National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: NEEDED DATA

« Previous: DEFINING FAMILY RESOURCES
Suggested Citation:"NEEDED DATA." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 11
Suggested Citation:"NEEDED DATA." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 12

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SUMMARY AND RECOMMENDATIONS 11 RECOMMENDATION 4.3. Appropriate agencies should work to develop one or more "medical care risk" indexes that measure the economic risk to families and individuals of having no or inadequate health insurance coverage. However, such indexes should be kept separate from the measure of economic poverty. EFFECTS To consider the effects of our proposed measure, we estimated poverty rates under both the current and the proposed measures with data from the March 1993 Current Population Survey (CPS), supplemented with data from the Survey of Income and Program Participation (SIPP) and other sources. In one set of comparisons, we kept the overall poverty rate the same for both measures—14.5 percent in 1992. The results show important distributional effects on the makeup of the poverty population under the proposed measure: most strikingly, higher poverty rates for families with one or more workers and for families that lack health insurance coverage and lower rates for families that receive public assistance. The results also show higher poverty rates in the Northeast and West and lower rates in the South and, to a lesser extent, in the Midwest. In another set of comparisons, we used the midpoint of our suggested range for the two-adult/two-child family threshold—$14,800. With this threshold, a scale economy factor of 0.75, and the other features of our measure, the poverty rate increased from 14.5 percent to 18.1 percent; with a scale economy factor of 0.65, the poverty rate increased to 19.0 percent. The changes in the resource definition increased the rate more than the changes in the thresholds. If we had been able to use SIPP data exclusively, we estimate that the rate would have increased less, from 14.5 percent to 15 or 16 percent (depending on the scale economy factor), because SIPP obtains more complete income reporting for lower income people than does the March CPS. NEEDED DATA Full and accurate implementation of the proposed poverty measure will require changes and improvements in data sources. We recommend that SIPP become the source of official poverty statistics in place of the March CPS. SIPP asks more relevant questions than the March CPS and obtains income data of higher quality. Also, because SIPP is an income survey rather than a supplement to a labor force survey, it is better able to satisfy the data requirements for an improved measure of poverty, both now and in the future. Because analysis with other surveys (including the March CPS) and with the decennial census often requires indicators of poverty status, we encourage research on the estimation of disposable income from these data sources.

SUMMARY AND RECOMMENDATIONS 12 Finally, with regard to expenditure data, we support a review of the Consumer Expenditure Survey to identify changes, especially larger sample sizes, that would improve its usefulness for poverty measurement and other important analyses of consumption, income, and savings. RECOMMENDATION 5.1. The Survey of Income and Program Participation should become the basis of official U.S. income and poverty statistics in place of the March income supplement to the Current Population Survey. Decisions about the SIPP design and questionnaire should take account of the data requirements for producing reliable time series of poverty statistics using the proposed definition of family resources (money and near-money income minus certain expenditures). Priority should be accorded to methodological research for SIPP that is relevant for improved poverty measurement. A particularly important problem to address is population undercoverage, particularly of low-income minority groups. RECOMMENDATION 5.2. To facilitate the transition to SIPP, the Census Bureau should produce concurrent time series of poverty rates from both SIPP and the March CPS by using the proposed revised threshold concept and updating procedure and the proposed definition of family resources as disposable income. The concurrent series should be developed starting with 1984, when SIPP was first introduced. RECOMMENDATION 5.3. The Census Bureau should routinely issue public- use files from both SIPP and the March CPS that include the Bureau's best estimate of disposable income and its components (taxes, in-kind benefits, child care expenses, etc.) so that researchers can obtain poverty rates consistent with the new threshold concept from either survey. RECOMMENDATION 5.4. Appropriate agencies should conduct research on methods to develop poverty estimates from household surveys with limited income information that are comparable to the estimates that would be obtained from a fully implemented disposable income definition of family resources. RECOMMENDATION 5.5. Appropriate agencies should conduct research on methods to construct small-area poverty estimates from the limited information in the decennial census that are comparable with the estimates that would be obtained under a fully implemented disposable income concept. In addition, serious consideration should be given to adding one or two questions to the decennial census to assist in the development of comparable estimates.

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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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