Trim 1/2 in off the top of all covers Front edge of spine------- ----8.

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*Small covers trim to (14.625 x 9.4) *Large covers trim to (18.875 x 11.4)
'POVERTY
DEFINITION AND PERSPECTIVE

By
ROSE D. FRIEDMAN

February 1965

PUBLISHED AND DISTRIBUTED BY THE

AMERICAN ENTERPRISE INSTITUTE

FOR PUBLIC POLICY RESEARCH
WASHrNGTON, D.C.
 Rose D. Friedman, who received her trammg in economics at the University
of Chicago, has been on the staff of the National Resources Committee, the
Federal Deposit Insurance Corporation, and the Bureau of Home Economics.
She has specialized in the economics of consumption and is currently engaged
in research in that field.

© 1965 American Enterprise Institute for Public Policy Research. 1200 17th Street, N.W.,
Washington, D. C. 20036. All rights reserved under International and Pan-American
Copyright Conventions. Library of Congress Catalog No. 65-15980

Price $1.00

11
 AMERICAN ENTERPRISE INSTITUTE
For Public Policy Research
THE AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH,
established in 1943, is a nonpartisan research and educational organization
which studies national policy problems.
Institute publications take two major forms:
1. LEGISLATIVE AND SPECIAL ANALYSES-factual analyses of current
legislative proposals and other public policy issues before the Congress
prepared with the help of recognized experts in the academic world
and in the fields of law and government. A typical analysis features:
(1) pertinent background, (2) a digest of significant elements, and
(3) a discussion, pro and con, of the issues. The reports reflect no
policy position in favor of or against specific proposals.
2. LONG-RANGE STUDIEs-basic studies of major national problems
of significance for public policy. The Institute, with the counsel of its
Advisory Board, utilizes the services of competent scholars, but the
opinions expressed are those of the authors and represent no policy
position on the part of the Institute.

ADVISORY BOARD

PAUL W. MCCRACKEN, Chairman

Professor, School of Business Administration, University of Michigan

KARL BRANDT FELIX MORLEY

Professor of Economic Policy (emeritus) Editor and Author
Stanford University
STANLEY PARRY
Professor, Department of
Political Science
MILTON FRIEDMAN
University of Notre Dame
Paul S. Russell Distinguished
Service Professor of Economics
University of Chicago E. BLYTHE STASON
Dean Emeritus, Law School
University of Michigan

GOTTFRIED HABERLER GEORGE E. TAYLOR

Galen L. Stone Professor Director, Far Eastern &
of International Trade Russian Institute
Harvard University University of Washington

iii
 OFFICERS

Chairman
CARL N. JACOBS

Vice Chairmen
W AL TER C. BECKJORD HENRY T. BODMAN H. C. LUMB

President Treasurer
WILLIAM J. BAROODY HENRY T. BODMAN

TRUSTEES

HENRY W. BALGOOYEN EDWARD H. LITTLE

WALTER C. BECKJORD RAYMOND S. LIVINGSTONE
HENRY T. BODMAN FRED F. LOOCK
HARRY L. BRADLEY H. C. LUMB
JOHN M. BRILEY WILLIAM L. MCGRATH
ROBERT P. BURROUGHS GEORGE P. MACNICHOL, JR.
FULLER E. CALLAWAY, JR. ALLEN D. MARSHALL
WALLACE E. CAMPBELL H. S. MIDDENDORF
L. M. CASSIDY DON G. MITCHELL
J. D. STETSON COLEMAN PETER O'DONNELL, JR.
CLYDE T. FOSTER HARVEY PETERS
HARRY C. HAGERTY H. LADD PLUMLEY
WALTER HARNISCHFEGER EDMUND W. PUGH, JR.
JOHN B. HOLLISTER PHILIP A. RAY
ROBERT A. HORNBY HERMAN J. SCHMIDT
N. BAXTER JACKSON WILLIAM T. TAYLOR
CARL N. JACOBS R. C. TYSON
ERRETT V AN NICE

THOMAS F. JOHNSON JOSEPH G. BUTTS

Director of Research Director of Legislative Analysis

EARL H. VOSS HOWARD FRIEND

Directur uf International Studies Director uf Public Finance Analysis

IV
 CONTENTS

INTRODUCTION _.._.. __ __.__ .._ .

I. POVERTY IN PERSPECTIVE _ _ __._._._ _.................. 5

II. CRITERIA FOR DEFINING POVERTY ._..__ __.__ . .__ . 13

Absence of Hunger _ __ .. __ _. __ __ ..__ 16
Nutritionally Adequate Diet .. _. . .. _ __ ._ _ 18
Nutritive Adequacy at Actual Cost __ . _.. _.. 21
Income Level Which Provides Nutritive Adequacy __ .. _ _.. 24
Relative Level of Living .__ .. _. __ .. __ _ _.._.. _ __ 25

III. THE COUNCIL OF ECONOMIC ADVISERS' REPORT ON

POVERTY _ .. __ ..__ __ .. _ _ __ .. __ _ __ __ 29
The Council's Concept of Poverty .. _. _ __ _ 30
The Basis for the Council's Figure of $3,000 ._._ __ . ._ _.. __ .. _. ._.__ .. 30
The Council's Estimate that One-fifth are Poor __ _.. __ ._ __ 34
Does the Council Correctly Characterize the Poor? _ _. __ .. _ 36

CONCLUSION _.. _ . _ _ _ __ __ ._ _ 43

... ... ...

AEI PUBLICATIONS _.. __ .. __ .. _ __ .. _. 47

v
 INTRODUCTION
poverty has once more become a
major public issue. It is easy to
understand why it was a major
public issue in this country in the
1890's and again in the 1930's,
when the country was in the grip
of major economic depressions and
many families were plunged into
desperate economic straits through
no fault of their own. Under such
1
circumstances, poverty was inevi-
tably seen as a social as well as an
individual problem.
It is much harder to understand
why poverty should be a major
public issue today. The country is
enjoying an unprecedentedly high
level of income that is widely
shared. Since the end of the war,
the nation has not experienced
2 Poverty-Definition and Perspective
more than brief and mild recession.
A feeling of frustration about the
persistence of relatively high un-
employment, despite prosperity,
may partly explain the outburst of
discussions of poverty. A more
fundamental cause is probably
changing public attitudes about in-
dividual and social responsibility
for men's actions and their conse·
quences.
Whatever the cause, the wide-
spread public attention paid to
poverty on this and earlier oc-
casions is only the top of an ice-
berg. Many individuals, private or-
ganizations, and governmental bod-
ies have been and are continuously
engaged in widespread activity to
cope with the problems of low-
income groups. This activity has,
if anything, grown over the decades
despite major improvements in the
material welfare of the most dis-
advantaged groups in the commu-
nity. Poverty is relative, not abso-
lute.
Periodic examinations of the
state of health are as desirable for
a society as for an individual. Such
examinations are best made when
the society is healthy rather than
when it is sick. It should then be
possible to examine the qmdition
of society unemotionally and in
historical perspective-not to see
whether the state of health is
perfect, but rather to see how it
compares with the condition in
preceding examinations, whether it
has improved or deteriorated, and
to what extent.
This essay does not attempt that
task. Its aim is much more modest-
to outline the problem of poverty,
to examine definitions and descrip-
tions of poverty in popular usage,
and to identify some of the pitfalls
that beset a thorough analysis of
the problem. The first chapter
sketches in broad strokes what has
happened over an extended period
both to the conception of poverty
and to the material condition of
the.poor.
The essay then considers various
criteria for defining poverty and
determining who are the poor. Per-
haps the most useful criterion is
the income level at which con-
sumers in fact purchase a diet ade-
quate in nutrition. However, even
this criterion is very far from be-
ing unambiguous and precise be-
cause there is no definitive way to
specify what constitutes nutritional
adequacy. (See Chapter II)
This criterion of nutritive ade-
quacy implicitly underlies the fig-
ure of $3,000 of-money income per
Introduction 3

family that has received so much that 10 percent, not 20 percent, of

attention since its presentation by
the President's Council of Eco-
nomic Advisers in its 1964 report.
The Council presents this figure of
$3,000 as the dividing line between
the poor and the not-poor, and
uses it to count and describe the
poor. It concludes that 20 percent
of the families in this country are
poor.
Though the Council implicitly
uses the criterion of nutritive ade-
quacy, it uses it incorrectly. A cor-
rect application of the criterion,
using precisely the same data and
the same concept of nutritive ade-
quacy, yields a figure around $2,-
200 as the relevant income for a
nonfarm family of four rather than
a figure of $3,000. In addition, the
Council uses the same income of
$3,000 as the dividing line for all
families regardless of size. The
combined result is that the Council
exaggerates greatly the extent of
poverty on its own criterion and
gives a misleading description of
who are the poor.
Correct application of the cri-
terion leads to a rough estimate
1 The 1965 reporl of the Council of Economic Advisers, which appeared after lhis paper
the families should be classified as
poor by that criterion. It also shows
that the Council greatly overstates
the fraction of the poor who are
young, old, on farms, and in the
South; and understates the frac-
tion of the poor who are in large
families, in the cities, and in the
North. (Chapter III) 1
Our estimate of the incomes at
which nutritive adequacy is at-
tained for families of different size,
like the single income used by the
Council, is derived from basic data
which are now nearly a decade old
-a Department of Agriculture Sur-
vey of Consumption for 1955-with
adjustments for price changes in
the interim. In addition, a nutri-
tively adequate diet is clearly not
the only criterion of poverty, and
the particular standard of nutritive
adequacy used in applying that cri-
terion is subject to a very wide
margin of uncertainty. In conse-
quence, our estimates should be
taken as illustrating orders of mag-
nitude rather than as precise esti-
mates of the poor today.

was in page proofs, recognizes some of lhese defecls; in particular, the undereslimalion
of the fraclion of the poor who are in large families. However, lhere is no recognilion of
lhe deficiency of the $3,000 figure for a family of four. In addilion, in mosl of ilS dis-
cussion, the Council conlinues lo use the earlier misleading procedures lo derive its
numerical eSlimales, laking no accounl even of the defecls il recognizes.
 I.
POVERTY IN
I nteenth
the eighteenth and early nine-
centuries, getting enough
to eat-that is, enough calories to
eliminate hunger-was the major
problem of the populace in almost
the entire world, with the possible
exception of Great Britain and
North America. A family that had
enough bread was considered in
easy circumstances. It did not oc-
5
PERSPECTIVE
cur to students of living standards
of that day that the working classes
might have essential needs over
and above subsistence. The level
of living per capita and per day of
a working-class family "varied be-
tween a maximum of about two
and a half to three pounds of
wheat during the best years and an
extremely low minimum which, as
6 Poverty-Definition and Perspective

late as the eighteenth century, marily of cereal in the form of

often fell below a single pound of
bread a day." 1 The subsistence
minimum, an income that allowed
the purchase of three pounds of
wheat per capita per day-the
equivalent of 3,500 calories- "did
not represent a realizable possibil-
ity but an ideal whose attainment
would solve every social prob-
lem." 2 In the eighteenth century,
this minimum was attained in
France in only one out of four
years.
As economic conditions Im-
proved, sociologists modified the
concept of minimum subsistence by
calculating the physiological mini-
mum more and more generously.
They paid increasing attention to
type of nutrition as well as number
of calories. In addition, the mini-
mum began to include some expen-
diture for things other than food,
such as lighting, heat, and clothing.
Half the people of the world to-
day still get less than 2,250 calories
per day, and live on a diet pri-
millet, wheat, or rice. Another 20
percent get less than 2,750 calories
per person per day.3 For this vast
multitude, getting enough to eat is
still the major problem. Only the
well-to-do three-tenths of the hu-
man race today get more than 2,750
calories as well as a varied diet
which provides the calories that
not only satisfy hunger but also
maintain a healthy body. Consider-
ably fewer than three-tenths of the
human race have a level of living
at which expenditures on food ab-
sorb less than half the budget. The
inhabitants of the United States
are among these fortunate few.
It is admitted by all that the
average level of living in the Unit-
ed States today is among the high-
est in the world,4 and that it .has
risen greatly over the past century.
But, some complain, many Ameri-
cans have been left behind and
have not shared in this rising level
of living. Are they right? In every
society and at all times there are

1 Jean Fourastie, The Causes of Wealth, translated and edited by Theodore Caplan
(Glencoe, III.: The Free Press of Glencoe, 1960), p. 41.
• Ibid., p. 47.
3 See M. K. Bennett, The Wot1d's Food (New York: Harper and Bros., 1954).

• See Karl Brandt, "Food in the Market Place," a paper presented on May 16, 1964 at
the symposium, Food and Civilization, held under the auspices of the University of
California School of Medicine at the San Francisco Medical Center.
Poverty In Perspective 7

wide variations among people in medium, these innovations have

the standard of living. These wide meant far more to the poor than
variations exist today in the United to the rich-as did the phonograph
States. But does that mean that a and the movies when they were de-
segment of the population has been veloped. Concerts, theaters, dances,
excluded from the benefits of a and lectures were always available
rising standard of living? Has prog- to the rich-either through public
ress brought gains primarily to performances, or in a still earlier
those at the top of the heap? Or to era, by live performances in the
those at the bottom as well? Or home. For the masses, first the
primarily to those at the bottom? phonograph, then the movies, and
Let us look at what has been now TV and radio provide oppor-
happening to the level of living of tunities for cultural enrichment
the people at the lower end of the that were once almost the exclusive
income distribution, the relatively privilege of the well-to-do. And
poor. First, some general observa- the masses have availed themselves
tions, and then some statistical evi- of the opportunity with abandon,
dence. as the ubiquitous TV aerial vividly
Technological change and indus- documents. According to David
trial progress have wrought many Caplovitz in The Poor Pay More,5
changes in the basket of goods "95 percent of the families-all but
available to American consumers. 25 of the 464 interviewed-own at
In many respects, however, this least one television set. Sixty-three
progress has been far more im- percent have a phonograph-about
portant to the persons at the bot- half owning one separate from
tom of the income pyramid than their TV set, and another 12 per-
to those at the top. To take just cent owning a television-phono-
a few examples. Radio and tele- graph console.... The 95 percent
vision have broug-ht news and en- of set-owners among these families,
tertainment into the homes of peo- which include a substantial pro-
ple at all income levels. But sure- portion in the lower-income range
ly, at least as an entertainment of the working-class, is about the
6 David Caplovitz, The Poor Pay More (Glencoe, III.: The Free Press of Glencoe, 1963),
p. 37. This study is based on families living in low-income housing projects in the neigh-
borhood of three settlement houses in New York City, all "located in slum areas which
are being rapidly transformed by public housing projects."
8 Poverty-Definition and Perspective
same as that found among samples
of working-class families in the
country at large, these including
many skilled workers and home
owners. . . . As much as any sta-
tistics, these figures reflect the sty Ie
of life of these young families.
There is an accent on entertain-
ment brought into the home by
modern technology."
On a more practical level, elec-
tricity, running water, central heat-
ing, indoor toilets, telephones,
automobiles, all of which we take
for granted today, have changed
the pattern of living available to
the majority of American consum-
ers even in the past 35 years. Says
Herman Miller, in Rich Man-
Poor Man: "Today electricity in
the home is taken for granted as
a more or less inalienable right of
every American. Practically every
home-on the farm as well as in
the city-is electrified. Even on
southern farms, ninety-eight out of
every hundred homes have elec-
tricity. In 1930, nine out of every
ten farm homes were without this
'necessity.' And the country was
much more rural then than now." 6
The poor in rural areas have
benefi ted especially from techno-
"Herman P. Miller. Rich Mfl11-P001'
p. 30.
logical improvements. For them,
even more than for the poor in
metropolitan centers, access to com-
munication by means of telephone,
to urban centers by means of the
au tomobile, and to entertainment
and education by means of radio
and television have meant a great
improvement in the social level of
living.
Inside plumbing and central
heating that are today part of the
specifications for an "adequate"
level of living were unavailable to
all but the very rich in this country
less than a century ago-and are
unavailable to most people in the
world today. Again, these improve-
ments brought a far greater change
to the life of the masses than of
the classes. Servants could always
provide the rich with the conveni-
ences that water systems and cen-
tral heating have for the first time
now made available to the masses
-and the same economic progress
that has made these available to
the masses has made servants scar-
cer for the classes.
These are all general and non-
quantitative indicators of the
changes that have occurred in the
standard of life of the ordinary
Ma'll (i'\ew York: Thomas Y. Crowell Co. 1964),
Poverty in Perspective
family. What of the quantitative
evidence?
First, nutrition, the basic need
of humanity: how far we have
moved from the situation of earlier
centuries or from the situation that
prevails in most of the world to-
day can be seen by the almost com-
plete neglect of calorie require-
ments in judging the adequacy of
the diets in this country. In terms
of simple calorie requirements, the
problem for the American people
today is too many, not too few
calories. In evaluating the diets re-
ported by families in the House-
hold Food Consumption Survey,
1955, of the U.S. Department of
Agriculture, one report states, "Cal-
orie averages, in particular, were
high. Even if a generous deduction
were made for waste in the kitchen
and at the table, the food con-
sumed probably still would provide
more calories than actually needed.
The prevalence of overweight in
the population is an indication of
over-eating." 7
As the quantity and quality of
food available in the more ad-
vanced countries increased, atten-
tion shifted from getting enoug-h to
eat to eating the right food, from
7 U.S. Department of AJ:(riculture. Dietary Evaluation of Food Used in Households in
the United States, Household Food Consumption Survey. 1955. Report # 16, p. 9.
9
number of calories to the import-
ance of other nutrients. As we shall
see later (pp. 18 ff) there are no
definitive standards of nutritive
adequacy and the tentatively ac-
cepted standards are revised period-
ically as new knowledge becomes
available. Nonetheless we can get
some idea of the changes that have
taken place in the nutritive ade-
quacy of the diet of the American
people by using the standard cur-
rently accepted. Table 1 gives the
relevant evidence for the one-third
of city dwellers with the lowest in-
comes.
As of 1936, the average diet of
the lowest third yielded less than
the currently (1964) recommended
allowances for six of the eight nu-
trients for which the National Re-
search Council specifies amounts.
From 1936 to 1955, consumption in-
creased at least 50 percent for all
but one of the eight nutrients. And
by 1955, the average amount con-
sumed by the poorest third exceed-
ed the National Research Council's
allowances for seven of the eight
nutrients. (The allowances speci-
fied in Table I are for men aged
18-35, the group with the highest
allowances in general.) More de-
10 Poverty-Definition and Perspective

tailed evidence indicates that even
for the one exception, Niacin, the
amount consumed exceeded the al-
lowance for all groups except men
18-35 and boys 12-18.
One report from the Household
Food Consumption Survey, 1955,
summarizes the improvement in
nutrition as follows: "Diets in the
United States have improved mark-
edly since the 1930's. In 1936 when
a large-scale household food con-
sumption survey was made, a third
of the diets were classed as 'poor.'
When we apply the same standards
to diets of the households sur-
veyed in 1955, only a little over a
tenth (13 percent) may be con-
sidered 'poor.' " 8
As to how the poor fared rela-
tive to the rich, this same report
says, "Diets of families in the lowest
income third showed much greater
improvement between 1936 and

Table 1. Change in Nutritive Value of City Diets of the

Lowest Income Third from 1936 to 1955
Nutrient NRC recommended Nutritive value of city diets
allowances of lowest income third
per per person per day2
adult male % increase
1964' 1936 1955 1936·55
Energy value - cal. . _ 2900 2580 2910 13
Protein gr. . _ 70 66 94 42
Calcium gr. _ .8 .64 1.00 56
Iron (milligr.) __. .. _ 10 10.2 16.4 61
Vit. A. value I.U. . . . 5000 5520 8700 58
Thiamine ._.. ._. _ 1.2 .79 1.42 80
Riboflavin .__. . _ 1.7 1.20 2.04 70
Niacin . . _ 19.0 9.4 17.4 85
Ascorbic Acid _. . .__ 70.0 58.0 94.0 62
1 National Research Council, Food and Nutrition Board, Recommended Dietary Allow-
lIlIceS, sixth revised edition, 1964.
2 U.S. Department of Agriculture, Dietary Evaluation of Food Used in Households in
the United States, Household Food Consumption Survey, 1955, Report # 16, Table 19,
p.30.

8 Ibid. p. 1.
Poverty in Perspective
1942 and between 1942 and 1948
than did diets of families in the
upper income third. Between 1948
and 1955 all of the income groups
shared fairly equally in the mod·
erate changes." 9
If a healthy body is the first
need, a healthy mind is the sec-
ond. Schooling is another example
of the far greater significance to the
masses than to the classes of the
improvement that has occurred in
the standard of living of the Amer-
ican people. Less than a century
ago (1870), only 57 percent of all
children between 5 and 17 years of
age attended school. By the turn of
the century, this had risen to 76
percent, by 1920, to 82 percent, and
by 1960 to 89 percent. It was this
low in 1960 only because children
were starting school at 6 years of
age instead of at 5. Nearly 97 per-
cent of all children between 7 and
17 years of age were in school in
1960. Even more dramatic are the
figures on schooling at a higher
level. In 1870, only 2 percent of
the relevant age group graduated
from high school. This tripled to
6 percent by 1900, tripled again
to 17 percent by 1920, and again
to 50 percent by 1940. It had
• Ibid. p. 2.
II
reached 62 percent by 1956. En-
rollment in institutions of high-
er education-junior colleges, col-
leges, and universiti~s-was less
than 2 percent of the relevant age
group in 1870, and more than 30
percent in 1960. There is still scope
for improvement, but much the
greater part of this particular road
has already been traveled.
To go from the specifics of food
and schooling to the level of living
as a whole, we can use income per
family as a rough index of level of
living-though as we shall see later
it has many defects as a precise
measure. As Table 2 shows, just
35 years ago, more than half of
the people in this country would
have been labeled "poor" by the
poverty line of $3,000 income so
popular today; 20 years ago, 30
percent; today, 21 percent-and
these statements are based on sta-
tistics that allow fully for changes
in the price level. In 1929, a year
of great prosperity, about II mil-
lion American families and indi-
viduals had incomes below $2,000
compared with 7 million in 1962.
Despite a 63 percent rise in the
total number of families and in-
dividuals from 1929 to 1962, the
12 Poverty-Definition and Perspective

number with incomes below $2,000 come negligible before the end of
actually fell by 36 percent. 10 the century. Of course, if the
By almost any yardstick, there growth in real income continues,
surely has been a major reduction one of its manifestations will be a
in the number of families with low rise in what is regarded as the
income in this country over the standard of poverty so that the
past three decades. It simply is not poor will continue to be with us.
true that any large segment of the All groups will continue to share
American people has been left be-
in economic progress and the peo-
hind and has failed to share in the
ple then labeled poor will have a
country's economic progress. If the
higher standard of living than
trend in growth of real income of
the past 35 years were to continue, many labeled not poor today. How
the fraction of the population be- much poverty there is now or will
low the currently popular poverty be then depends on the yardstick
line of $3,000 per family would be- used to define poverty.
Table 2. Distribution of Consumer Units by Real Income Level
Family personal
income 1929 1947 1962
(in 1962 dollars) No. % No. % No. %
(before income tax) (millions) (millions) (millions)
Under $2,000 ________________________ 11.2 31 7.2 16 7.1 12
2,000· 3,000 ---------------------- 7.2 20 6.3 14 5.3 9
3,000· 4,000 ---------------------- 6.9 19 6.3 14 5.9 10
4,000· 6,000 ---------------.---.-- 5.6 15 11.7 26 12.2 21
6,000· 8,000 ---------------------- 2.4 7 6.0 14 10.8 18
8,000 . 10,000 ---------------------- 1.1 3 3.1 7 6.7 11
10,000 and over ____________________ 1.9 5 4.1 9 10.9 19
Total ---------------------------._- 36.1 100 44.7 100 58.6 100
Source: Jeanette M. Fitzwilliams, "Size Distribution of Income in 1962," Survey of Cur-
rent Business, April 1963, Table 3: Herman P. Miller, Rich Man-Poor Man; (New York:
Thomas Y. Crowell Co., 1964), p. 29.
10 The number of consumer units in Table 2 includes single individuals, i.e., family units
of I, as well as larger family units and therefore overstates the number of families at the
lower income levels, since single individuals in general have lower incomes than family
units. On the other hand, the income concept used is total income including, in addition
to money income, imputed income from an owned home and food produced at home.
For this reason, the number of consumer units is smaller at the lower levels than in the
statistics used later in this essay as well as the statistics used in the Economic Report
of the Council of Economic Advisers. Only money income is used in both these instances.
 I I.
CRITERIA FOR DEFINING
POVERTY
I nwhat
sketching a general picture of
has been happening to the
standard of life in this country over
the past decades, we have used the
terms poverty and standard of life
loosely. For such a comparative pic-
ture, that may be adequate. But for
any federal program to aid the
poor or for any investigation into
the causes of poverty, we need to
13
spell out more precisely the mean·
ing of these terms.
What is poverty? What is a sub-
standard income? Is it an income
so low that it does not purchase
enough food to allay hunger, as it
was before 1800 and as it is in
seven-tenths of the world today?
Or, is it an income that does not
permi t the purchase of the food
14
that provides adequate nutrition as
judged by the Food and Nutrition
Board's recommended dietary al-
lowances? Or, is poverty eating
hamburger when many others are
eating steak? Is poverty having a
cloth coat when others have fur
coats, or having one bathroom
when some have two or even three?
Is poverty having one car when all
around one are two-car families?
Or, as Dwight MacDonald put it in
New Yorker Magazine, "Not to be
able to afford a movie or a glass of
beer is a kind of starvation-if
everybody else can." Or, as John
Johnston facetiously summed it up
in the Chicago Daily News, "'When
everybody else has a spaceship, a
man with one Cadillac can proper-
ly be called poor."
Is poverty always related to eco-
nomic means? What of the poverty
of the blind, who, however rich in
material goods, are deprived of the
richness of experience obtained
through vision? What of the pov-
erty of the bereaved who, through
the death of loved ones, become
poor regardless of material goods?
What of the poverty of the indi-
vidual who, for whatever psycho-
logical or sociological reason is
unable to enjoy life as others do,
regardless of material wealth? Rich·
Poverty-Definition and Perspective
ness and poverty mean different
things to different people.
The "War on Poverty" proclaim-
ed by the President of the United
States is a war on economic pov-
erty-poverty as it relates to the
standard of living. But even here,
there is no one definition of pov-
erty. Each writer can and does
choose his own definition, accord·
ing to his purpose. 1£ his purpose
is to demonstrate the progress of
society not only over the past two
or three centuries, but even over
the past two or three decades, he
can use a definition of poverty of
the earlier period and compare the
condition of today's poor with the
condition of yesterday's. 1£ his pur-
pose is to demonstrate how much
better off our poor are than the
poor in other countries, he can
use the definition of poverty in
other countries, and compare the
condition of our poor with the con-
dition of other nations' poor. 1£ his
purpose is to emphasize that de-
spite the United States' great prog-
ress, there is still poverty amidst
plenty, he can use the Department
of Labor's City Worker's Family
Budget as a poverty line-despite
the explicit warning against so
using it by the Bureau of 'Labor
Statistics official in charge of its
Criteria for Defining Poverty 15

construction.! He could then con- health? How many yards of cloth

clude as Mr. Kolko does that
"since 1947 one-half of the nation's
families and unattached individ-
uals have had an income too small
to provide them with a mainte-
nance standard of living."2
The multiplicity of definitions
is one indication of the absence
of an adequate yardstick for de-
fining poverty. The loose use of
the word "poverty" to denote a
variety of conditions is in con-
trast to the situation of Humpty
Dumpty in Carroll's A lice Through
the Looking Glass. "When I use a
word, it means just what I choose
it to mean-neither more nor less."
Are there now, or have there
ever been any scientific standards
for specifying how much and what
kind of food is basic to maintaining
or its equivalent are basic to de-
cency? How many square feet of
space constitute adequate shelter?
A survey of the literature indicates
that food is the only need for
which such scientific standards may
be available. For clothing and
housing, there clearly are no such
standards. From a purely physical
point of view, a minimum stand-
ard for clothing would be sufficient
covering to protect the body from
the elements in cold climates and
to comply with the standards of
decency of society. These stand-
ards vary widely from time to time
and place to place. For housing,
minimum standards would con-
sist of shelter from the elements.
These are not the standards that
we apply or should apply in our

I In a paper discussing "Valid Lses and Inherent Limitations of the City Worker's
Family Budget," presented at the 87th Annual Forum of the 1 ational Conference on
Social Welfare on June 9, 1960, Helen Humes Lamale, Chief, Branch. of Consumption
Studies, Division of Prices and Cost of Living, says, when discussing the use of the budget
as a measure of income adequacy, "It is in this area where the greatest discrimination
must be shown in the use of the total budget cost. . . . It is essential that the level of
living described by the CWFB be judged il\ relation to the standard prescribed for the
particular program or problem." And afl;ain, later in the paper, she says: "It is not a
'minimum' budget in the sense that such budgets are usually defined, and thus cannot
be used without adjustment in minimum wage considerations or in establishing assistance
standards or allowances. For such uses, the CWFB level must be scaled downward to meet
the standards established for the program and to account for variations in the character-
istics of the families involved." In addition, Mrs. Lamale makes it perfectly clear that
comparison of the original, prewar CWfB and the revised 1959 budget, both in 1959
dollars, provides a valuable summary measure of the increase in this standard of living.
She estimates this increase at about 20 to 30 percent.
"Gabriel Kolko, Wealth and Power in America (New York: Frederick A. Praeger, 1962),
p. 101.
16
society today. In the absence of
any scientific standards, is there
any substitute for the judgment
of the person setting the standard?
One such substitute is to use nu-
trition, for which we have some-
thing approaching a scientific
standard, as a measuring stick for
judging poverty. We can do this
by taking as the appropriate al-
lowance for clothing, housing, and
other items, the amounts that peo-
ple, who are just getting the speci-
fied margin of nutrition, actually
spend on such items. There is at
least an a priori presumption that
families who achieve adequate nu-
trition also have adequate clothing
and housing. There is also some
historical evidence that, at least
at the lower end of the income dis-
tribution, the adequacy levels of
other parts of the budget roughly
correspond to the adequacy level of
nutrition.
Expenditures for clothing and
housing are negligible among peo-
ple who can barely provide them-
selves with enough to eat. This is
documented by the descriptions of
the clothing and housing of the
poor in the eighteenth century as
well as by the clothing and housing
of the poor in the greater part of
the world today.
Poverty-Definition and Perspective
In India, for example, the side-
walk is still the only home for
many families today. A common
sight in Bombay or Calcutta is the
sidewalk lined with sleeping bodies.
Those in more comfortable cir-
cumstances own something resem-
bling an army cot to replace the
sidewalk bed, but their shelter and
the place they prepare and eat their
food may still be the street or side-
walk. The huts that are one notch
above the sidewalk shelter are prim-
itive indeed-mud huts, covered
with cakes of dung plastered on the
outside walls, with dirt floors and
open fires.
When economic conditions are
better, so that even the poorer
classes get a more varied and ade-
quate diet, the clothing and hous-
ing they get also improves. This is
clearly shown in budget studies.
The fraction of total income spent
on food, which is nine-tenths or
more in the most desperate circum-
stances, falls to about one-half
among the poor of more advanced
countries.
Absence of Hunger
In societies where getting enough
to eat is the major problem of the
populace, there is the least am-
biguity about the meaning of pov-
 Criteria for Defining Poverty 17

erty.3 Expenditures for food consti- teenth century, this nutrition stand-
tute well over three-fourths of the ard for judging poverty was appli-
total budget, and some kind of cable to almost the entire world,
cereal makes up well over half of with the possible exception of
the food consumed. Poverty can Great Britain and North America.
then be defined solely in terms of It is still applicable to over two-
nutrition in the basic sense of a thirds of the population of the
sufficient amount of food to satisfy world today, where some kind of
hunger. Even here, however, there cereal is the predominant food and
is clearly no precise amount of any food is the only significant item in
particular food such that one cal- the budget.
orie less means an individual is Clearly, by this standard, there
hungry. Clearly, also there is more is negligible poverty in the United
than one way to obtain the neces- States today. That is not to say
sary nourishment. that there may not be some fami-
Prior to the middle of the mne- lies who, because they are too

Table 3. Low Cost Adequate Food Standard for General

Assistance Programsl (weekly quantities>

Type of food Man Woman Boy Girl Child

113·15) 113 ·151 6

Meat (lb.) --------------------_._-------------------_._-. 2V2 2 2 2 1

Eggs _________________________________________ . ____________ 6 6 6 6 5V2
Cereal, flour, bread (lb.) ---------------------- 43,4 31/2 51,4 4 2%
Fats (lb.) ---------------.------------------._---------- His 1 11/2 11,4 1
Sugar (lb.) -------.---------------------- .. ------------ H~ 5fs 3,4 5/S %
Vegetables (Ib) ---------------------------.-------- 71/4 7 73,4 71/2 5
Potatoes & legumes ------------------_.-------- 3V2 23,4 4% 23,4 15/s
Milk (qt.) -----------------------------------------.---- 3112 3112 7 7 5V2

Source: Cook County Department of Public Aid.

1 The food standard is an adaptation of the Low-Cost Food Plan of the USDA published
in 1959. The standard incorporates the 1958 recommendations for nutrients of the
National Research Council.

3 See Bennett. op. cit" chapter 12. for an excellent discussion of the change in the mean-
ing of hunger with the introduction of the science of nutrition.
18
proud or unknowing to apply for
relief, are hungry. But there are
sur!;ly very few such families and
their situation is a temporary one.
Hunger will generally conquer
pride. The Cook County Depart-
ment of Public Aid Food Budget,
presented in Table 3, which is the
Food Standard for Aid to Depend-
ent Children and General Welfare
Assistance, is one example of a food
budget at the poverty level. It
would surely represent a food bud-
get at an affluent level to seven-
tenths of the population of the
world today.
NutritionaUy Adequate Diet
But absence of hunger alone is
not a sufficient criterion for judg-
ing adequacy of diet. As numerous
medical studies have shown, a full
stomach does not necessarily mean
a healthy body. The kind of food
is also important. However, the sci-
ence of nutrition is very young and
by its own admission still leaves
much to be known. The earliest
scientific studies of human nutri-
tional requirements go back to
about the turn of the century, and
they were based primarily on diets
of persons in apparent good health.
The only nutrients mentioned were
protein, carbohydrates, fat, and
Poverty-Definition and Perspective
"mineral matter." Even today, ac-
cording to the Committee on Nu-
trition Surveys of the Food and
Nutrition Board of the National
Research Council, "with the more
precise and clinical procedures in
use, knowledge of human require-
ments for many of the essential nu-
trients is far from complete."
In addition to knowledge of hu-
man requirements of the essential
nutrients, some yardstick is neces-
sary for assessing the adequacy of
the quantities of food which peo-
ple eat. Until the so-called London
Standard was drawn up in 1935-
36 by the League of Nations Tech-
nical Commission on Nutrition, in-
vestigators developed their own
yardsticks, or adopted one used by
others. The yardstick varied all the
way from the minimum to prevent
deficiency diseases to the amount
needed to promote optimum nu-
trition. In 1941, the Food and Nu-
trition Board of the National Re-
search Council presented its first
formulation of daily nutrient in-
takes which were judged to be ade-
quate for maintenance of good nu-
trition in the population of the
United States. These formulations
have been used as standards by
most students of nutrition in the
United States since then.
Criteria for Defining Poverty
"These formulations," says the
Food and Nutrition Board "were
designated 'Recommended Dietary
Allowances' in order to indicate
that they were value-judgments
based on the existing knowledge of
nutritional science and subject to
revision as new knowledge became
available." According to the sixth
revised edition published in 1964,
"The allowances are intended to
serve as goals toward which to aim
in planning food supplies and as
guides for the interpretation of
food consumption records of
groups of people. Actual nutrition-
al status of groups of people or
individuals must be judged on the
basis of physical, biochemical, and
clinical observations combined with
observations on food or nutrient in-
takes. If the recommended allow-
ances are used as reference stand-
ards for interpreting records of
food consumption, it should not
be assumed that food practices are
necessarily poor or that malnutri-
tion exists because the recommen-
dations are not completely met."
As the above qualifications and
many others which appear in the
discussion of the allowances indi-
cate, the Food and Nutrition Board
does not consider its recommended
allowances as precise allowances
19
that define adequacy of nutntIOn
in the sense that failure to achieve
them spells malnutrition.
Further developments in the sci-
ence of nutrition along with better
tests of nutritive health may pro-
vide a more definitive yardstick for
defining poverty. In the meantime
for want of such a yardstick and
notwithstanding the qualifications
surrounding the recommended nu-
tritive allowances, can we use these
standards to determine who are
the poor?
The extensive work that has
been done on the adequacy of ac-
tual diets of U.S. families as judged
by the allowances formulated by
the National Research Council sug-
gests that the answer is a "yes,"
albeit a highly qualified yes. De-
spite its objectivity and scientific
character, the criterion of nutritive
adequacy is far from unambiguous.
An examination of American fami-
lies' diets during a single week in
1955 indicated that only 52 per-
cent of all households used food
that furnished the National Re-
search Council's 1953 recommend-
ed allowances of all eight nutrients.
An additional 18 percent were
short in only one of the eight nu-
trients, and an additional 10 per-
cent in only two, making 80 per-
20
cent that had at least the recom-
mended allowances in six out of
the eight nutrients. The allowances
provide a margin above minimum
requirements which varies widely
among the nutrients. Hence, diets
that do not reach these rather high
standards in individual nutrients
may still be well above minimum
needs. For this reason, the Depart-
ment of Agriculture used two-thirds
the recommended allowances as an
alternative standard of adequacy.4
On this basis, it found that 87
percent of the families had diets
that furnished the recommended
allowances of all eight nutrients.
(This level of two-thirds of 1953
recommended allowances is of spe-
cial interest because, as we shall
see later, it underlies the Council
of Economic Advisers' estimated
figure of $3,000 of income as the
poverty line.)
These figures, based on the con-
sumption of food in one week,
yield estimates varying from around
10 percent to 48 percent for the
fraction of American households
that had inadequate diets in 1955.
Clearly, that week mayor may not
have been typical for the people
surveyed. In general, consumption
'Dietary Evaluation of Food Used in Households in the United States, op. cit., Table
16, p. 10.
Poverty-Definition and Perspective
in a week might be expected to
show more of an erratic element, to
vary over a wider range, than con-
sumption as averaged out over
a longer period. In addition, a
healthy body depends not only on
current nutrition but past nutri-
tion as well. In consequence, data
on food consumption over a long-
er period would almost surely show
smaller fractions of families having
inadequate diets than the 10 per-
cent to 48 percent based on the
one-week samples.
Are inadequate diets clearly re-
lated to low income? As we saw,
the diets of 48 percent of all house-
holds were judged inadequate in
1955 by a standard which regards
as inadequate a diet that provides
less than the 1953 recommended
allowances for any nutrient. By
this same standard, 38 percent of
the city families with incomes of
$6,000 or more (this would be
equivalent to $6,780 at 1962 prices)
had inadequate diets, and as many
as 34 percent of the city families
with incomes under $2,000 in
1955 ($2,300 at 1962 prices) had
adequate diets.
For farm families, there is even
less relation between income and
Criteria for Defining Poverty
diet adequacy. In the North, the
percentage of farm families with
adequate diets varied hardly at all
with income. It was 62 percent for
farm fal1).ilies with income under
$1,000 (in 1955) and 60 percel1l
for farm families with incomes of
$6,000 and over. In the South, the
variation was wider, going from
29 percent with adequate diets in
the under $1,000 income class to
49 percent in the $2,000 to $3,000
class and 57 percent in the $6,000
and over class.
This weak relation with income
doubtless reflects partly the de-
ficiencies in the measure of income
used. In addition, however, it sug-
gests that inadequate nutrition re-
sults from many factors other than
income. Knowledge about adequate
nutrition is very recent and sure-
ly has not reached many sections
of the community.
Despite these qualifications, it
would be most interesting to have
further studies of food consump-
tion made along these lines. It
would be desirable to select one
or more yardsticks of adequate nu-
trition; at one extreme perhaps,
satisfaction of the National Re-
search Council's 1964 allowances in
full for every nutrient separately;
at the other, some less exacting
21
standard. It would be desirable also
to get data on food consumption
for a period longer than one week.
From such data, it would be illu-
minating to classify the people who
receive inadequate diets by such
characteristics as income, location,
size and composition of family,
education, age, employment status
of head of family, etc. It would be
desirable also to get medical evi-
dence on the state of health of
members of those families judged
to receive inadequate nutrition.
There is no other single study of
conditions of living that would
have such a large scientific and ob-
jective element, and would do so
much to define the nature of the
problem of poverty, in its strictest
and most physical sense.
Nutritive Adequacy at Actual Cost
The yardstick of nutritive ade-
quacy discussed above is in physical
terms-the eight nutrients included
in the National Research Council's
recommended allowances. It may
be desirable to express this yard-
stick in the more easily measured
and more usual terms of dollars
and cents.
Can we determine the dollar ex-
penditure on food at which fami-
lies do in fact attain nutritive ade-
22
quacy? This is feasible only if we
make two value judgments. First,
as already noted, the National Re-
search Council's recommended al-
lowances are higher than the
amount that will, on the average,
provide n u tri tional adequacy.
Hence, we must decide how close
an approximation to these allow-
ances is to be judged nutritionally
adequate. Second, however this is
decided, families of the same size
and composition spending the same
amount on food do not all achieve
the same results. Some get adequate
diets, others do not. If we classify
families of the same size and com-
position by the amount spent on
food per person, a small percentage
will get adequate diets at the low-
est level of cost (e.g., 35 percent
of all households of four did in
1955 at a cost of under $4.00 per
person per week).5 A higher and
higher percentage will achieve ade-
quate diets as the level rises. But
the level will have to be very high
before literally 100 percent of the
families get adequate diets ($10.00
to $12.00 per week per person
at 1955 prices for households of
four). 6 Hence, it is necessary to de-
• These percentages are based on the judgment that achievement of two-thirds of the
recommended allowances constitutes adequate nutrition. U.S. Department of Agriculture,
Family Food Plans and Food Costs, Home Economics Research Report #20, p. 53.
6 Ibid.
Poverty-Definition and Perspective
eide what percentage of families
with inadequate nutrition will be
regarded as tolerable.
For each standard of adequacy
and each tolerance percentage, the
cost of food per person at which
adequate nutrition is achieved
varies with the size of the house-
hold. The cost per person declines
as the size of household increases.
Therefore the cost will have to be
specified for each size of household,
and ideally for different composi-
tions of household, that is, for dif-
ferent ages and sexes of the mem-
bers.
In setting up family food plans
as guides for food budgeting at
different income levels, the Con-
sumer and Food Economics Re-
search Division of the U.S. Depart-
ment of Agriculture makes these
two value judgments: (1) it ac-
cepts as adequate nutrition the
achievement of two-thirds of the
recommended National Research
Council's allowances for each of
the eight nutrients specified; and
(2) it accepts as tolerable the
achievement of adequate nutrition
by three-fourths of the households.
Table 4 gives for five different
Criteria for Defining Poverty 23

sizes of households the annual food greater effect. For a household of

cost in 1955 at which adequacy in
this sense was achieved for a sample
of families surveyed in 1955. For
comparative purposes, the Table
also gives estimates of the corres-
ponding food costs at which 50 per-
cent and 90 percent of the house-
holds met two-thirds of the recom-
mended allowances.
Size of family has a marked effect
on the annual food cost per per-
son at which nutritive adequacy
is achieved. For the 75 percent tol-
erance percentage, the food cost
varies from $228 per person in a
six-person household to $296 in a
two-person household. The toler-
ance percentage used has an even
four the food cost varies from $187
per person at the 50 percent level
to $325 at the 90 percent level.
These figures, like those cited
earlier, show the importance of
the particular value judgments that
must be made to estimate food
costs at which adequate nutrition
is achieved. According to the earlier
figures, (pp. 19-20) altering the par-
ticular standard of nutrition
judged adequate altered the esti-
mated fraction of households that
achieved adequate nutrition in 1955
from 52 percent to 90 percent. Ac-
cording to the figures in Table 4,
even with a given standard of nu-
trition, altering the tolerance per-

Table 4. Annual Money Cost of Food in 1955 at Which Nutritive

Adequacy was Achieved, by Size of Household

Annual Food Cost at Which Nutritive Adequacy was Achieved by

Number
of
persons 50% of households 75% of households 90% of households
in Annual cost per Annual cost per Annual cost per
household person household person household person household

2 $221 $443 $296 $592 $358 $715

3 204 613 283 850 341 1,023
4 187 748 262 1,050 325 1,298
5 170 850 244 1,222 308 1,539
6 153 917 228 1,367 291 1,747

Source: Family Food Plans and Food Costs, Home Economic Research Report #20,
p.53.
24
centage of households with inade-
quate nutrition alters annual food
costs from $748 to $1,298 for a
four-person household.
The importance of specifying
size of household is evident from
the range in food cost at any given
level of tolerance, from $592 to
$1,367 per household at the 75
percent level or from $296 to $228
per person. If food cost at which
adequate nutrition is achieved is
to be used as a criterion for de-
fining poverty, it must be specified
for each size of household.
Income Level Which Provides
Nutritive Adequacy
The level of income rather than
of expenditures on food at which
adequate nutrition is achieved can
be justified as a criterion to deter-
mine the poverty line on either of
two grounds: first, that families
should be judged poor only if they
do not have enough income to
purchase an adequate amount of
nutrition, not if, despite having an
adequate income, they choose to
spend it on other things; second,
that adequate nutrition alone is
not a sufficient criterion to judge
poverty, that some allowance for
adequate clothing, housing, etc.,
should also be included. As we
Poverty-Definition and Perspective
have seen, there is no basis for
judging adequacy of clothing and
housing that is even as objective
and scientific as that for nutrition.
But, as suggested earlier, it may be
appropriate to regard as adequate
for these other items a level of ex-
penditure equal to the amount that
people who are on the margin of
adequate nutrition actually spend
for them.
The same two value judgments
have to be made in estimating the
income level at which nutritive
adequacy is achieved as in esti-
mating food costs; i.e., what
achievement of the recommended
allowances is to be regarded as
adequate nutrition and what frac-
tion of households with inadequate
nutrition is to be tolerated. We
shall use the same value judgments
as in the preceding section, i.e.,
two-thirds of recommended allow-
ances and three-fourths of the fami-
lies achieving adequate nutrition.
Since income level, like food cost,
at which adequate nutrition is
achieved varies with household size
and composition, estimates should
be made for each household size
and composition. Unfortunately,
the published reports of the De-
partment of Agriculture's House-
hold Food Consumption Survey for
Criteria for Defining Poverty 25

1955 do not present food costs at 2,550 for 5-person households

different income levels for house- 2,855 for 6-person households
holds of different size and com- 3,155 for 7 or more person
position, but only for all house- households 7
holds of two or more combined. This set of poverty lines, I shall
However, by piecing together in- refer to as the nutritive adequacy
formation from different reports of definition of poverty.
the 1955 Food Consumption Sur-
vey, we can approximate the in- Relative Level of Living
come levels at which households So far we have considered abso-
of different size achieve adequate lute levels of poverty. Current dis-
nutrition. These income levels ex- cussions suggest that we may want
pressed at 1962 prices turn out to to define poverty as a level of living
be: relative to that enjoyed by other
$1,295 for 2-person households sections of the society. It is not al-
1,785 for 3-person households ways clear whether the discussants
2,195 for 4-person households view poverty as a level of living
7 These income levels were derived as follows (all reports are from the 1955 Household
Food Consumption Survey):
I. Report #6 Dietary Levels of Households in the United States presents a distribu-
tion of nonfarm households of two or more persons, by money value per person of all
food used at home in a week, April-June (1955), by income (table 16, p. 60).
2. Report # I Food ConJUlIlption of Households in the United States gives the aver-
age size of family at each income level (table 2, p. 9).
3. Home Economics Research Report #20 Family Food Plans and Food Costs,
presents the percentage of households meeting approximately two-thirds of National
Research Council's allowances by household size and money value of food used per
person per week (table 23, p. 53). By interpolation from this table, I obtained for
each average size of family as given in step 2, the percentage of households meeting the
same specified nutritive allowances for each food cost class.
4. Multiplying the percentage in each cell of table 16 (Repon #6) by the correspond-
ing interpolated value obtained in step 3 and adding for each income level gives the per-
centage of households that achieves adequate nutrition at each income level.
5. By interpolation, I estimated the income at which 75 percent of the families achieve
nutritive adequacy to be $1,661. This is the income for a family of 3.22 members in
1955.
6. Since the Consumer Price Index has risen by 13 percent from 1955-62, this is
equivalent to $1,877 in 1962 dollars.
7. Using the ratio of food costs for households of varying size calculated from per
person costs at which nutritive adequacy is achieved by 75 percent of the families
(p. 52, Report #20) to food costs for a household of 3.22, I derived a scale for esti-
mating incomes for households of varying size.
(Footnote continued on p. 26.)
26 Poverty-Definition and Perspective

relative to what has been attained in the low-income studies of special

by the society as a whole or what
the author thinks can be attained
by society as a whole. For example,
Michael Harrington in The Other
A merica says: "Those who suffer
levels of life well below those that
are possible, even though they live
better than medieval knights or
Asian peasants are poor." And
again, "Poverty should be defined
in terms of those who are denied
the minimal levels of health,
housing, food, and education that
our present stage of scientific know-
ledge specifies as necessary for life
as it is now lived in the United
States." Since, except for food, there
are no minimum levels specified
by scientific knowledge, the only
way I can understand this quota-
tion is to take "necessary" to mean
"customary" or "usual"-perhaps
average in the sense of modal or
typical. In discussing the revisions
congressional committees in the
late forties to bring the poverty
line up to date, Mr. Harrington
clearly implies that poverty is a
relative concept. "Merely revising
it so that it expresses 1961 prices,"
he says, "tacitly assumes that there
should be no progress over the
course of a decade. In short, it
leaves out the fact that this was
a time when other groups in the
society advanced."
It seems like belaboring the ob-
vious to point out that defining
poverty in terms of a relative level
of living is tantamount to saying
that poverty will always be with
us. If poverty is a level of living
below that which one-fifth of the
families with the lowest levels of
living just fail to attain, then one-
fifth of the families will always be
poor, however high their absolute
income. The extent of poverty is

8. Applying this scale to the 1962 income for a family of 3.22 persons, I calculated
incomes at which households of varying size achieved nutritive adequacy-where nutritive
adequacy is defined as 75 percent of the families meeting two·thirds of the recommended
allowances of the National Research Council.
The scale for estimating equivalent income is:
Index Size of Household
69 . 2 persons
95 -- 3 persons
100 , . 3.22 persons
117 . 4 persons
136 . 5 persons
152 .. 6 persons
168 . 7 or more persons
Criteria for Defining Poverty
then purely a matter of definition.
There is nothing wrong with such
a definition, provided one recog-
nizes it for what it is. It is well
that our aims grow with our means.
It is highly misleading, however, to
adopt such a definition and then
describe the living conditions of
those labeled poor in terms remi-
niscent of poverty as defined a cen-
tury ago.
Suppose we seek to find out at
any time who are the fifth, or the
fourth, or the third, of the popula-
tion at the bottom of the heap.
How can we do so?
We first need, conceptually at
least, to be able to rank all families
and individuals in the country by
level of living. How can we rank
them? A family's level of living is
determined by the quantity and
quality of the goods and services
which it consumes on the one hand
and the number of individuals in
the family who are sharing these
goods and services on the other.
For families of the same size and
composition (e.g., sex and age of
adults and children) living in the
same place, the aggregate value of
all goods and services consumed is.
a fairly good index of relative level
of living. Even under these re-
stricted conditions, however, this
27
yardstick is not without its prob-
lems. What does the aggregate
value of the goods and services con-
sumed tell us about the relative
levels of living of two families alike
in all respects except that one has
a mentally retarded child? At the
same aggregate value of goods and
services consumed, one family clear-
ly enjoys a considerably higher
standard of living than the other.
To a certain extent, each family
has such "abnormal" needs. But
the problems raised by these family
differences are probably minor
compared to the problems raised
when we begin to compare levels
of living for "normal" families of
different size and composition and
living in different places.
Various methods have been de-
vised to adjust for the effect of
family size and composition. The
most obvious is to substitute ex-
penditures per persan for total ex-
penditures. This is clearly unsatis-
factory because the needs of dif-
ferent members of a family result
in unequal sharing of its consump-
tion. Expenditures per person, for
example, is a very poor measure of
the relative levels of living of two
families; one ~ith two teen-agers,
the other with two pre-school chil-
dren. Various methods of deriving
28
expenditure per equivalent unit
have been developed to take ac-
count of such differences in family
composition. Though there is not
complete agreement on the appro-
priate equivalent units, this kind
of measure is used widely in com-
paring families of different size and
composition.
Similar difficulties arise when we
try to compare families living in
different parts of the country and
in communities of different size. Be-
cause of different climatic condi-
tions, for example, the same aggre-
gate value of heating and housing
means very different levels of com-
fort, i.e., levels of living, for fami-
lies in the North and in the South.
The aggregate value of clothing
that represents the same level of
comfort in the two regions is very
different. Cultural patterns in dif-
ferent regions as well as in com-
munities of different size affect the
goods and services which represent
the same level of living. Food pat-
terns are very different for families
in the North and the South. And
finally, prices differ by region and
by city size. As in the adjustment
for family size and composition,
various methods have been sug-
Poverty-Definition and Perspective
gested for allowing for regional and
size-of-community differences in
level of living.
Though plagued by the many
difficulties which its use involves,
aggregate value of a family's goods
and services per equivalent unit,
roughly adjusted for regional and
community differences in prices,
probably comes as close as is pos-
sible to ranking families by level
of living.
Cm ~ent discussions of poverty do
not use aggregate value of goods
and services per equivalent unit
as a basis for ranking families by
level of living. Instead, they gen-
erally proceed by substituting in-
come for value of goods and serv-
ices, then money income for total
income. They almost all pay lip
service to the need to take account
of family size and composition as
well as regional and size-of-com-
munity differences in judging pov-
erty. Yet, in the final analysis,
families, regardless of size and com-
position and regardless of where
they live, who receive less than a
specified money income are re-
garded as at the bottom of the
heap, as constituting the "poor."
 II I.
THE COUNCIL OF ECONOMIC
ADVISERS' REPORT ON POVERTY
I ncriteria
the preceding chapter, various
were set forth for de-
fining the "poor," and the prob-
lems associated with each criterion
were indicated. In this chapter, an
examination will be made of the
treatment of poverty by the Coun-
cil of Economic Advisers in its re-
port to the President, transmitted
to Congress in January 1964. The
29
Council's report did not initiate
the current concern with poverty
but its prestige has lent an aura
of authenticity to the precise figure
of $3,000 of money income per
family which it uses to separate
the poor from the not-poor. The
same aura attaches now to one-
fifth, the fraction of the total popu-
lation that the Council Report cal-
30
culates to be "poor." These have
now become the basic statistics of
the poverty literature of 1964.
How does the Council arrive at
its figure of $3,000? Are the families
and individuals it classifies as the
bottom one-fifth, the poorest one-
fifth of the population?
The Council itself cautions that
its measure of poverty is too simple
to be "suitable for determining
eligibility for particular benefits or
participation in particular pro-
grams." But the Council nonethe-
less uses it to pinpoint the sources
of poverty and thereby to indicate
the programs needed to cope with
poverty. Is it a valid measure for
this purpose?
The Council's Concept of Poverty
In its qualitative discussion, the
Council characterizes the poor as
"those who are not now maintain-
ing a decent standard of living-
those whose basic needs exceed
their means to satisfy them" (italics
added). Can these two definitions
provide us with an objective cri-
terion for determining who and
how many are poor? Standards of
decency, like fashions, change from
year to year, and mean different
things to different people. How do
we decide what wants are "needs"
Poverty-Definition and Perspective
and what "needs" are basic, and in
what amount? The Council, of
course, recognizes that "there is no
precise way to measure the number
of families who do not have the
resources to provide minimum sat-
isfaction of their own particular
needs." (A third definition of pov-
erty.) Hence, for its objective cri-
terion the Council uses a fourth
definition of poverty. A family with
less than $3,000 a year of money
income is defined as poor. This
figure is said to constitute an "ap-
proximate standard" of "an accept-
able minimum" "for our society
today" for which "a consensus.
can be found."
The Basis for the Council's
Figure of $3,000
What is the basis for the Coun-
cil's "approximate standard" of
$3,000? The Council says that "one
such standard is suggested by a
recent study, described in a publi-
cation of the Social Security Ad-
ministration, which defines a 'low-
cost' budget for a nonfarm family
of four and finds its cost in 1962
to have been $3,955. The cost of
what the study defined as an 'econ-
omy-plan' budget was $3,165.
Other studies have used different
market baskets, many of them cost-
The Council of Economic Advisers' Report on Poverty
ing more. On balance, they pro-
vide support for using as a bound-
ary, a family whose annual money
income from all sources was $3,000
(before taxes and expressed in
1962 dollars) . This is a weekly in-
come of less than $60.
"These budgets contemplate ex-
penditure of one-third of the total
on food, i.e., for a $3,000' annual
budget for a 4-person family about
$5 per person per week."
The "recent study" referred to
by the Council is "Children of the
Poor" by Mollie Orshansky. It ap-
peared in the Social Security Bul-
le'tin of July 1963. Miss Orshan-
sky's study is not devoted to estab-
lishing criteria for determining the
poverty level. As its title suggests,
it is devoted to counting and class-
ifying the children of the poor. To
estimate the number of families
with children who are poor and the
number of children in those fami-
lies, the author uses two "crude"
criteria of "income adequacy":
(I) "that the low-cost food plan
priced by the Department of Agri-
culture in January, 1962 repre-
sents no more than one-third of
total income," (In other words,
Miss Orshansky estimates that an
income is adequate if it is three
31
times the cost of the low-cost food
plan.)
(2) three times the "cost of the
more restricted but still adequate
diet suggested in the economy
plan." Since the cost of the econ-
omy plan was roughly estimated as
four-fifths of the cost of the low-
cost food plan, the income level
defined by the second criterion is
four-fifths that defined by the first.
In counting the poor, Miss Or-
shansky herself computes the in-
come levels defined by these criteria
separately for each size of family,
and separately for farm and non-
farm families. However, "by way
of suggesting" to the reader "the
level of living implied by the pres-
ent approximation" she notes that
"the income required for a hus-
band, wife and two children not
on a farm would be $3, I65 by the
more conservative measure, or $3,-
955 by the more liberal." These
are the numbers quoted by the
Council.
Let us examine in some detail
the two elements of Miss Orshan-
sky's crude criteria of income ade-
quacy: (a) the food plans; and
(b) the fraction of income spent
on food.
32
(a) The food plans
The food plans Miss Orshansky
uses are two of the five food plans
described in Home Economics Re-
search Report # 20 referred to
earlier. (See p. 22) These five
plans are the latest revisions of
plans first developed in the 1930's.
They were not then and are not
now presented as the minimum
cost at which nutritional needs can
be met but rather as guides to help
families get better nutrition for
less money than they actually
spend. The "five food plans (are)
at four levels of cost . . . a plan
at liberal cost, one at moderate
cost, two at low cost and an econ-
omy plan for emergency use."
Though the report designates the
economy plan for emergency use,
it also says "the designation 'low-
cost' is relative. The cost of the
food is lower than in the moderate-
cost plan but none of the three
low-cost plans [i.e., the economy
and the two low-cost plans] repre-
sent the minimum cost at which
nutritional needs can be met. . . .
Plans for adequate diets at still
lower cost could be developed, and
while they would deviate further
from average food habits, they
could be made acceptable to some
groups of people."
Poverty-Definition and Perspective
Food consumption data from
selected income classes of nonfarm
families in the 1955 survey were
used "to study the current food
patterns of families and to obtain
basic data for estimating the cost
of food for the plans. . . . These
representative classes are the ones
containing the median income of
the low, middle, and high third,
respectively, of the income distri-
bution." The median income for
the lowest third was $2,258 and fell
in the income class $2,000-$2,999.
While the low-cost food plan was
based on the food patterns for this
class, the cost of the low-cost plan
is not equal to the average amount
spent on food in this income
group. Over two-thirds of the fam-
ilies in this income class spent
more on food than the $5.40 per
person per week estimated as the
cost of food for the low-cost plan
(in 1955). "In other words, by
careful food management, many
families can have nutritionally ade-
quate diets for less money than
they now spend."
I have not been able to find
an explicit statement about pre-
cisely how the cost of the low-
cost food plan was calculated.
However, there is considerable cir-
cumstantial evidence to su gge s t
The Council of Economic Advisers' Report on Poverty
that it was set roughly equal to the
cost at which, in fact, 75 percent
of the families surveyed met two-
thirds of the recommended allow-
ances of the National Research
Council. 'For example, in discuss-
ing per person food costs at which
adequacy so 'defined was achieved,
Janet Murray says: "This 75 per-
cent level seemed to represent those
households on whose food pat-
terns the low-cost food plans were
based. The per person food costS
[at this level] fall well within the
range of the costs of the low-cost
food plans in 1955." (Appendix,
Report # 20) .
The first part of Miss Orshan-
sky's more liberal criterion for
determining an adequate income
therefore appears to be the same
as one of the criteria discussed
earlier in this paper, (pp. 22-24)
namely, the cost of food at which
75 percent of the nonfarm families
surveyed in 1955 had diets that
met two-thirds of the recommended
allowances of the National Re-
search Council.
(b) The fraction of income spent
on food
To get the income correspond-
ing to the specified food costs, Miss
Orshansky multiplies by three. The
33
basis for this multiplier is the
same survey on which the food
plans are based. According to that
survey, average expenditures for
food by all families in the sample,
farm and nonfarm, and all income
levels combined, amounted to 33
percent of their average money in-
come after taxes. In addition, it
should be noted, these families re-
ceived some food without money
payment-mostly by providing it
for themselves.
In using the multiplier of three,
Miss Orshansky implicitly assumed
that the multiplier for all families
should be used for families with
low incomes even though she stated
explicitly that "poorer families
generally devoted more than one-
third of income to food, and those
better off used less of their in-
come in this way." For the par-
ticular 1955 Food Consumption
Survey she used, the percentage
spent on food varied from 131 per-
cent at incomes under $1,000, to
60 percent at incomes of $1,000-
.$1,999, to 48 percent at incomes
of $2,000-$2,999 to 21 percent at
incomes of $8,000 and over. The
fact that the families in the bot-
tom income class reported expendi-
tures for food (based on one week's
expenditure) that were higher than
34 Poverty-Definition and Perspective

reported income strongly suggests come of $3,000 per family to de-

that a single year's reported income fine poverty. This is presumably
is not a valid measure of the real based on Miss Orshansky's "more
income status of many of these conservative measure" for a family
families. In any event, it appears of four (four-fifths of the low-cost
difficult to justify using the multi- criterion) rounded to the nearest
plier applicable to all families to thousand dollars. 3 Though origin-
compute the income corresponding ally introduced as applying to a
to a poverty level of living. family of four, the Council uses
To sum up: Miss Orshansky's $3,000 as the dividing line for fam-
crude criteria of income adequacy ilies of all sizes.
correspond neither to the min-
imum cost at which families could The Council's Estimate that
get an adequate diet 1 nor to the One-fifth are Poor
income level at which three-fourths
The Council estimates that nine
of the families do in fact achieve million families or 20 percent of
adequate nutrition. Her criteria all families in the United States,
yield incomes that are far higher were poor in 1962, according to the
than the first and 20 to 50 percent Council's definition.
higher than the second. 2 I estimate that 4.8 million fam-
The Council uses a money in- ilies, or roughly 10 percent of all
1 In Electronic Computation of Human Diets, Ch. II, Victor E. Smith reviews several
purely nutritional models at minimum cost. One such model is described in George
Stigler, "The Cost of Subsistence," Journal of Farm Economics, May 1945. He estimates
the minimum cost of nutritively adequate diets at $39.93 per year for an adult male in
1939 and $59.88 in 1944 (both in current prices). His only criteria were nutritive ade·
quacy as defined by the National Research Council in 1943 and minimum cost. He did
not take into consideration palatability, variety, or current food practices.
2If we compare Miss Orshansky's more liberal figure of $3,955 with ours of $2,195, (see
p. 25 above) here figure appears much more than 50 percent higher than ours. This over-
states the difference however, because, as it happens, the composition of Miss Orshansky's
family of four is not the average composition of a family of four. Miss Orshansky does
not indicate the composition of family to which the income of $3,955 refers. However,
it can be deduced from the Food Plans on which her adequate income is based. For the
family of average composition, Miss Orshansky's criterion, i.e., three times the cost of
the low-cost food budget, yields an income of $3,440. Conversely, for the family compo-
sition she uses, the direct estimate from the data of the income at which nutritive
adequacy was achieved by three-fourths of the families is $2,350.
3 For the composition of the four-person family which Miss Orshansky uses, this income
is $3,164. For the family of average composition, the income is $2,852.
The Council of Economic Advisers' Report on Poverty 35

families in the United States were the same statistical data.

poor in 1962, according to the nu-
tritive adequacy definition of pov-
erty. (See p. 25 for my estimates
of the incomes for families of dif-
ferent size at which adequate nutri-
tion is achieved by three-fourths
of the families.) 4 This definition
gives an income of $2,200 as the
poverty line for a nonfarm family
of four. The cost of food implied
by the $3,000 income for a family
of four, says the Council, is $5.00
per person per week. The amount
actually spent for food, on the aver-
age, by a family of four with an
income of $2,200 was over $6.00
per person per week, because the
fraction of income spent on food at
this level was about 60 percent and
not 33 percent.
It should be emphasized that the
difference between the Council's
estimate that 20 percent of families
were poor in 1962 and my estimate
that 10 percent were poor results
neither from a different basic cri-
terion of poverty nor from the use
of different data. Both use nutri-
tion to separate the poor from the
not-poor; both use the same stand-
ard of nutritive-adequacy; both use
The high estimate by the Coun-
cil simply reflects the crudity of its
analysis. First, the C~>uncil accep-
ted an estimate of a poverty line
that is not valid, according to the
criterion on which that estimate is
supposed to be based. Second, the
Council estimated the percentage
of families who are poor by using
the same income level to define
poverty for all families regardless
of their size, composition, or resi-
dence.
My estimate of 4.8 million fam-
ilies should not be taken as a pre-
cise estimate of the number of poor
families even on the particular
criterion of poverty for which it
is derived. The data on income at
which nutritive-adequacy is at-
tained are now nearly a decade
old, the adjustments for price
changes are at best rough, the in-
come distributions used, though
for a more recent date, are based
on a concept of income and meth-
ods of estimation that differ from
those used in the Consumption
Sur~ey. The chief importance of
this new estimate is to show how
much the results depend on the

• This estimate of 10 percent allows only for the effect of size of family; further correc-
tion for other factors like regional differences, non-money income, and a more realistic
estimate of funds available for current consumption would further reduce this estimate.
36
way in which the same criterion
is applied.
Does the Council Correctly
Characterize the Poor?
The Council recognizes that
"A family's ability to meet its
needs depends not only on its
money income but also on its in-
come in kind, its savings, its prop-
erty, and its ability to borrow.
· . . Refined analysis would vary
the income cut-off by family size,
age, location. A case could be made
· .. for setting the over-all income
limit eit.her higher or lower than
$3,000." Nevertheless, says the
Council, "the analysis of the
sources of poverty, and of the pro-
grams needed to cope with it,
would remain substantially un-
changed." The Council therefore
neglects the refinements in esti-
mating the characteristics of the
poor. It concludes that "there are
substantial concentrations of pov-
erty among certain groups. For
example, families headed by per-
sons 65 years of age and older
represent 34 percent of poor fam-
ilies. Moreover, they appear among
the poor 2y:! times as frequently
as they appear among all families.
· . . Five additional major cate-
gories of families that appear more
Poverty-Definition and Perspective
than twice as often among the
poor as among the total population
[are]: non-white families, families
headed by women, families headed
by individuals not in the civilian
labor force, families with no wage
earners, and rural farm families.
Of course, some of these groups
overlap considerably; but the data
help to identify prospective targets
for an anti-poverty attack."
This characterization is seriously
misleading because of the inade-
quacy of the Council's definition
of poverty. The indiscriminate use
of the same income level for fam-
ilies of all sizes leads to a signifi-
cant overestimate of the relative
incidence of poverty among the
aged and the young. This overesti-
mate is reinforced by the inade-
quacy of money income as an in-
dex of real income status-a de-
fect common to both the Council's
and the nutritive-adequacy defini-
tion. This defect also leads to an
overestimate of the relative in-
cidence of poverty among farm
families and Southern families.
(a) Neglect of size of family
Unfortunately, published data
do not permit estimates of the
characteristics of the poor for the
nutritive-adequacy definition of
poverty in anything like the detail
The Council of Economic Advisers' Report on Poverty 37

that is possible for the Council's group that is designated poor by

definition. The reason is that most
data are not available by size of
family. However, one can estimate
the incidence of poverty by size of
family, and can approximate the
direction in which the characteriza-
tion of the poor would be altered
by substituting the nutritive-ade-
quacy defini tion for the Council's
definition.
Table 5 gives estimates of the
percentage of each family-size
the nutritive-adequacy definition
and the percentage distribution of
all poor families by size of family.
In interpreting this table and the
subsequent discussion, it should be
kept in mind that "family" refers
to a group of two or more persons
related by blood, marriage, or
adoption and residing together. 5
Related persons not living in the
same dwelling uni t are not
counted. For comparison, estimates

Table 5. Comparison of Incidence of Poverty According to

Two Definitions, by Size of Household

All families Poor families

Nutritive-adequacy Council's
definition definition
Number
of
persons Incidence Incidence
in No. % No. % of No. % of
household (millions) (millions) poverty (millions) poverty

2 15.0 32 1.5 31 10.2 4.8 52 32

3 9.8 21 .8 17 8.5 1.6 17 17
4 9.4 20 .7 15 7.4 1.1 12 12
5 6.1 13 .6 13 9.4 .7 7 12
6 3.4 7 .4 8 12.1 .4 4 13
7 or more 3.3 7 .7 15 22.0 .7 7 20
Total 47.0 100 4.8 100 10.2 9.3 100 20

Incidence of poverty is the ratio of the number of poor families to the number of all
families of the same size.

5 Current Population Reports, Consumer Income, Series P-60, No. 39, p. 7.

38
based on the Council's definition
are also presented. The Council
itself does not give such estimates,
though it does give some figures
for families classified by number
of children under 18. 6 It is clear
from Table 5 that the two defini-
tions give very different pictures
of the incidence of poverty among
families of different size.
On the basis of the Council's
definition, the incidence of pov-
erty among two-person families is
32 percent or over one and one-
half times the average for the
country. The incidence of poverty
is considerably less than average
among large families until we get
to the very largest families and
even then the incidence is only the
average for the country.
On the basis of the nutritive-
adequacy definition, the incidence
of poverty among two-person fam-
ilies is the same as the average
for the country-namely, 10 per-
cent-while the incidence among
the largest families is more than
twice the average.
By using the same poverty line
for large and small families, the
Council neglects one very impor-
• I have not been able to duplicate the Council's classification because data are not
available to me cross-classifying families by size and by number of children under 18.
The Council needed no such cross-classification because its definition takes no account
of size of family_
Poverty-Definition and Perspective
tant cause of poverty, namely, large
families. Next to economic growth,
there is probably no single factor
that has contributed more to rais-
ing the standard of living of fam-
ilies at the bottom of the income
scale than a reduction in size of
family.
As a corollary, one of the factors
contributing to the lower standard
of living of nonwhite families is
the larger size of the average non·
white family. In Children of the
Poor, Mollie Orshansky points out
that "nonwhite families in general,
despite their smaller incomes, are
considerably larger. Three out of
every five mother-child families
with six or more children are non-
white, but only one out of five
among those with one child. A
fourth of the husband-wife fam-
ilies with six or more children are
nonwhite, in contrast to 7 percent
of those with a single child."
Young families and aged families
both tend to be small in size-the
young because they have not com-
pleted their families, the aged be-
cause their children have left to
set up their own households. The
neglect of size of family in the
The Council of Economic Advisers' Report on Poverty
Council's estimate therefore means
that it overestimates the incidence
of poverty in these two groups.
(b) Concept of money income
The defects of one year's money
income as a measure of resources
available for consumption tend to
produce a significant overstatement
of the incidence of poverty among
the young, the aged, farm families,
and Southern families. For the
young and the aged, this overesti-
mate magnifies the error resulting
from the neglect of size of family.
For the young, the chief defect
of money income is that it neglects
long-run income status. Families
with young heads are just begin-
ning their income cycle. It is ex-
pected that their permanent in-
come over a longer period of time
will be higher than it is at the
beginning. Some have married
while still in school and are com-
pleting their education. Others
may be in apprenticeship. Some
have not found their niche in the
economy. Many are still being
helped by their parents. The real
income status of these young fam-
ilies on the basis of a longer term
estimate of their income is higher
than the status indicated by their
current money income.
39
For the aged, the chief defect
of money income is the neglect
of income from property. The aged
are at the opposite end of the in-
come cycle from the young fam-
ilies. They have passed their peak
earnings, and are on their way
down. Anticipating this well-estab-
lished pattern of earnings over the
life cycle, many older families have
accumulated assets in the form of
an owned home, stocks, bonds,
savings accounts, insurance policies,
as well as a share in the Social
Security benefits and other pension
funds. These assets accumulated
during the period of higher earn-
ings can be used to supplement
lower earnings in three ways: (1)
thro{.gh the nt/nmoney income de-
rived from an owned home, (2)
through money incqme in such
forms as interest, dividends, so-
cial security benefits, and other
pension payments, and (3)
through funds obtained by selling
assets.
The defini tion of money income
in the statistics used in deriving
the estimates in Table 5 includes
item (2) above. But it excludes
completely items (1) and (3)-
nonmoney income derived from an
owned home ar'.d. receipts from the
sale of assets.
40
This restricted definition of funds
available for current living is par-
ticularly misleading for families
with head over 65. According
to the 1963 survey of the aged,
"Home ownership (farm and non-
farm) at the end of 1962 was re-
ported by three-fourths of the
couples with head or wife aged
65 or over." Excluding receipts
from the sale of assets similarly
misrepresents the level of living of
some aged. If, instead of accumu-
lating assets in earlier years, fam-
ilies used their savings to purchase
a pension, the proceeds from the
pension are included in money in-
come. If the families accumulated
assets but sold them and used the
proceeds to buy a life annuity, the
income from the annuity is like-
wise included in the definition of
income. But if a family chooses to
supplement its current income to
the same amount by selling assets
piecemeal, this supplement is ex-
cluded. There are no data, to my
knowledge, from which a more
realistic estimate of funds avail-
able for current living can be made
for the aged. But there is little
doubt that such an estimate would
indicate that too large a fraction
are classified as poor by any defini-
Poverty-Definition and Perspective
tion which uses money income
alone.
For farm families, money income
is defective because it omits non-
money income in the form of
home-produced food and services
of an owned home. In addition,
because money income varies much
more from year to year for farm
than for nonfarm families, one
year's income may be highly mis-
leading. We can make a crude
estimate of the effect of the first
defect; we have no data to do so
for the second.
According to the 1955 Depart-
ment of Agriculture Food Con-
sumption Survey, 40 percent of the
food used by farm families comes
from the home farm or garden.
Using this figure, we can make
nutritive-adequacy income esti-
mates for farm families alone.
Using these, in turn, we can get a
rough estimate of the fraction of
farm families who should be char-
acterized as poor. My estimate is
about 13 percent or 1.3 times the
average incidence of poverty in the
population as a whole. If no allow-
ance is made for home-produced
food, the incidence appears to be
25 percent as compared with 10
percent for the population as a
whole. The Council estimates the
The Council of Economic Advisers' Report on Poverty
incidence of poverty among farm
families as 44 percent as compared
with an incidence of 20 percent
for the population as a whole.
For Southern families, a given
level of money income will give a
higher standard of living than for
Northern families for two main
reasons: first, the climatic differ-
ence; second, lower food prices and
a pattern of food habits that can
be satisfied at lower costs. The
Bureau of Labor Statistics esti-
mates that the second factor alone
produces a 20 percent lower food
cost in the South than in the North
for the same nutritive adequacy.
(c) How important are the errors?
Even the rough estimates that
can be made show that the Coun-
cil's characterization of the poor
gives a seriously distorted picture
of the problem of poverty. The
Council divides those whom it
classifies as poor into white and
Negro, old and young, farm and
city, schooled and unschooled, em-
ployed and unemployed. But the
group the Council so divides is the
wrong group. The error contamin-
ates everyone of the Council's
divisions. Of the families it desig-
nates poor, over 50 percent are
two-person families, and less than
41
20 percent are families of five or
more persons. Of the families desig-
nated poor by the nutritive-ade-
quacy definition of poverty, less
than one-third are two-person fam-
ilies and more than 36 percent are
families of five or more persons,
and even these percentages over-
state the importance of the small
family and understate the impor-
tance of the large because small
families tend to be unusually
young or old.
Or, take another classification
for which alternative estimates can
be constructed: farm vs. nonfarm
families. Of the families the Coun-
cil classifies as poor, 15 percent are
farm families; on the alternative
estimate, less than 9 percent.
Rougher estimates yet, by age
of family head, show differences of
a similar order of magnitude: Of
the families the Council classifies
as poor, 9 percent have a head
aged 14-24, and 34 percent, a head
aged 65 or over, or 43 percent all
together in these two groups. Of
the families classified as poor by
the nutritive-adequacy definition,
6 percent have a head aged 14-24
and 21 percent a head aged 65 and
over, or 27 percent all together.
Clearly, differences of this magni-
tude can hardly be shrugged off as
42
refinements which, if made, would
leave "the analysis of the sources
of poverty, and of the programs
needed to cope with it . . . sub-
stantially unchanged." On the con-
Poverty-Definition and Perspective
trary, they are so large that little
confidence can be placed in the
Council's characterization of the
poor.
 CONCLUSION
Theseenpast century and more has
an unprecedented improve-
ment in the material conditions of
the ordinary man in this country.
Central heating, electricity, run-
ning water, telephones, and auto-
mobiles have become so much a
part of our environment that they
are taken for granted. Yet, less
than a century ago, these common-
43
places of today either did not exist
at all or were the prize only of the
rich. The phonograph, movies, ra·
dio, and television, have provided
the masses with entertainment and
opportunities for cultural enrich·
ment that were once almost the ex-
clusive privilege of the well-to-do.
Nutrition, the first need of man,
has improved markedly even since
44
the 1930's-which is as far back as
we have satisfactory measurements.
In 1936, a third of American fam-
ilies had diets that were classified
as "poor"; in 1955, only an eighth
had such diets, according to the
same standards. And diets of the
families with the lowest incomes
showed a much greater improve-
ment than diets at higher income
levels.
Schooling, a second index of
progress, has become practically
universal. Currently, 97 percent of
the children between the ages of
7 and 17 attend school; a century
ago, less than 60 percent did.
The income that in 1929, a year
of high prosperity, put a family
in the top 25 percent of all con-
sumer units is today attained by
fully two-thirds of all consumer
units-and this is, of course, after
adjusting for the change in the
purchasing power of the dollar.
At the other end of the income
scale, the highest income of the
lowest third in 1929 is today ex-
ceeded by all but one-eighth of
consumer units.
One striking manifestation of
the improvement in economic con-
ditions is the change in the mean-
ing attached to the concept of pov-
erty. Two centuries ago, even in
Poverty-Definition and Perspective
the West, poverty meant not hav-
ing enough to eat. A diet provid-
ing 3,000 calories a day for a work-
ingman was a widely-accepted
dividing line between poverty and
comfort-if we may use that word
as the complement of poverty.
Even this dividing line, which
seems so starkly simple to us, can
cover a wide range when viewed
through the eyes of people on the
margin of starvation. The normal
diet consisted of cereal but the
kind and amount of cereal varied.
The poorest made do with the
coarse cereals, rye and barley. The
slightly better off shifted to wheat
or rice according to the type of
agriculture.
Only three-tenths of the human
race has even today progressed
beyond this bleak condition-
where the ideal is simply a full
stomach. Adequate nutrition, the
counterpart of a full stomach for
this three-tenths, is judged not only
by quantity, in terms of energy or
calories, but also by quality, in
terms of nutrients provided.
The need for a uniform yard-
stick to assess the adequacy of the
quantities of food which people
eat gave rise first to the so-called
London Standard drawn up in
1935-36 by the League of Nations
Conclusion
Technical Commission on Nutri-
tion and then to the Recom-
mended Dietary Allowances formu-
lated in 1941 by the Food and Nu-
trition Board of the National
Research' Council. These allow-
ances are, according to the Coun-
cil, designed' to afford a wide mar-
gin of sufficiency above physio-
logical requirements; they are not
minimum allowances in the sense
that if the allowances are not fully
met, malnutrition exists. Nonethe-
less, these allowances are the near-
est thing we have to a "scientific"
standard of adequacy and can be
used as a criterion of poverty.
Since food is no longer the pre-
dominant item in consumers' budg-
ets in the United States, a relevant
poverty line must allow for other
items of consumption. However,
there are no objective standards
for judging adequacy of clothing,
housing, and other consumption
items. In lieu thereof, nutritive
adequacy can be used indirectly
for this purpose as well. Expendi-
tures on these other items by fam-
ilies on the border of achieving
nutritive adequacy can be re-
garded as the appropriate mini-
mum allowances for them. Or, in
terms of income, the income level
at which people just achieve nu-
45
tntIve adequacy may be regarded
as a level of income at which peo-
ple are, on the average, able to
afford "adequate" housing, cloth-
ing, and other consumption items-
i.e., as a level separating poverty
from comfort.
On this basis, I have calculated
the money incomes which divide
poverty from comfort for families
of different sizes. These money in-
comes range from $1,295 for a non-
farm family of two to $3,155 for a
nonfarm family of seven or more
persons. These figures are at 1962
prices, the latest year for which
relevant data were available at the
time of writing.
The Council of Economic Ad-
visers in its 1964 Report to the
President used a money income of
$3,000 per family as its dividing
line between poverty and comfort.
The Council's figure of $3,000 is
implicity, though not explicitly,
based on the same criterion of
poverty as the one I used, i.e., the
income level at which adequate
nutrition is achieved. Yet the
Council's portrait of poverty is
very different from mine.
The Council estimates that 20
percent of all families are poor. I
estimate that 10 percent are poor.
This doubling of the estimated
46
number of the poor results neither
from a different basic criterion of
adequate nutrition nor from the
use of different data. The high
estimate by the Council results
from the crudity of its analysis.
First, the Council accepted an esti-
mate of a poverty line that is not
valid, according to the criterion on
which that estimate is based. Sec-
ond, the Council uses the same
income level to define poverty for
all families regardless of their size,
composition, or residence. The first
error is primarily responsible for
the magnification of the problem
of poverty. The second results in
an erroneous characterization of
the poor.
The error in the Council's de-
scription of poverty is so large that
it leads to a seriously mistaken
diagnosis of the problem of pov-
erty. If its figures had any relation
to action-which it is by no means
clear they do-they would lead to
Poverty-Definition and Perspective
the wrong action to aid the wrong
groups in the population.
My own analysis is, I believe,
free from gross error, but it is
based on data that are both rough
and seriously incomplete. It clear-
ly does not provide a valid basis
for action.
The many separate individuals
and organizations, each working in
their own area and its own field
of interest to relieve distress and
alleviate misery, need no compre-
hensive statistical blueprint to
guide them. Voluntary cooperation
in charity, no less than in econ-
omic production, can be and is
guided by an invisible hand. But
if a centralized governmental pro-
gram is to be directed at anything
like the right problems, let alone
succeed in mastering them, it must
be guided by a far more sophisti-
cated and extensive study of just
who are the poor ,and how poor
they are than any that is now
available.
 PUBLICATIONS
STUDIES
The Responsible Use of Power: A
Critical Analysis of the Congressional
Budget Process, John S. Saloma II/-
1964
Federal Budgeting-The Choice of Gov-
ernment Programs, Murray L. Weiden-
baum-1964
The Rural Electrification Administration
-An Evaluation, John D. Garwood and
W. C. Tuthill-1963
The Economic Analysis of Labor Union
Power, Revised Edition, Edward H.
Chamberlin-1963
United States Aid to Yugoslavia and
Poland - Analysis of a Controversy,
Milorad M. Drachkovitch-1963
Communists in Coalition Governments,
Gerhart Niemeyer-1963
Subsidized Food Consumption, Don
Paarlberg-1963
Automation-The Impact of Technolog-
ical Change, Yale Brozen-1963
Essay on Apportionment and Repre-
sentative Government, Alfred de Grazia
-1963 ($2.00)
American Foreign Aid Doctrines, Ed-
ward C. Banfield-1963
The Rescue of the Dollar, Wilson E.
Schmidt-1963
The Role of Gold, Arthur Kemp-1963
Pricing Power and "Administrative" In-
flation-Concepts, Facts and Policy Im-
plications, Henry W. Briefs-1962
Depreciation Reform and Capital Re-
placement, William T. Hogan-1962
47
The Federal Antitrust Laws, Jerrold G.
Van Cise-1962
Consolidated Grants: A Means of Main-
taining Fiscal Responsibility, George C.
S. Benson and Harold F. McClelland-
1961
Inflation: Its Causes and Cures, Revised
and Enlarged Edition, Gottfried Haber-
ler-1961
The Patchwork History of Foreign Aid,
Lorna Morley and Felix Morley-1961
U. S. Immigration Policy and World
Population Problems, Virgil Salera-
1960
Voluntary Health Insurance in the
United States, Rita R. Campbell and W.
Glenn Campbell-1960
Unionism Reappraised: From Classical
Unionism to Union Establishment,
Goetz Briefs-1960
United States Aid and Indian Economic
Development, P. T. Bauer-1959
Improving National Transportation Pol-
icy, John H. Frederick-1959
The Question of Governmental Oil Im-
port Restrictions. William H. Peterson-
1959
Labor Unions and the Concept of Public
Service, Roscoe Pound-1959
Labor Unions and Public Policy, Ed-
ward H. Chamberlin, Philip D. Bradley,
Gerard D. Reilly, and Roscoe Pound-
1958, 177 pp. ($2.00)
National Aid to Higher Education,
George C. S. Benson and John M. Payne
-1958
 48
Agricultural Surpluses and Export Pol-
icy. Raymond F. Mikucfl-1958
Post-War West German and United
Kingdom Recovery, David McCOTd
Wn',hl-19S7
The Rcgulation of Nalural Gas. Jamcs
W. McKie-1951
legal Immunities of Labor Unions, Ros-
coe Pound-195?
• AulolDllion--lts Impact on Ecoclomic
Growth and Stability, Almorin Phillips
-1951
·Involwllary Panicipation in Unionism.
Philip D. Brodlty-1956
The Role of Government in Developing
Peace.ful Uses of Atomic Encru.A"hur
Kcmt-19S6
The Role of The Federal Government
in Housinc. Paul F. W,,"dt-1956
The Upper Colorado Reclamation Proj-
ed, Pro by Sen. Arthur V. WatkilU,
Con by Rtlymond Molt)'-J956
-Federal Aid 10 Education-Boon or
Bane? Roger A. Fruman-IUS
Stales Rights and tbe Law of Labor
Relations, Guard D. Rf'illy-19SS
Three Taft-Hartle, Issucs: Secondary
Boycotts, "Mandatory" Injunctions, Re-
placed Strikers' Votes, Theodore R.
Isum(lll_1955
What Price Federal Reclamation? Ray-
motld Moley-1955
Private Investment. Abroad, Charles R.
Carrofl-1954
Farm Price Supports-Rigid or Flex-
ible. Karl Brandt_1954
tCurrency Convertibility. GOIl/ried Ha-
bulu-1954
tTbe Control of the Location of In-
dustry in Greal Bri' in, John Jewkts-
1952
Pllblications
t11le Walsh-Healey Public Contracts
Act, John V. Van Sickl_1952
TIle Economics of Full Employment:
An Analysis of the U. N. Report on Na_
tional and International Measures for
Full Employment. Wilhdm Riipke-
1952
Price fiJ:inc for Foodstuffs, uri L.
Butz-1951
Manpower Needs and the Labor Sup-
ply, Clare/'fC1! D. Long-1951
tAn Economic: AppI"oaeh to Antitrust
Problems, Clarl! E. Griffin - 1951
tValley Autborities., RaymOtid MoIey-
1950
·Farm Price and Income SuPPOrts. O. B.
Jesness-1950
tMonetary Policy aad Economic Pro5-
perity: Testimony of Dr. W. W. Stewart
(July 3~. 1930) before lha Mkmillan
Committee, with introduction by Don-
ald B. Woodward-1950
·Corporar.e Profits ill Perspective, John
Unlu-1949
·Current Problems of lmmi.ration
Policy, E. P. HUlchinson-1949
Guaranteed Employment and Wage
Plans. A Summary and Critique of the
Latimer Report and Related Doc:umc:nts.
William A. Berridgr and Cedric Wol/e
-1948
The Foreign Loan Policy of Ihe United
States. J. B. Cond1iD_1941
• Proposals for Consideration by an In·
temational ConferelKlC on Trade and
Employment-J. B. CondJiOe-1946
The Market for Risk Capital, Julu J.
Bogen-1946
Unless otherwise shown in listinC.
Studies 1953 and earlier, 50 cents each;
1954 to date, $1.00 each.
·Out of Print
Publications
LEGISLATIVE AND SPECIAL ANALYSES
88th Congress, First Session, 1963
No. I-History and Powers of the House
Committee on Rules. Special Analysis
No.2-The Youth Employment Bill.
Bills by Sen. Humphrey; Rep. Perkins
No. 3-Tax Proposals and the Federal
Finances: Part I: Federal Expenditures.
Special Analysis
No.4-Tax Proposals and the Federal
Finances: Part II: The American Tax
System: Background for Studying Pro-
posals for Change. Special Analysis
No.5-Proposals to Increase the Na-
tional Debt Ceiling, Bill by Rep. Mills
No.6-Area Redevelopment Act Amend-
ments of 1963. Bills by Sen. Douglas and
Others; Rep. Patman
88th Congress, Second Session, 1964
No. I-Tax Proposals and the Federal
Finances: Part V: Changes in the Pro-
posed Revenue Act of 1964 Recommend-
ed by the Senate Committee on Finance.
Special Analysis
No.2-Analysis of the Fiscal 1965 Fed-
eral Budget.
No.3-The Panama Canal-Its Past and
Future.
No.4-The Federal Government in Be-
havioral Science: Fields, Methods, and
Funds. Special Analysis
No.5-The Economic Opportunity Bill.
Bills by Sen. McNamara; Rep. Lan-
drum
49
No.7-Tax Proposals and the Federal
Finances: Part III: Tax Issues of 1963.
Special Analysis
No.8-The Higher Education Facilities
Act of 1963. Bill by Rep. Green (Ore.)
No.9-Tax Proposals and the Federal
Finances: Part IV: The Proposed Rev-
enue Act of 1963. Special Analysis
No. 100The Proposed Foreign Assist-
ance Act of 1963. Bills by Sen. Ful-
bright; Rep. Morgan
No. ll-The Interest Equalization Tax
Bill and the U. S. Balance-of-Payments
Situation. Bill by Rep. Mills
No. 12-A Bill to Prohibit Futures
Trading in Irish Potatoes. Bills by Sen.
Muskie; Rep. McIntire
No.6-Urban Mass Transportation Aid
Bills. Bills by Sen. Williams; Rep. Rains
No.7-The Revised "War on Poverty"
Bill. Bill by Rep. Landrum
No. 8--Social Security Amendments of
1964. Bill by Rep. Mills
No.9-Presidential Disability and Vice-
Presidential Vacancies.
No. 100The Housing Act of 1964. Bill
by Sen. Sparkman
No. II-Proposals Relating to Reappor-
tionment of State Legislatures and The
U.S. House of Representatives.
No. 12-The Drug Safety Program. Spe-
cial Analysis
Trim 1/2 in off the top of all covers Front edge of spine------- ----8.875in from the front edge of the paper. Trim small here ----- Trim large here ---

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