EXPERIMENTAL POVERTY MEASURES

Summary of a Workshop

John Iceland, Rapporteur

Planning Group for the Workshop to Assess the Current Status of Actions Taken in Response to Measuring Poverty: A New Approach

Committee on National Statistics

Division of Behavioral and Social Sciences and Education

NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS
Washington, D.C.
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Experimental Poverty Measures: Summary of a Workshop EXPERIMENTAL POVERTY MEASURES Summary of a Workshop John Iceland, Rapporteur Planning Group for the Workshop to Assess the Current Status of Actions Taken in Response to Measuring Poverty: A New Approach Committee on National Statistics Division of Behavioral and Social Sciences and Education NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS Washington, D.C. www.nap.edu

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Experimental Poverty Measures: Summary of a Workshop NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by Contract No. 223-01-2460 TO# 14 between the National Academy of Sciences and the Food and Drug Administration with funding from the U.S. Census Bureau. The work of the Committee on National Statistics is supported by a consortium of federal agencies through a grant from the National Science Foundation (Number SES-0112521). Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 0-309-09520-4 (Book) International Standard Book Number 0-309-54712-1 (PDF) Additional copies of this report are available from National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu Printed in the United States of America Copyright 2005 by the National Academy of Sciences. All rights reserved. Suggested citation: National Research Council. (2005). Experimental Poverty Measures: Summary of a Workshop. John Iceland, Rapporteur. Planning Group for the Workshop to Assess the Current Status of Actions Taken in Response to Measuring Poverty: A New Approach, Committee on National Statistics, Division of Behavioral and Social Sciences and Education. Washington, DC: The National Academies Press.

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Experimental Poverty Measures: Summary of a Workshop THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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Experimental Poverty Measures: Summary of a Workshop PLANNING GROUP FOR THE WORKSHOP TO ASSESS THE CURRENT STATUS OF ACTIONS TAKEN IN RESPONSE TO MEASURING POVERTY: A NEW APPROACH REBECCA BLANK (Chair), Ford School of Public Policy, University of Michigan DAVID BETSON, Department of Economics and Policy Studies, University of Notre Dame GRAHAM KALTON, Senior Vice President, Westat, Rockville, MD TIMOTHY SMEEDING, School of Public Policy, Syracuse University BARBARA WOLFE, Department of Economics and Population Health Sciences, University of Wisconsin-Madison CONSTANCE F. CITRO, Director, Committee on National Statistics MICHELE VER PLOEG, Study Director JOHN ICELAND, Rapporteur JAMIE CASEY, Research Assistant TANYA M. LEE, Project Assistant MICHAEL SIRI, Project Assistant

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Experimental Poverty Measures: Summary of a Workshop COMMITTEE ON NATIONAL STATISTICS 2004-2005 WILLIAM F. EDDY (Chair), Department of Statistics, Carnegie Mellon University KATHARINE G. ABRAHAM, Department of Economics, University of Maryland at College Park ROBERT BELL, Statistician, AT&T Laboratories-Research, Florham Park, NJ LAWRENCE D. BROWN, Department of Statistics, University of Pennsylvania ROBERT M. GROVES, Survey Research Center, University of Michigan JOHN HALTIWANGER, Department of Economics, University of Maryland at College Park PAUL HOLLAND, Educational Testing Service, Princeton, NJ JOEL L. HOROWITZ, Department of Economics, Northwestern University DOUGLAS S. MASSEY, Department of Sociology and Public Policy, Princeton University VIJAYAN NAIR, Department of Statistics and Department of Industrial and Operations Engineering, University of Michigan, Ann Arbor DARYL PREGIBON, Google Inc., New York, NY KENNETH PREWITT, School of Public Affairs, Columbia University LOUISE M. RYAN, Department of Biostatistics, Harvard School of Public Health NORA CATE SCHAEFFER, Department of Sociology, University of Wisconsin-Madison CONSTANCE F. CITRO, Director

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Experimental Poverty Measures: Summary of a Workshop Acknowledgments On behalf of the Committee on National Statistics (CNSTAT), I thank all of the individuals involved in the workshop and the production of this workshop summary. First, I thank all those individuals who presented information and shared their ideas for improvements in the U.S. measure of poverty, including those people who prepared papers, those who served as formal discussants, and those who attended the workshop and participated in a lively and informative set of discussions (see the workshop agenda in Appendix A and the list of workshop participants in Appendix B). Second, I thank the members of the planning group (listed on page v), who were central to the workshop’s success; they devoted much effort to structuring the agenda and identifying experts to make presentations and serve as discussants. I also thank Katherine K. Wallman, chief statistician in the Office of Management and Budget, for originating the idea for the workshop and working with CNSTAT and the U.S. Census Bureau to bring it to fruition. The Census Bureau provided funding for the workshop through a task order contract between the Food and Drug Administration and the National Academies. John Iceland, University of Maryland, was responsible for preparing this summary of the workshop. He attended the workshop, developed the outline, and wrote the summary—which faithfully, elegantly, and succinctly captures the workshop discussions.

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Experimental Poverty Measures: Summary of a Workshop I am grateful for the excellent work of the staff of the Committee on National Statistics and the Division of Behavioral and Social Sciences and Education (DBASSE) for developing and organizing the workshop and assisting in the preparation of the workshop summary. Michele Ver Ploeg, who served as study director for the project, was chiefly responsible for organizing the workshop. Tanya Lee and Michael Siri handled all administrative matters regarding the workshop. Jamie Casey assisted in revising the workshop summary in response to reviewers’ comments, and Eugenia Grohman of the DBASSE reports office edited it. This workshop summary has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the Report Review Committee of the National Research Council. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the charge. The review comments and draft manuscript remain confidential to protect the integrity of the process. We thank the following individuals for their review of this report: David M. Betson, Department of Economics and Policy Studies, University of Notre Dame; David S. Johnson, Division of Price and Index Number Research, Bureau of Labor Statistics, Washington, DC; and Robert D. Reischauer, President’s Office, The Urban Institute, Washington, DC. Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the content of the report nor did they see the final draft of the report before its release. The review of this report was overseen by Robert T. Michael, Harris Graduate School of Public Policy, University of Chicago, and Joseph P. Newhouse, Health Policy and Management, Harvard University. Appointed by the National Research Council, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the author and the institution. Constance F. Citro, Director Committee on National Statistics

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Experimental Poverty Measures: Summary of a Workshop Contents 1   INTRODUCTION AND BACKGROUND   1      The Current Official Poverty Measure,   2      Recommendations in the 1995 Report and Subsequent Research,   4      Workshop Goal,   6 2   SETTING AND UPDATING THRESHOLDS   8 3   EQUIVALENCE SCALES   11 4   GEOGRAPHIC ADJUSTMENTS TO THRESHOLDS   14 5   MEDICAL EXPENSES   17 6   WORK-RELATED AND CHILD CARE EXPENSES   21 7   HOUSING   25      Accounting for Home Ownership,   25      Accounting for Housing Subsidies,   28 8   DATA ISSUES, OTHER TOPICS, AND FUTURE RESEARCH   30      Data Issues,   30      Other Topics,   32      Future Research,   34     REFERENCES   35     APPENDIXES     A   Workshop Agenda   37 B   Workshop Participants   39

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