One of the problems with the new measure being discussed, unless I am
missing something, is that the changes are really dealing only with
measurements on the income side--leaving the poverty line cutoffs
unchanged. Current measures of poverty are problematic on both the
income and benchmark sides (as Jim notes below).
I did a recent blog post on this here:
http://media.lclark.edu/content/hart-landsberg/2011/09/11/the-tragedy-of-child-poverty/
Key part of the text follows:
Children under the age of 18 are counted as poor if they live in
families with income below U.S. poverty thresholds.There are a range of
poverty thresholds
<http://www.census.gov/hhes/www/poverty/data/threshld/thresh09.html>
which are based on family size and number of children.The thresholds are
adjusted yearly using the change in the average annual Consumer Price
Index for All Urban Consumers (CPI-U). These poverty thresholds are far
from generous. The 2009 poverty threshold for a family of two adults
and two children was $21,756
<http://www.census.gov/hhes/www/poverty/data/threshld/thresh09.html>.Poverty
thresholds for 2010 have not yet been published.
Sadly our poverty rates understate the seriousness of our poverty
problem, for children and adults. The history of how we developed and
calculate our official poverty thresholds provides perhaps the clearest
proof of the inadequacy of current statistics. In broad brush, the
Johnson administration, having announced a war on poverty in January
1964, needed a measure of poverty.In response, its newly created Office
of Economic Opportunity [OEO] introduced the first poverty thresholds in
1965.
These thresholds were largely based on previous work of the Department
of Agriculture [DOA].The DOA had developed four low-cost weekly food
plans, the least generous called the “economy plan.” That plan was
designed for “temporary or emergency use when funds are low.” It had no
allowance for eating outside the home.The Department had also
determined, based on surveys, that families of three or more persons
spent approximately one-third of their after-tax income on food. The OEO
took the cost of the economy food plan for families of different sizes
and multiplied the total by 52 to get a series of yearly food
budgets.Then, it multiplied those food budgets by three to generate a
series of poverty thresholds.
From 1966 to 1969, these poverty thresholds were adjusted annually by
the yearly change in the cost of the food items contained in the economy
food plan.After 1969 the poverty thresholds were simply adjusted by the
rise in the consumer price index.
This methodology has produced a poverty standard that is deficient in
several ways. First, it does not acknowledge that our knowledge of
nutrition has significantly changed since 1965.Second, it does not
acknowledge that most families now spend approximately one-fifth of
their after-tax income on food, not one-third. That correction alone
would mean that the food budget should be multiplied by 5 rather than 3,
thereby producing higher thresholds and poverty rates. Third, it does
not acknowledge that poverty is best thought of as a relative condition.
The National Academy of Sciences Panel on Poverty and Family Assistance
has played a leading role in developing one of the most promising
alternative poverty measures. A 2008 Bureau of Labor Statistics Working
Paper <http://www.bls.gov/osmr/pdf/ec080030.pdf> refine and extend the
Panel’s experimental methodology and use it to calculate poverty
thresholds and estimates for the period 1996 to 2005.
The authors of the Working Paper start with a reference family, two
adults and two children, the most common family unit in the United
States.Then, using Consumer Expenditure Surveys, they calculate the
dollar amount of spending on food, clothing, shelter, utilities and
medical care by all reference families in a given year.
The poverty threshold for the reference family is set, following the
work of the Panel, at the midpoint between the 30^th and 35^th
percentile of the spending distribution for all families with two adults
and two children.Small multipliers are then used to add spending
estimates for other needs, such as transportation and personal care,
slightly raising the poverty threshold.This threshold is adjusted to
generate thresholds for families of other sizes and compositions.
Poverty rates are determined by comparing family resources with these
poverty thresholds.In contrast to current poverty calculations which
rely on pre-tax incomes (even though official thresholds are based on
the share of after-tax income spent on food), the authors of the Working
Paper define family resources as the sum of after-tax money income from
all sources plus the value of near-money benefits (such as food stamps)
that help the family meet its spending needs.
The chart below shows national poverty rates for the years 1996 to
2005.We see that the rates produced by this experimental methodology are
significantly higher than the official rates.Strikingly, while the
official 2005 poverty rate is lower than the 1996 official poverty rate,
the 2005 experimental poverty rate is the highest in the period.
On 11/4/2011 8:37 AM, Jim Devine wrote:
Some thoughts: the old official poverty measure is flawed (as I’m sure
the new one will be). The key thing is whether or not the new poverty
rate rises less than the old, though any rise in the rate is a bad
thing. The cut-offs are pretty arbitrary for the both old and the new
measures, while changes in the percentages say something more (as long
as "poverty" is defined in a consistent way over time).
The poverty level defined without paying attention to transfer
payments received tells us something about the need for such transfer
payments, while the level defined after those payments have been
received says something about the success of government programs.
Measures of inequality -- and relative poverty -- seem better than
poverty rates in many cases. It depends on what questions you're
trying to answer. Relying on just one statistical measure is often a
mistake.
On Fri, Nov 4, 2011 at 6:58 AM, Jayson Funke<[email protected]> wrote:
November 3, 2011
Bleak Portrait of Poverty Is Off the Mark, Experts Say
By JASON DePARLE, ROBERT GEBELOFF and SABRINA TAVERNISE
http://www.nytimes.com/2011/11/04/us/experts-say-bleak-account-of-poverty-missed-the-mark.html?_r=1&hpw
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