This report presents experimental measures of poverty in the United States. These measures are illustrative variations of the recommendations of the Panel on Poverty and Family Assistance: Concepts, Information Needs, and Measurement Methods of the National Research Council of the National Academy of Sciences.1 This report extends work previously published by the Census Bureau in Experimental Poverty Measures: 1990 to 1997.2 The experimental measures presented here:
- Incorporate, in a way that the official measure does not, the effects of key government policies aimed at the most needy families in the U.S.
- Use an after-tax income measure
- Add the value of in-kind benefits, such as food stamps, to income
- Take account of expenses that are necessary to hold a job and to obtain medical care.
Key findings from experimental poverty measures presented here and in our last report include the following:
- Due to the Earned Income Tax Credit, deducting taxes from income on balance reduces the percent of people who are viewed as being poor.
- Adding in-kind benefits to income reduces poverty rates, but the reductions from any single program are generally quite small.
- The resulting increase in poverty rates when one accounts for necessary expenses can be substantial but depends on the method used to value those expenses.
- The experimental measures show a poverty population that is more like the total population in terms of socioeconomic characteristics than results from using the current official measure.
This report addresses measurement issues and presents alternative ways of accounting for the calculation of work-related expenses including child care, the value of housing subsidies that is added to income as a noncash transfer, the valuation of medical out-of-pocket spending, and adjustments for geographic cost-of-living differences in the threshold.
Key findings from the measures shown in this report are:
- Experimental poverty rates are more comparable in magnitude to official rates than those reported in earlier studies.
- Updated estimates of work-related expenses, including child care, are lower than those used in previous experimental measures, resulting in lower experimental poverty rates overall.
- Improved methods for including the value of housing subsidies result in increased imputed income for those families who benefit from these programs.
- Estimates of medical-out-of-pocket spending that are based on more recent data and alternative techniques have a considerably smaller effect on experimental poverty measures than those previously reported.
- Alternative geographic adjustments yield slightly higher experimental poverty rates but may provide better estimates of state-level poverty than those presented in the NAS and earlier Census reports.
This report represents continuing work toward improving the official measure of poverty.
1 Citro, Constance F. and Robert T. Michael (eds.), Measuring Poverty: A New Approach, Washington, DC: National Academy Press, 1995.
2 Short, Kathleen, Thesia Garner, David Johnson, and Patricia Doyle. Experimental Poverty Measures: 1990 to 1997, U.S. Census Bureau, Current Population Reports, Consumer Income, P60-205, U.S. Government Printing Office, Washington, DC, 1999.