TY  - JOUR
AU  - Hurd,Michael D.
AU  - Rohwedder,Susann
TI  - Economic Well-Being at Older Ages: Income- and Consumption-Based Poverty Measures in the HRS
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12680
PY  - 2006
Y2  - November 2006
UR  - http://www.nber.org/papers/w12680
L1  - http://www.nber.org/papers/w12680.pdf
N1  - Author contact info:
Michael D. Hurd
RAND Corporation
1776 Main Street
Santa Monica, CA 90407
Tel: 310/451-6945
Fax: 310/451-6923
E-Mail: mhurd@rand.org

Susann Rohwedder
RAND
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407
Tel: 310-393 0411,ext. 7885
Fax: 310-451-6923
E-Mail: Susann_Rohwedder@rand.org
AB  - According to economic theory, well-being or utility depends on consumption.  However, at the household level, total consumption is rarely measured because its collection requires a great deal of survey time.  As a result income has been widely used to assess economic well-being and poverty rates.  Yet, because households can use wealth to consume more than income, an income-based measure of well-being could yield misleading results for many households, especially at older ages. We use data from the Health and Retirement Study to find income-based poverty rates which we compare with poverty rates as measured in the Current Population Survey.  We use HRS consumption data to calculate a consumption-based poverty rate and study the relationship between income-based and consumption-based poverty measures.  We find that the poverty rate based on consumption is lower than the income-based poverty rate.  Particularly noteworthy is the much lower rate among the oldest single persons such as widows.  The explanation for the difference is the ability to consume out of wealth.
ER  -