rigorous approach to assess the desirability of geographic adjustments to poverty measures by examining how well they achieve a central objective of a poverty measure: identifying the least advantaged population. Specifically, we compare an exhaustive list of material well-being indicators of those classified as poor under the Supplemental Poverty Measure and the new Comprehensive Income Poverty Measure with and without a geographic adjustment. These well-being indicators are drawn from linked survey and administrative records and include material hardships, appliances owned, home quality issues, food security, public services, health, education, assets, permanent income, and mortality. For nine of the ten domains of well-being indicators, we find that incorporating a geographic adjustment identifies a less deprived poor population. This result can be explained by local prices being positively correlated with public goods and locational amenities, which are valued by those with low incomes.

Full Text: The Geography of Disadvantage: Implications for Poverty Assessment and Program Targeting