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Measuring Poverty: A New Approach (1995)

Chapter: INDEXES OF POVERTY

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Suggested Citation:"INDEXES OF POVERTY." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 308

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OTHER ISSUES IN MEASURING POVERTY 308 SIPP be developed by aggregating the monthly information.16 Poverty rates calculated in this manner will be more accurate than rates calculated from the March CPS: unlike SIPP, the CPS assumes that the people in each family in March were together for the entire preceding year for which income is measured. When this assumption does not hold (e.g., in the case of a divorced or widowed person who was married for some or all of the preceding year), an erroneous poverty classification may result (see Appendix B). Although poverty statistics can readily be developed with the SIPP monthly data for people (using the information on their families' characteristics), to develop such statistics for households or families as such poses a conceptual problem. The difficulty is how to define these units longitudinally, given that their composition changes. For example, it may be easy to decide that a married couple that has a baby should be treated as the same family before and after the birth. A more difficult question is how to treat the couple if they later divorce. Is the parent who retains custody of the child the continuation of the original family and the other parent a new one-person household, or does the original family end at the time of the divorce and do two new units begin? Any longitudinal household or family definition will produce units that exist for only part of the year, and a decision must then be made on whether to count part-period units the same as full-period units. In view of these and other problems, the CNSTAT SIPP panel recommended that the Census Bureau continue the practice of developing person-based longitudinal income, poverty, and program statistics for SIPP reports, with attribution of household, family, and program unit characteristics to people. In the case of annual statistics from the March CPS and SIPP that are designed for comparison purposes, that panel recommended that the tables from both sources should use attribute-based person measures. We believe that these reasons are convincing for presenting poverty statistics for people. However, users could be misled, and we urge a clarifying note accompanying the presentation. Since by definition all those in a family are either in poverty or not in poverty, the presentation of the "number of people in poverty" might be misunderstood as an independent person-by-person calculation instead of a single calculation for the family unit. A clarifying note with the person counts should minimize that risk. INDEXES OF POVERTY By comparing the poverty threshold with the corresponding income estimate for each economic unit, its poverty status is determined. After determining 16 The procedure is to determine each person's monthly family income and monthly poverty threshold corresponding to monthly family composition, aggregate the monthly income and threshold values over the year, and divide to obtain the person's poverty ratio.

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Measuring Poverty: A New Approach Get This Book
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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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