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Measuring Poverty: A New Approach
assistance, and these preferences should be given weight in any national policy making. On the other hand, there are equity problems in providing needy families with very different levels of public support on the basis of where they happen to live when their economic problems arise. From this perspective, while the proposed poverty measure (or any standard of need) cannot be used by itself to determine benefit levels, it does have a role to play in the policy debate.
DETERMINING STATE AFDC STANDARDS OF NEED
In most government assistance programs, the benefit standard (i.e., the maximum amount of benefits provided to people with no other income) and the need standard are one and the same: people who are eligible because their countable income falls below the benefit standard are in turn entitled to receive benefits up to the amount of the standard. 10 As noted above, the standard for a particular program reflects judgements about a variety of factors, including appropriate levels of need, constraints on available funds, and the desire to provide positive incentives to recipients.
AFDC is unique in that federal legislation requires each state to establish a standard of need for families with children who have no other means of support, and, in a separate process, to determine a payment standard, which may be lower than the need standard.11 Both the need standard and the payment standard restrict eligibility for benefits (see below). Furthermore, states may set a maximum benefit amount that is below both the standard of need and the payment standard.
One might surmise that the need standard, as distinct from the payment standard or maximum benefit, is supposed to represent a type of poverty concept. In this case, one might want to consider the use of the proposed poverty measure as the standard.12 The use of the proposed measure would reduce the current wide disparity in need standards among the states, while recognizing geographic cost-of-living differences. However, it is not clear that the states have typically interpreted the need standard as a poverty concept. Indeed, the role of the need standard in the AFDC program seems
Strictly speaking, this statement applies to cash benefit programs (e.g., SSI, veterans' pensions, etc.). Near-cash programs (e.g., food stamps and assisted housing) have a benefit standard that falls below the eligibility standard because the benefit pertains to a single commodity.