FIGURE 1-2 Alternative equivalence scales. NOTES: Alternatives 1 and 2 use scale economy factors of 0.75 and 0.65, respectively; both alternatives assume children need 70 percent as much as adults. The increments are relative to a scale value of 1.0 for a single adult.

costs between coastal metropolitan areas and the heartland—seem obvious to the public, and, indeed, are often the subject of media attention. Poverty thresholds that recognize such differences seem clearly preferable to those that do not. Unfortunately, this is a topic for which limitations in data greatly constrain one's options. For example, although BLS publishes price indexes for a number of metropolitan areas, no indexes are published for nonmetropolitan areas. Moreover, the BLS price indexes are not designed to permit comparisons of cost-of-living differences across areas; rather, they compare rates of change in price inflation: one can determine whether prices are rising faster in Los Angeles than in New York City, for example, but not whether the cost of living is higher in one or the other area.

Despite data limitations, we believe that some adjustment to the poverty thresholds should be made for geographic cost-of-living variations. Research conducted by BLS analysts suggests that variations are minor for some items, such as food (Kokoski, Cardiff, and Moulton, 1994), but that they are large for housing (including utilities), which is a large component of the proposed



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