period for measuring income seems natural. People file tax returns that pertain to their income and deductions for a calendar year. Assistance programs that are geared to the tax system (notably, the Earned Income Tax Credit) also use an annual accounting period. Third, there is widespread acceptance of the view that families can smooth consumption and accommodate fluctuations in income over the period of a year. One would not necessarily want to have a poverty measure that counts as poor such people as teachers, who use winter savings to tide them over the summer, or construction workers, who use summer savings to tide them over the winter.
Of course, no one accounting period or measure is right for all purposes, and the use of the poverty measure should affect the choice. One important use is as a general social indicator for evaluating the socioeconomic health of the nation and for measuring progress toward reducing economic insufficiency for the whole population and for particular groups. For this purpose, the length of the measurement period may matter less than whether different time periods result in different trends over time or different poverty rates for key groups, such as the elderly and children. An annual measure is arguably as appropriate as any other for this important purpose.
Another important use of the poverty measure is as a benchmark against which to evaluate the effectiveness of government assistance programs—in terms of whether benefits are provided primarily to people who are poor (on a pretransfer basis) and whether the benefits move recipients out of poverty. For such programs as Supplemental Security Income (SSI), which assists low-income elderly and disabled people who commonly remain in the program for long periods, determining the proportion of program participants who are poor or not poor on an annual basis is quite appropriate.
In contrast, for such programs as food stamps and Aid to Families with Dependent Children (AFDC), which use a short accounting period and may provide benefits to people for periods as short as a few months, an annual calculation is not always appropriate. As an example, consider the case of someone who loses a job and has few other resources, applies for and receives food stamps for, say, a period of 3 months, and then obtains a job that pays good wages for the remainder of the year. Such a person would be classified as a food stamp recipient during the year but with an annual income that might be well above the annual poverty level. Hence, it would look as if the program had provided benefits inappropriately, when, in fact, it had served its goal of helping someone with a short-term need. For analyses of these kinds of programs, one would like to have a shorter term poverty measure, either in place of or as a supplement to an annual measure. Other programs, which are designed to address such root causes of poverty as low levels of education and lack of training, may need to be assessed on a longer term basis than a year. For these programs, one might want a poverty concept applicable to a segment of the life cycle.