Poverty module version 11.10 The Urban Institute  TRIM3  Reference  Contact Us  Version History  Dictionary

The Poverty module tabulates the number of families and persons at different levels of poverty under various income definitions. Income (under each definition) is divided by the family's poverty threshold in order to determine the family's income as a percent of poverty. The income definitions are specified through Poverty module "forms" and can be altered as necessary to meet the needs of a particular analysis.

Default income definitions are provided in simulations stored under the Baseline user name. PVxxxx_RawCPS (where xxxx specifies the simulation year) defines income using the income variables reported on the CPS. PVxxxx substitutes TRIM3 simulated variables (where available) into the income definition. In the text below, references to the "typical," "standard," or "default" settings of program rules and forms refer to the standard settings used in these runs.

Additional information about the Poverty module is provided in the following sections:

• Family Composition
• Child Definition
• Determining Family Poverty Threshold
• Family Income
• Summary Tables
• Output Variables
• Comparing TRIM3 "Raw CPS" and Census Bureau Figures
• Working with Poverty Module Forms
• References

Family Composition

The Poverty module uses the broad definition of family -- all related persons in a household are considered part of the same family. This definition includes related subfamilies as part of the household's primary family. The terms "family" and "unit" are used interchangeably in the documentation, program rules, and variable names.

TRIM3 typically treats unrelated individual children under the age of 15 as members of the household's primary family, under the assumption that the primary family is responsible for the child's care. This is accomplished by setting the program rule TreatmentOfUnrelatedKids to "Unrelated children are included in the primary family."

The treatment of unrelated children can have a noticeable impact on poverty tabulations. The CPS does not report income data on the records of children under the age of 15. Therefore, if unrelated children are treated as one-person families, they will all appear to be poor. By combining unrelated children into the primary family, TRIM3 assumes that the unrelated child enjoys the same standard of living as the primary family, which, in turn, may have a slightly lower standard of living due to support of the unrelated child.

TRIM3 can simulate alternative approaches to the treatment of unrelated children. The Bureau of the Census excludes unrelated children from poverty tabulations entirely. This can be accomplished by setting TreatmentOfUnrelatedKids to "Census method. Unrelated children are treated as if they don't exist." Another option is to count unrelated children as one-person families. This can be accomplished by setting TreatmentOfUnrelatedKids to "Each unrelated child is treated as their own separate 1-person family." A final option allows the user to specify that all unrelated individuals under the age of 18 are treated as members of the primary family.

Child Definition

The Poverty module needs to be able to identify children in order to determine the family’s poverty threshold (see below) and also for use in the summary tables. The definition of "child" is entered through two standard forms: ChildDefinition and PersonUnder18.

ChildDefinition controls the definition of "child" used in determining the family's poverty threshold and is also used in certain summary tables. By default, ChildDefinition defines a person as a "child" if he or she is under the age of 18, not the household head or spouse, not the head or spouse of an unrelated subfamily, and not a non-family householder or unrelated individual adult (aged 15+).

The form PersonUnder18 defines whether or not a person is included in the count of "children under 18" in certain summary tables. By default, the definition of PersonUnder18 is the same as for ChildDefinition. See the section on summary tables (below) for further details.

Determining Family Poverty Threshold

Poverty thresholds vary by family size, the age of the family head, and (optionally) the number of related children under 18 in the family. The program rule PovertyThreshold specifies "weighted average thresholds" that vary by family size and the age of the family head. The program rules DetailedPovertyThreshold_0 - DetailedPovertyThreshold_8 specify detailed poverty thresholds that vary by family size, age of the family head, and the number of related children under the age of 18. Program rule UseDetailedPovertyThresholds indicates whether the weighted average thresholds or the detailed poverty thresholds are used in the simulation. This rule also lets the user specify that a third type of threshold be used -- the "Reference Family Threshold" (click here for details).

Family Income

The Poverty module calculates each family's poverty ratio (income divided by the poverty threshold) for the following 10 different definitions of income:

• (definition 0): Cash income before transfers
• (definition 1): Plus social insurance
• (definition 2): Plus means-tested cash transfers
• (definition 3): Plus food and housing benefits
• (definition 4): Less federal taxes
• (definition 5): Plus EITC (and the Additional Child Tax Credit)
• (definition 6): Less out-of-pocket expenses (except those below)
• (definition 7): Less health insurance premiums
• (definition 8): Less out-of-pocket child care expenses
• (definition 9): Less other work-related expenses

The different definitions are provided in order to see the cumulative effect of different income sources on the standard poverty definition (cash income before transfers + social insurance + means-tested cash transfers) and also to see the effect of including additional sources of income and expenses under experimental poverty definitions.

It is important to note that even though the Poverty module can calculate and display results for each of the above income definitions, some of the income variables (such as out-of-pocket expenses, health insurance premiums, and work-related expenses) are not available for every year of TRIM3 data. When unavailable, these income variables are treated as having a value of "0."

Each income concept is defined through a Poverty module "form". The names of the forms are listed below, along with the standard income definition for simulations using raw CPS variables and for those incorporating simulated TRIM3 variables.

• CashIncBeforeTransfers




CashIncBeforeTransfers defines cash income before transfers.

• Raw CPS Definition - sum of the following "Adult" input variables: TotalWages, Interest, DividendsEstatesOrTrusts, BusinessSelfEmployment, FarmSelfEmployment, GeneralOtherIncome, GovernmentPensions, PrivatePensions, and RentsOrRoyalties.
• Simulated TRIM3 Definition - same as the above Raw CPS Definition, but also includes ImputedCapitalGains (obtained as part of the Federal Income Tax baseline statistical match with the IRS Statistics of Income Public Use File). For the 1993 baseline, AdjustedInterest and AdjustedDividends are used in place of Interest and DividendsEstatesOrTrusts. AdjustedInterest and AdjustedDividends attempt to correct for the underreporting of interest and dividend income on the CPS.



• SocialInsurance




SocialInsurance specifies income from transfer programs that are not means-tested.

• Raw CPS Definition - sum of the following "Adult" input variables: UnemploymentCompensation, WorkersCompensation, VeteransPayments, SocialSecurityOrRrr
• Simulated TRIM3 Definition - same as the Raw CPS Definition.



• MeansTestedCashTransfer




MeansTestedCashTransfer specifies cash income from means-tested transfer programs.

• Raw CPS Definition - sum of the following "Adult" input variables: OtherPublicAssistance, SSI, and AFDC.
• Simulated TRIM3 Definition - sum of the "Adult" input variable OtherPublicAssistance, the TRIM3 simulated SSI variable AnnualSSIBenefitsReceived, and the TRIM3 simulated AFDC/TANF variable AnnualBenefitsReceived.



• FoodAndHousingBenefits




FoodAndHousingBenefits specifies the value of food stamp and school lunch benefits, energy assistance, and public and subsidized housing.

• Raw CPS Definition - sum of the "Household" input variables: EnergyAssistanceIncome and FoodStampsValue; and the "Family" input variables: HousingSubsidyMarketValue and NutritionMarketValue.
• Simulated TRIM3 Definition - sum of the "Household" input variable EnergyAssistanceIncome, the "Family" input variable NutritionMarketValue, the TRIM3 simulated Food Stamp Program variable AnnualBenefitsReceived, and the Public or Subsidized Housing variable AnnualSubsidyReceived.


Each family receives a share of the household's EnergyAssistanceIncome, FoodStampValue, and AnnualSubsidyReceived. The value assigned to a particular family is pro-rated by the number of people in the family. HousingSubsidyMarketValue is a monthly value and so is multiplied by twelve to obtain an annual amount.



• FederalTaxes




FederalTaxes specifies federal income taxes (not counting refundable credits) and payroll taxes.

• Raw CPS Definition - sum of the "Adult" variables: FederalTaxLiability and FicaDeduction.
• Simulated TRIM3 Definition - sum of the simulated TRIM3 PayrollTax variables: WorkerOASDHI, SelfEmpOASDHI, and WorkerFedRetireTax; and simulated TRIM3 federal income taxes excluding the EITC and Additional Child Tax Credit (Tax + EarnedIncomeTaxCredit + AdditionalChildTaxCredit). AdditionalChildTaxCredit is only relevant beginning with the 1998 Federal Income Tax Baseline.



• EITC




The EITC form specifies refundable tax credits.

• Raw CPS Definition - "Adult" variable EitcAmount
• Simulated TRIM3 Definition - sum of the TRIM3 simulated Federal Income Tax variables EarnedIncomeTaxCredit and AdditionalChildTaxCredit. AdditionalChildTaxCredit is only relevant beginning with the 1998 Federal Income Tax baseline.



• OutOfPocket




The purpose of the OutOfPocket form is to specify out-of-pocket expenses (except those added in the income definitions below).

At the time of writing, there are no CPS or TRIM3 simulated variables for out-of-pocket expenses. Therefore, this form is set to zero.




• Premiums




The purpose of the Premiums form is to specify private (group and non-group) health insurance premiums.

• Raw CPS Definition - at the time of writing, there are no CPS variables for the amount of a person's health insurance premiums, so this form is set to zero.
• Simulated TRIM3 Definition - sum of the EmpSponsoredHealthIns variable AnnualEsiWorkerPremium and the PvtNonGroupIns variable AnnualPNGPremiumPaid. One or both of these TRIM3 variables may be unavailable for a particular year. If neither variable is available, then the Premiums form is set to zero.



• OutOfPocketChildCare




The purpose of OutOfPocketChildCare is to specify out of pocket child care expenses.

• Raw CPS Definition - at the time of writing, no CPS variable indicates the amount of a person's child care expenses, so this form is set to zero.
• Simulated TRIM3 Definition - OutOfPocketChildCare is set equal to the ChildCareExp variable AnnualChildCareExpense, in years where available, or to the annual sum of the monthly ChildCareExp variable ChildCareExpense. Prior to the 1996 baseline, OutOfPocketChildCare is set equal to ChildCareExpenses (a variable that was imported into TRIM3 from the TRIM2 model).



• OtherWorkRelatedExp




At the time of writing, there are no CPS or TRIM3 simulated variables for other work related expenses, so this form is set to zero.

Summary Tables

The Poverty module produces four groups of summary tables as part of its standard output:

Income Definition Tables

These tables present poverty measures based on the 10 definitions of income described above. Although fairly self-explanatory, the following notes may help in understanding the tables:

• Persons are considered "elderly" if 65 or over.
• Heads of families are considered "single" if they meet the definition given by the form SingleStatus. By default, a person is considered single if he or she is not married with spouse present (not MaritalStatus=2).
• Persons are placed in the "Children Under 18" category if they meet the definition given in the form PersonUnder18 (note that they do not have to meet the definition given in the form ChildDefinition). However, ChildDefinition is used when determining if a family has children.
• The columns marked "(1), "(2)", and "(3)" are mutually exclusive, but none of the other columns are.
• For the anti-poverty effectiveness tables, the level of poverty which is considered "poor" is given by the program rule PovertyLimit, which can be set to any desired percent-of-poverty.

State Tables

The state tables present state-level poverty measures for various demographic groups. State tables 1-8 use income definition #9 (income after all taxes and expenses). State tables 9-11 use income definition # 2 (cash plus social insurance, plus means-tested cash transfers) Although fairly self-explanatory, the following notes may help in understanding the tables:

• Persons are considered "elderly" if 65 or over.
• Persons are included in the first table ("Children") if they meet the definition given in the form PersonUnder18 (note that they do have to meet the definition given in the form ChildDefinition). However, ChildDefinition is used when determining if a family has children.

Characteristics Tables

These tables also use income definition # 2 to present poverty measures, but at a national rather than state level. Note that in the second table, the definition of "child" for purposes of determining if an adult is a parent, is not based on the form ChildDefinition. See the table footnotes for the definition.

State Tax Tables

This set of tables (SP1-SP6) when used with the forms StateTaxes and StateEITC, gives the user the ability to separate the impact of state taxes from federal taxes. To do this, first make sure that the forms FederalTaxes and EITC do not include state tax amounts. Then, make sure that the form StateEITC specifies how to determine the amount of state EITC that was received, and the form StateTaxes specifies how to determine the amount of state taxes paid before factoring-in any state EITC. The Poverty module assumes the amounts specified by these forms are person-level, and so it sums them across all persons in the family to come up with the family-level amounts. The result variables UnitStateTaxes and UnitStateEITC contain these family-level values calculated by the module, but note that none of the other result variables will incorporate the state tax values. Likewise, none of the other tables will incorporate the state tax values either.

Output Variables

The Poverty Module allows the user to select numerous micro-level output variables. Complete descriptions of each variable can be found in the dictionary. Note that most variables are stored just on the record of the head of the unit, but some are stored on all persons. Check the variable descriptions to find out for whom a particular variable is stored.

Comparing TRIM3 "Raw CPS" and Census Bureau Figures

TRIM3 "raw CPS" baseline poverty tables differ from published Census Bureau poverty estimates due to differing assumptions regarding the treatment of unrelated children. As discussed above, TRIM3 treats unrelated children as members of the primary family, while the Census Bureau drops them from poverty tabulations entirely. Another approach used at times by the U.S. Department of Health and Human Services is to treat each unrelated individual child as his or her own one-person family (ASPE 1998).

Census Bureau results for the number of persons in poverty can be reproduced by starting with the "raw CPS" baseline, and changing TreatmentOfUnrelatedKids to "Census method. Unrelated children are treated as if they don't exist." This has been confirmed for the "official" poverty estimates—where income is defined as cash income (including cash transfers). However, no comparison has been completed for Census Bureau and TRIM3 estimates that use alternative income definitions.

For some families who have a topcoded source of income, the poverty ratio calculated by TRIM3 will differ from what is coded on the CPS. This is because the Census Bureau calculates the poverty ratio before topcoding. Topcoding typically affects only higher income families and is unlikely to affect whether a family is found to be poor. Because the Census Bureau replaces the topcoded value with the average amount received by families subject to topcoding, topcoding may either increase or decrease a family's apparent income.

A comparison of TRIM3 "Raw CPS" and Census Bureau poverty estimates is provided below.

Children in Poverty

TRIM3 counts the number of "children" who meet the standard TRIM3 definition of "child" (specified in the form ChildDefinition).

The Census Bureau publishes three child poverty figures:

• "Related children under 18" - members of the primary family who are under age 18 and are not the head or spouse
• "Children under 18 in unrelated subfamilies" - persons in unrelated subfamilies who are under 18 and are not the head or spouse.
• "Persons under 18" – all persons under 18 (except for unrelated children under age 15 who are excluded from all Census Bureau poverty tabulations).

The number of poor children according to the TRIM3 definition exceeds the sum of poor "related" plus "unrelated" children, according to the Census Bureau definition, due to the presence of poor unrelated individual children under the age of 15 (see below). It is also possible that TRIM3’s addition of unrelated individual children to the primary family renders some previously nonpoor families poor. The TRIM3 child poverty rate is lower than the Census Bureau poverty rate for "persons under 18", presumably because those added in the Census definition (unrelated individuals aged 15-17 and primary and unrelated family heads or spouses aged 15-17) are disproportionately poor.

Number of "children" in poverty (thousands), and percent poor (%) by different definitions:

* Census figures come from Table A "People and Families in Poverty by Selected Characteristics: 1989, 1997, and 1998" in Poverty in the United States: 1998, and Table A. "Persons and Families in Poverty by Selected Characteristics: 1995 and 1996" in Poverty in the United States: 1996

** Calculated from values in this table.

Families With Children

The Census Bureau excludes unrelated families from tabulations of poor families. TRIM3 includes these families in its estimates.Given the higher rate of poverty for children in unrelated subfamilies, it is not surprising that by including unrelated subfamilies in TRIM3 tabulations, TRIM3 finds a higher poverty rate for families with children.

Number of "families with children" in poverty (thousands), and percent poor (%) TRIM3 (unadjusted CPS) and Census Bureau:

* Census figures come from Table B-3 Poverty Status of Families by Type of Family, Presence of Related Children, Race, and Hispanic Origin: 1959 to 1998 in Poverty in the United States: 1998.

Non-Elderly Families

TRIM3 defines a non-elderly family as being a family (with related subfamilies included in the primary family) that has at least two members, at least one of whom is under the age of 65.

The Census Bureau’s standard poverty tables do not include poverty estimates for families by whether or not there is an elderly member. The TRIM estimated poverty rate for all non-elderly families (11% in 1998) is below that for families with children (15.6% in 1998).

Working with Poverty Module Forms

The Poverty module calls each income definition form once for each person in the family, adding that person's income to the family's total income. Care must be taken to avoid double counting the income amounts reported in the CPS "Household" and "Family" variables. The income definition form must divide household level variables by the number of people in the household, and family level variables by the number of people in the family. That way, when the income definition form is called for a person, only that person's "share" of the total household or family income is added to total family income.

Care must also be taken in referencing simulated TRIM3 variables. Before modifying a form, the user should understand whether the simulated TRIM3 variable represents the person's share of the benefit or the total benefit for the unit. If the variable represents the total benefit for the unit, then the user should understand whether the variable is stored with the unit head or with each person in the unit. The form should reference the variable in such a way as to avoid double-counting.

The result variables UnitDefinition_0 through UnitIncomeDefinition_9 show each family's income under the various income definitions. Users experimenting with alternative income definitions should use the TRIM3 microdata tool to test that the UnitIncomeDefinition variables are calculated accurately, given the input variables used in the definition.

References

Dalaker, Joseph, U.S. Bureau of the Census. 1999. "Poverty in the United States: 1998." Current Population Reports Series P60-207. U.S. Government Printing Office, Washington, DC.

Lamison-White, Leatha, U.S. Bureau of the Census. 1997. "Poverty in the United States: 1996." Current Population Reports Series P60-198. U.S. Government Printing Office, Washington, DC.

Office of the Assistant Secretary for Planning and Evaluation (ASPE). 1998. "Counting Persons in Poverty on the Current Population Survey." ASPE Research Notes. U.S. Department of Health and Human Services.