ASPE-Initiated Workshop on Consumption among Low-Income Families

The Well Being of Families and Children as Measured by Consumption Behavior

Traditional measures of poverty are based on income: if income is below a given threshold, then the family is determined to be poor. Some economists have suggested that a family's well-being is better measured by their total spending rather than their total income. That is, some families can have a satisfactory standard of living even if they have low current income. This may be due to the fact that the family can support consumption by drawing down assets.

At the same time, some empirical evidence suggests that low-income families with little or no assets are able to maintain consumption patterns that exceed their reported income. One possibility is that these low-income families are establishing credit card debt or borrowing on the equity in their home, perhaps jeopardizing their future financial security. Alternatively, these families may be receiving assistance from family and friends to buffer their low income.

May 2006 Conference

By July 2005, the NPC had identified a number of high priority areas and identified scholars whom we commissioned to write original research papers. The papers were presented at a conference held in Washington, D.C., May 4-5, 2006.

Over 30 scholars from universities and think tanks participated in the final conference, along with interested government agency staff and researchers. The papers undertaken by NPC researchers along with the commissioned papers were presented and discussed. Conference details and presented papers are available here.

November 2004 NPC workshop

In November 2004, the NPC sponsored a 1 day workshop in Washington, D.C., that brought together the nation's leading experts on this topic, as well as the experts from each of the three data sets, along with agency staff from ASPE, Census, the BLS and other agencies, to begin to develop a consensus about what we know and what we need to know about these issues.

The goal of the pre-conference was to identify broad topics that need to be explored by the research and policy communities. To that end, the NPC commissioned memos from several scholars, who presented their memos to the pre-conference participants for open discussion and assessment. The memos (see below) describe various gaps in our knowledge about consumption related issues.

Memos prepared for November 5, 2004 workshop

Inequality, Poverty and their evolution in the US: Consumption and Income Information in the Consumer Expenditure Survey. Orazio Attanasio, Erich Battistin and Andrew Leicester.

Consumption Among Low-Income Families: Policy Concerns. Timothy M. Smeeding, Maxwell School, Syracuse University.

Using Consumption Data to Assess Income Sharing Among Cohabiting Couples. Douglas J. Besharov and Gordon W. Green, University of Maryland and the American Enterprise Institute.

Potential Policy-Related Uses of Measures of Consumption among Low-Income Populations. Susan E. Mayer, University of Chicago, Harris School.

Consumption and the Poor: What We Know and What We Can Learn. Bruce D. Meyer University of Chicago and NBER. James X. Sullivan, University of Notre Dame.