Modelos predictivos

2.5.1 Descriptive statistics

Holding all resource changes constant between one year and the next, two factors can affect a family’s poverty status in the subsequent year. First, the poverty thresholds are adjusted each year for inflation and thus, all else remaining equal, the inflation-adjusted threshold could be responsible for a change in poverty status. For example, in 2015, the poverty threshold for a family of 4 (2 adults and 2 children) was $24,036. In 2016, this

threshold was $24,339. Therefore, if a family of this composition had an income of $24,300 in both 2015 and 2016, the family would fall into poverty in 2016 based solely on the inflation adjustment. As later sections will show, changes in income are rarely zero and thus changing thresholds to adjust for inflation is typically not a source of poverty entries.

The second factor that can affect poverty transitions when all resources are held constant is a change in family composition. As Table 2.3 shows, a family of 3 people in t1 that has a newborn (and thus 4 people in t2) moves their poverty threshold from $19,078 to $24,339 (in 2015 and 2016, respectively). Thus, the addition of a baby can be responsible for a transition into poverty because of the increased need for resources as indicated by the higher poverty threshold for the now-larger family. Conversely, a loss of a family member will typically lead to a lower poverty threshold and thus can be responsible for a poverty exit. Overall, any family composition change could lead to a different poverty threshold.

Table 2.5 demonstrates that about 13 percent of all families experience a change in family composition between one year and the next (see Appendix Table A.2 for the com-parable OPM statistics). In this analysis, family composition change is defined by the arrival/departure of a family member.¹⁷ About 7 percent of families experience a de-parture of a family member, about 5 percent of families have a family member arrive, and a little under 1 percent of families have both an arrival and departure. A few patterns are worth mentioning. Those families entering poverty have a proportionally higher rate of family member departures (9.67 percent) than those never in poverty (6.85 percent). Sec-ond, these departures are mostly adult departures. Families entering poverty have nearly two percentage points higher adults departing than those never in poverty (7.80 percent versus 6.00 percent). Elderly departures for families entering poverty are twice as likely than they are for those never in poverty (2.44 percent versus 1.02 percent). To the extent that can be noted in the data, divorce/separation is about 1 percentage point higher for families entering poverty than those never in poverty (1.73 percent versus 0.67 percent).¹⁸ Finally, the percent of families losing a spouse (widowed) is about 1 percentage point higher for those entering poverty than those never in poverty (1.50 percent versus 0.66 percent). In

17 In practical terms, an arrival is defined as the presence of a person in t2 not in the data in t1while a departure is the presence of a person in t1 but not found in the data in t2.

18 Divorce/separation is noted by the departure of a family member whose marital status was married and then the remaining spouse changes their marital status to divorced/separated. For widows, the marital status changes to widowed.

general, the arrival of adults is more common for families exiting poverty than those never in poverty (5.19 percent versus 3.43 percent). In sum, these patterns suggest that family composition changes are more common occurrences for families transitioning in and out of poverty than those not transitioning and thus could be an important factor in explaining poverty transitions.

2.5.2 Counterfactuals

In order to separate the role of family composition in poverty transitions, it is necessary to tease out the effect of concurrent resource changes. A simple intuitive counterfactual can be developed. Consider that a family is in poverty when family resources are less than their corresponding poverty threshold. Adjusting resources and thresholds so that there is no effect of inflation (i.e. CPI-deflated), then it is possible to isolate the effect of family changes from resource changes. The counterfactuals can be constructed as follows. Hold the resources of a family at the t1 level and then only allow their threshold to change to their corresponding t2 level:

(Resources t1/ Threshold t2) 1 ! Poverty Rate from Family Composition Changes.

For the role of resource changes, the inverse counterfactual can be calculated:

(Resources t2/ Threshold t1) 1 ! Poverty Rate from Resource Changes,

which captures the poverty rate in t2 if only resources had changed and family composition stayed at its t1 state.

Table 2.6 presents the results of this counterfactual analysis and shows that the family composition changes result in less families falling into poverty than resource component changes. The overall SPM rate for t1 is 13.94 percent. If only family composition changed, the SPM rate would not be statistically different at 14.07 percent. If only resources changed, the SPM rate would by about 0.8 percentage points higher and statistically different at 14.74 percent. Therefore, despite family composition changes being rather common (recall that about 13 percent of families experience a composition change), these changes alone do not lead to a higher poverty rate. Resource changes have a larger effect on the poverty rate.

The overlap of family composition changes and resource changes is clear and even logical.

When an adult family member leaves the household, they also take their resources with them. Thus, family changes alone, through their changes on the relevant poverty threshold, are not a largely influential source of poverty transitions. However, the concurrent change in resources associated with family composition changes are more influential. In order to more fully understand the role of resource changes, more structure must be given to the analysis.

2.6 Decomposing poverty transitions into resource