National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Recommendation

Suggested Citation:"Recommendation." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 309

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OTHER ISSUES IN MEASURING POVERTY 309 the poverty status of all units, there is a question about how to quantify and report that status. The current official U.S. poverty index is a head-count ratio. The head-count ratio measures the proportion of the population with incomes below their poverty thresholds. That head count, expressed as a proportion of the population (e.g., 14.5% for the year 1992), or expressed as a number of people (e.g., 36.9 million people in 1992), is the accustomed way in which poverty is reported in the United States (Bureau of the Census, 1993c:viii). There are many other ways in which the poverty status of the population might be expressed, and they are typically independent of the concept of poverty, the threshold levels, or the particular definition of income. For example, the Census Bureau currently publishes statistics on the aggregate and mean ''poverty gap," or the difference between the income of the poor (or of particular groups) and their poverty thresholds. The Census Bureau also publishes statistics on the proportion of people with family incomes below specified proportions of the poverty thresholds (75%, 50%, etc.) Recommendation We recommend continuing the practice of using the head count and head- count ratio, which are familiar and readily understandable, as the basic statistics on poverty. We also recommend supplementing the head-count ratio by other indexes, which provide additional important information—specifically, statistics on the average income of the poor and the distribution of income of the poor. Finally, we recommend publication of the head-count ratio and supplemental statistics for measures in which family resources are defined net of government taxes and transfers. All of these additional statistics need to be carefully interpreted, but they add a needed depth of understanding about the extent of poverty in the United States. RECOMMENDATION 6.4. In addition to the basic poverty counts and ratios for the total population and groups—the number and proportion of poor people—the official poverty series should provide statistics on the average income and distribution of income for the poor. The count and other statistics should also be published for poverty measures in which family resources are defined net of government taxes and transfers, such as a measure that defines income in before-tax terms, a measure that excludes means-tested government benefits from income, and a measure that excludes all government benefits from income. Such measures can help assess the effects of government taxes and transfers on poverty.

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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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