A number of other technical limitations of these methods were discussed during the workshop. For example, FMRs were developed to run HUD’s Section 8 certificate and voucher program and not for poverty measurement purposes. FMRs measure the gross rents of recent movers, not the entire rental stock. Rental markets can be volatile. Methods for determining FMRs sometimes vary across areas. Charles Nelson’s (Census Bureau) presentation of the FMR method for making geographic adjustments listed 12 limitations of the methodology (Nelson, 2004). Discussants John Ruser and Mark Shroder (Department of Housing and Urban Development) were also highly critical of the FMR approach to adjusting poverty thresholds. They both suggested that further research on other approaches to making geographic adjustments was necessary. One possible avenue for future research mentioned involves using Consumer Price Index data to construct interarea price indexes. Such indexes do not yet exist for the entire country.

In the open discussion period, Timothy Smeeding (Syracuse University) and Rebecca Blank (University of Michigan) argued that while incorporating geographic adjustments to poverty thresholds in a poverty measure was appropriate in principle, the methods currently available to make these adjustments were simply too crude, especially in light of the fact that these adjustments have a substantial effect on state-level poverty rates—a politically sensitive issue. Others argued that the methods for geographical adjustment are sound. Many workshop participants argued that regardless of whether the methods were technically acceptable or not, it would not be worthwhile to spend significant resources improving the methods because it is very unlikely that geographical adjustments to the official measure would ever be adopted because of the political infeasibility.

Many—though not all—workshop participants indicated agreement with these views. In looking at the need for further research on improving methods for making geographic adjustments to thresholds and including more than just the variation in the housing costs in possible future adjustments, Rebecca Blank said: “At present we should set aside putting geographical price adjustments into the poverty calculation, but … continu[e] to improve our methodology on how to do that, including research on improving the housing price issue, which is how the geographic adjustments are largely done right now, and its interarea price distribution, as well as work on geographic variation and other prices that might add to our information about housing.”



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