National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: RELATING THE POVERTY MEASURE TO ASSISTANCE PROGRAMS

« Previous: OTHER ISSUES IN POVERTY MEASUREMENT
Suggested Citation:"RELATING THE POVERTY MEASURE TO ASSISTANCE PROGRAMS." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 14
Suggested Citation:"RELATING THE POVERTY MEASURE TO ASSISTANCE PROGRAMS." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 15
Suggested Citation:"RELATING THE POVERTY MEASURE TO ASSISTANCE PROGRAMS." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 16

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SUMMARY AND RECOMMENDATIONS 14 RELATING THE POVERTY MEASURE TO ASSISTANCE PROGRAMS More than 25 government programs that provided benefits and services to low-income families in 1994—such as food stamps, Head Start, Legal Services, Medicaid—linked their need standard for determining eligibility for some or all applicants to the U.S. Department of Health and Human Services poverty guidelines, which are derived from the official poverty thresholds. The use of the proposed measure would improve the targeting of benefits to needy families, and we encourage program agencies to consider adopting it as an eligibility criterion in place of the current measure. In doing so, program agencies should consider whether the proposed measure may need to be modified to better serve program objectives. For example, the proposed definition of family resources may add administrative burdens in programs that currently obtain crude measures of applicants' gross money income to assess eligibility because more information is needed to determine applicants' disposable income. In these instances, it may be preferable to implement a less detailed definition. Program agencies should also consider the implications of the recommended method for updating the poverty thresholds. There may be consequences for program caseloads or waiting lines and costs if, over time, thresholds developed under that method rise at a faster rate than thresholds that are simply adjusted for inflation. With constrained budgets, the relationship of program need standards to the poverty thresholds may need periodic adjustment. In the Aid to Families with Dependent Children (AFDC) program, for which we were asked to consider issues of a national minimum benefit standard, federal law currently defines "countable income." The definition is similar in concept, if not in specifics, to the proposed disposable income definition of family resources. However, a unique feature of AFDC is that the states establish need standards for eligibility but are allowed to and often do pay benefits below that standard. Most state need standards and, even more so, most state benefit standards are considerably below the poverty thresholds, and the level varies widely across states—more widely than can be explained by differences in living costs. Currently, more than a dozen states link their need standard in some way to the current poverty guidelines. Again, the proposed measure would be an improvement for this purpose. We encourage the states to consider the use of the proposed measure, which includes an adjustment to the thresholds for geographic differences in housing costs, in setting their need standard for AFDC. It would also seem reasonable to consider the thresholds that are developed under the proposed measure as a goal or benchmark in any debate about

SUMMARY AND RECOMMENDATIONS 15 state or federal AFDC benefit standards. However, many factors properly enter into a determination of program benefit levels, and the result may well be standards that differ from those that make sense for a statistical measure of poverty. Such factors include constraints on available funding, the desire to target benefits to particular population groups, interactions among programs, and the desire to provide incentives to participants and potential participants, such as incentives to prefer work over welfare. Ultimately, the determination of appropriate assistance program benefit standards involves political judgements about the appropriate balance of competing program objectives within the constraints of scarce resources. We hope, by reviewing the issues, to help clarify the policy debate. RECOMMENDATION 7.1. Agencies responsible for federal assistance programs that use the poverty guidelines derived from the official poverty thresholds (or a multiple) to determine eligibility for benefits and services should consider the use of the panel's proposed measure. In their assessment, agencies should determine whether it may be necessary to modify the measure—for example, through a simpler definition of family resources or by linking eligibility less closely to the poverty thresholds because of possible budgetary constraints—to better serve program objectives. RECOMMENDATION 8.1. The states should consider linking their need standard for the Aid to Families with Dependent Children program to the panel's proposed poverty measure and whether it may be necessary to modify this measure to better serve program objectives.

SUMMARY AND RECOMMENDATIONS 16

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Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

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