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Measuring Poverty: A New Approach
provide assistance to individual families.2 In particular, we consider the implications of the changes we propose in the current poverty measure for program eligibility and benefit determination. To put the issue in perspective, we review in general the types of programs that are designed to help low-income people and consider a few specific examples. Different categories of programs pose somewhat different questions for the potential role of one or another poverty measure. Appendix D provides details on all such federal programs as they existed through 1994. In Chapter 8, we focus on the possible relationship of the proposed poverty measure to benefit levels in the AFDC program, and we also address the relationship of that measure to state AFDC standards of need, which, in many states, exceed actual benefit levels.
We argue throughout this report that the proposed poverty measure is a marked improvement over the current measure for use as a statistical indicator, and we recommend its adoption for this purpose. We believe that the proposed measure also deserves serious consideration for use as an income eligibility standard in government assistance programs that currently determine eligibility or benefit amounts by comparing family resources to the poverty guidelines derived from the official thresholds. However, we do not flatly recommend that the proposed measure be adopted in place of the current measure for program use. Rather, we urge program agencies to carefully review the proposed measure to determine whether it is appropriate and whether it may need to be modified in one or more respects to better serve program objectives.
In their review, program agencies should consider the implications of the proposed measure in relation to the current measure. They should also keep in mind some important criteria for evaluating any measure of need. In particular, it is critical that the measure provide for consistency between the definition of family resources and the definition of the poverty threshold (or other need standard). This criterion is important for a statistical measure of poverty so that population groups are appropriately classified by poverty status; it is also important for program use so that program benefits are given to needy families.
As we have noted above, the current poverty measure fails this consistency criterion in several important respects, for example, by not excluding
There are other questions about the role of a poverty measure and about the changes we propose to the current measure for fund allocation purposes that we do not address. Thus, our recommendation to adjust the official poverty thresholds for geographic area differences in the cost of housing has obvious implications for the distribution of program funds among jurisdictions. However, broadly speaking, the availability of reliable data for estimating poverty rates for small geographic units may be a more important concern for fund allocation than the properties of a specific poverty measure.