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Measuring Poverty: A New Approach
for a net increase in federal-state government expenditures of $16 billion. More important, CBO found that the effects would be very uneven across states: states in the South would actually incur net costs rather than savings, and savings would be highest for wealthier states. Low-income, low-benefit states would have to pay more than better off, more generous states to bring their benefits up to the federal minimum AFDC standard; moreover, those states, with their already higher matching percentages, would gain less from the increased federal matching rate than better off states. Hence, there would be little incentive for low-income, low-benefit states to support this type of proposal.
Of course, there are other ways in which to combine a national minimum benefit standard for AFDC with a provision for federal-state cost sharing. However, the current structure of the program makes it difficult to devise a scheme that does not increase overall program costs or that does not disadvantage some states relative to others.
This brief review of some key factors that enter into the design of assistance programs—funding constraints, considerations of the target population, program interactions, incentive effects, and federal-state cost-sharing provisions—makes it clear why it is difficult to link poverty thresholds directly to benefits. To those who are involved in evaluating and designing government assistance programs, our observations will come as no surprise and indeed may seem obvious. Yet we believe it is worth underscoring the point that measuring need, by determining how many people have resources below a reasonable poverty standard, is different from determining the proper societal response to that need.
Many factors properly enter into a determination of program benefit standards, including judgements about the extent to which society is prepared to allocate scarce resources to supporting low-income people and the mix of goals that society wants government assistance programs to serve. The critical role of such judgements is the reason that a panel such as ours, chosen for expertise in measurement issues, cannot make recommendations about appropriate benefit levels for specific assistance programs. Ultimately, the determination of appropriate programs and policies to alleviate poverty involves political choices—namely, the consideration of competing public objectives against the constraints of scarce public resources within the framework of a nation's social and political climate and belief system.
However, the fact that we do not make a recommendation about national minimum benefit standards for AFDC (or other programs) should not be taken to mean that there is no argument for such a benefit standard. On one hand, it is clear that the states differ in their preferences for spending on public