Why the United States Needs an Improved Measure of Poverty

Source: Rebecca M. Blank, Brookings Institution, Testimony before the Subcommittee on Income Security and Family Support of the House Committee on Ways and Means, July 17, 2008

From the summary:
An economic measure of poverty requires two definitions. First, one needs to define a poverty line or poverty threshold, the level of income or other resources below which a particular type of family is considered poor. Second, one needs to define a resource measure, which delineates the ways an individual family’s economic resources will be counted. The poverty count is the number of people who live in families with resources below the poverty threshold.

I emphasize these definitional items because it is important to think about poverty lines and resource definitions together. A statistically credible measure of poverty should have a poverty threshold that is consistent with its resource measure, so that the two can be used together. Unlike Representative McDermott’s proposed legislation, many proposed changes in poverty measurement in the past have emphasized changing the way in which family resources are counted, without proposing to change the poverty threshold in a consistent way.

There are serious problems in the current poverty measure with both the threshold definition and the resource definition. No simple, minor change will make this historical poverty measure accurate; a major redefinition is required.

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