plausible that, if there is a serious depression or even a long-running recession, people will change their views about an appropriate poverty threshold, setting it at a lower dollar figure than previously. Also, a decline in the threshold does not necessarily mean a lower proportion of people in poverty (nor does an increase in the threshold necessarily mean a higher proportion of people in poverty). However, it seems undesirable to have the thresholds fluctuate with yearly ups and downs in the business cycle.
From the perspective of public acceptability and also from the view that the poverty level is inherently relative to a particular society, one could argue for using the responses of a representative sample of the population to set the level. In support of this approach, evidence from the Gallup Poll series and other studies show that subjective poverty thresholds tend to track changes in living standards, although on a less than one-to-one basis (i.e., they tend to change in a quasi-relative fashion). However, we believe that methodological problems—such as sensitivity of the results to question wording, large variance in responses—make this approach unsuitable for determining the official U.S. poverty thresholds. There is also the possibility with a public opinion survey that the results could be biased if people realize that their answers could affect the poverty line and thus respond differently than they otherwise would.
We propose that a new poverty threshold for the United States be developed as a hybrid of the budget-based and relative approaches. In our view, the poverty-level budget should start with a dollar amount for the sum of three broad categories of necessary goods—food, clothing, and shelter (including utilities). This sum should then be increased by a modest additional amount to allow for other necessary expenditures, such as personal care, household supplies, non-work-related transportation. We selected food, clothing, and shelter because they represent basic living needs with which no one would quarrel. That is, people may quarrel about the need for specific kinds of food, housing, and clothing—such as whether air conditioning is essential—but not about the need for food, housing, and clothing in broad terms. Indeed, the United States has major assistance programs to provide food and housing; there is no clothing program, but clothing allowances historically were separately identified grants under Aid to Families with Dependent Children (AFDC). There are other needs besides these three, of course, but there will be debate about which other goods and services represent necessities (e.g., whether to include reading materials). We believe that the use of a multiplier is a better way to provide an allowance for other needs without having to designate particular goods and services as necessary or unnecessary.
A difference in our approach is that we propose to obtain dollar amounts for the budget categories directly from tabulations of actual expenditures,