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Measuring Poverty: A New Approach
possible to construct poverty estimates from census data with the proposed disposable income definition of families' resources.
Yet, as we have demonstrated, poverty statistics that are based on gross money income cannot distinguish between groups that differ in important ways (e.g., working versus nonworking families) or capture the effects of important government policy changes. Hence, we believe it is critical for agencies to conduct research on methods to adjust census small-area poverty estimates to more closely approximate the estimates that would obtain with a disposable income resource definition. Again, the basis for such adjustments could be analysis of poverty rates with SIPP: for example, comparing rates estimated with a disposable money and near-money income definition to rates estimated with a gross money income definition for various groups. If key population groups (e.g., the elderly, minorities) were distributed about equally across the country instead of residing disproportionately in some areas, then it might not be necessary to conduct research on methods for adjusting census small-area poverty estimates to approximate a disposable income definition of resources. The reason is that most uses of census poverty statistics are relative in nature: for example, allocating shares of a fixed total amount of federal funding to areas according to their poverty rate relative to the nation as a whole.
Also, while recognizing the constraints on the census questionnaire, we urge serious consideration of adding perhaps one or two simple yes-no questions that would facilitate adjusting the census poverty estimates. For example, questions on whether a family received food stamps or paid for child care in the past year or had health insurance coverage would be very helpful in developing appropriate adjustment factors.29
RECOMMENDATION5.5. Appropriate agencies should conduct research on methods to construct small-area poverty estimates from the limited information in the decennial census that are comparable with the estimates that would be obtained under a fully implemented disposable income concept. In addition, serious consideration should be given to adding one or two questions to the decennial census to assist in the development of comparable estimates.
Unlike many other developed countries, the United States does not have adequate data with which to develop a poverty measure that uses a consump-
At present, planning for the year 2000 census is exploring ways to reduce the content of the census questionnaire and to determine alternative sources of data, such as a continuing large-scale sample survey with most of the census content (see Edmonston and Schultze, 1995). Whether income questions are included in the census or in a census-like questionnaire that is fielded at more frequent intervals, the issue of obtaining information for developing appropriate poverty estimates remains.