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Measuring Poverty: A New Approach
the thresholds for changes in total consumption, including luxuries as well as basic goods and services.
However, adopting the proposed updating procedure does not obviate the need for periodic reviews of the poverty measure to determine whether, conceptually, it remains useful and appropriate and to identify and effect improvements on the basis of new data collection or research knowledge. No measure is without flaws, and a continuing process of review and improvement is needed. Thus, we also recommend periodic reassessments of all aspects of the poverty measure to determine what further improvements could be made. Indeed, it is dismaying that such a process has not been followed for the current poverty measure.
Although we do not fully understand the reasons, it seems that the ''official" standing of the U.S. measure and the fact that it is used to determine eligibility for a number of government assistance programs have made it almost impervious to change. Other statistical measures with equally great political and budgetary consequences, such as the CPI, are regularly reviewed and revised, but even obvious changes—such as defining income in after-tax terms once the Census Bureau had developed reasonably good procedures for estimating income and payroll taxes—have not been made to the poverty measure. Although maintaining a concept over time is desirable to facilitate analysis of trends, it is dangerous to let a key social indicator become so frozen in place that, when societal conditions change, it can no longer adequately reflect what it was designed to measure.
We believe it makes sense to conduct a comprehensive review of the poverty measure on a 10-year cycle, as is done with other important statistical indicators, such as the CPI. The review should address all aspects of the poverty measure, including the concepts underlying the thresholds and the family resource definition, the performance of the updating procedure, and whether better data are available with which to derive the thresholds and estimate resources.
Should changes to the measure result from one of these periodic reviews, it will be important for policy makers, researchers, and other users to understand the implications for the time series of poverty statistics. To facilitate the transition for users, two poverty rate series should be produced for a period of several years—the official series that is based on the new measure and a second series that is based on the old measure.
There is a question of who should implement the proposed revised poverty measure and carry out the 10-year reviews. The poverty measure, unlike the CPI or unemployment rate, does not have a clear "home" within the federal government. The Census Bureau publishes the official poverty statistics, but it has never been empowered to change the measure. The U.S. Office of Management and Budget (OMB) issued directives implementing the minor changes to the thresholds that were adopted in 1969 and 1981, but it