Reconciliation of income and consumption data in poverty measurement

A recent series of papers has renewed interest in the question of whether consumption data are superior to income data for poverty measurement. Although the Census Bureau has provided researchers with an experimental series of variables that can produce a comprehensive income measure, this resource has not been fully exploited in previous analyses. When poverty is measured by a comprehensive income measure, income poverty rates and trends are similar to consumption poverty rates. Arguments that income is measured with more error than consumption at the bottom of the distribution are shown to be based upon inferior income data. © 2008 by the Association for Public Policy Analysis and Management.