Hi there!
We are using IPUMS’ POVERTY variable in the 2019 5-year ACS as an easily understandable way to compare family incomes from families of different sizes. While our research is focused on the lower end of the income scale, we did want to include those families above 500% of the poverty line, who are topcoded as “501”.
In order to re-code these topcoded families, I have been trying to sort out how to re-create the POVERTY variable using the IPUMS documentation, and the necessary variables on family size, income, number of children, etc. - but I was curious if there was an easier way?
Does IPUMS have any ready-made code available to create a POVERTY variable for all family incomes?
Thank you!
Sam
There are two steps to calculate POVERTY, an indicator of family wealth. First, calculate the adjusted total family income by multiplying the total family income (FTOTINC) by the year-specific, CPI-U multiplier, which accounts for changes in cost of living (see the second-to-last table on the poverty definition page). For the appropriate multiplier for 2013-onward years, see the adjusting for inflation page. Second, calculate poverty status by dividing the adjusted total family income by the poverty threshold according to family size and number of children under 18 years, 1999 dollars (see the last table on the poverty definition page). Multiply this number by 100 to get the value of POVERTY for that individual (see the description tab for POVERTY for further discussion of how it is calculated). The reason POVERTY is calculated in this way is because poverty thresholds are automatically adjusted each year based on CPI-U, by law, so the 1999 thresholds, adjusted by CPI-U, give the exact threshold in any other year.
I hope this helps!