Experimental Measures of Poverty and Net Worth: 1996

The National Academy of Sciences report on poverty measurement recommended changes to the official measure of poverty in the USA. That report from a panel of experts suggested that it is important to examine the relationship between asset ownership in relation to poverty status. This paper suggests that debt is also an important determinant of economic well-being. While spending down assets can enhance income to make ends meet, servicing debt can be a drain on family income that would otherwise be sufficient to purchase basic necessities. This paper uses data from the 1996 panel of the Survey of Income and Program Participation to examine these issues.