Finally, with regard to data sources, we believe it is vitally important to improve the available data on consumer expenditures, an area in which the United States lags behind other developed countries. Our evaluation of alternative methods for updating poverty thresholds was hampered by the fact that the United States did not have a continuing consumer expenditure survey until 1980. Moreover, small sample sizes in the present CEX impair its usefulness for developing poverty budgets and completely preclude its use for measuring family resources. The CEX also has data quality problems, such as high nonresponse rates by sample households, high rates of recall error, and underreporting of expenditures and income. We urge BLS to conduct (or commission) a study that evaluates the CEX and assesses the costs and benefits of changes to the survey that could make it more useful for poverty measurement and for other important analytical uses related to the understanding of consumption, income, and saving. It would be especially useful if improvements to the survey could be made in time for the next 10-year review of the poverty measure.
RECOMMENDATION 5.6. The Bureau of Labor Statistics should undertake a comprehensive review of the Consumer Expenditure Survey to assess the costs and benefits of changes to the survey design, questionnaire, sample size, and other features that could improve the quality and usefulness of the data. The review should consider ways to improve the CEX for the purpose of developing poverty thresholds, for making it possible at a future date to measure poverty on the basis of a consumption or expenditure concept of family resources, and for other analytic purposes related to the measurement of consumption, income, and savings.
The current measure of poverty compares family income for a year with a budget that reflects a year's worth of expenditures. This annual accounting period is very familiar to policy makers and the public and is quite appropriate for evaluating the effect on poverty of provisions of the tax code (e.g., the Earned Income Tax Credit) and programs that are designed to provide long-term income support (e.g., Social Security and SSI for the elderly and disabled). We believe it makes sense for the official measure to continue to use an annual accounting period.
In addition to the official measure, however, there are needs for supplementary poverty measures with shorter and longer accounting periods than a year. Many assistance programs (e.g., AFDC and food stamps) provide benefits to people who are experiencing short spells of poverty. The use of an