Valuation of In-Kind Transfers and the Measurement of Poverty

Abstract

This article addresses three related but distinct issues relevant to the valuation of in-kind transfers. First, it shows that the census bureau's widely cited recipient value approach substantially underestimates the true cash equivalent value of in-kind transfers. Second, it shows that the true cash equivalent value of income can exceed even the income value arrived at by adding the market value of in-kind transfers to cash income. Third, it presents some reasons for preferring that income be measured at its market value rather than at its cash equivalent value, at least when the goal is identifying poverty status.