National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Conclusions

« Previous: BLS Family Budgets Program
Suggested Citation:"Conclusions." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 122

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POVERTY THRESHOLDS 122 In 1981, the last year for which BLS published family budget estimates (Bureau of Labor Statistics, 1982: Table A), the lower level budget for urban four-person families excluding taxes was $19,587 (in 1992 dollars), or 138 percent of the official poverty threshold for a two-adult/two-child family. Excluding gifts, contributions, insurance, and work expenses, the lower budget was $18,629, or 131 percent of the official poverty threshold. Schwarz and Volgy Budget Schwarz and Volgy (1992: Table 4) took an approach similar to, although less detailed than, the original BLS Family Budgets Program to develop an "economy budget" for a family of two adults and two children for 1990. Their market basket of goods contains those things that they consider to be "basic necessities," defined as goods and services directly and indirectly necessary to sustain life and health. Direct necessities include food, medical care, housing, clothing, and personal care and cleaning products. Indirect necessities include transportation, clothing adequate for employment of the adults and for school for the children, and such smaller items as school supplies and postage stamps. They also included items needed to participate in the wider community and express one's feelings, such as a telephone, a television, newspapers, stationery, and a gift fund. Their budget allows for the payment of federal and state income taxes and Social Security contributions. The food component of the budget was based on the USDA Thrifty Food Plan. The housing component used the Department of Housing and Urban Development's fair market rent standard, based on the 45th percentile of two- bedroom rental units in an area that met specified characteristics. Transportation and medical care were based on national averages. Allowances for additional items, such as clothes, toys and presents, dishes, utensils, bedding, and used furniture, as well as other personal items and incidentals, appear to be based solely on the authors' judgements. The resulting budget constructed by Schwarz and Volgy for a four-person family for 1990, including payroll and state and federal income taxes, was $22,176 in 1992 dollars; excluding taxes, the budget was $18,983. These figures are, respectively, 156 percent and 133 percent of the official four-person poverty line. Conclusions Detailed budgets avoid the problem of specifying a multiplier, which is inevitably done by reference to actual expenditure patterns. Such budgets, however, entail a myriad of judgements about many different goods and services. Moreover, inevitably such judgements also make reference to actual spending patterns as opposed to strictly physiologically based standards of need. This is true even when the budget makers adopt expert standards from another source,

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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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