National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Overview and Recommendations

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Suggested Citation:"Overview and Recommendations." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 182

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ADJUSTING POVERTY THRESHOLDS 182 FIGURE 3-5 Current and proposed equivalence scales expressed relative to a value of 1.00 for a family of two adults and two children. a Each child is treated as 0.70 of an adult, and the number of adult equivalents in the family is raised to a power of 0.75. The resulting scale value for each family type is converted to a ratio of the scale value for two-adult/two-child families. b Each child is treated as 0.70 of an adult, and the number of adult equivalents in the family is raised to a power of 0.65. The resulting scale value for each family type is converted to a ratio of the scale value for two-adult/two-child families. c The current scale is calculated by converting the official 1992 threshold for each family type to the 1992 threshold for a family of two adults and two children; the thresholds for unrelated individuals and two-adult families are those for people under age 65. ADJUSTMENTS BY GEOGRAPHIC AREA Overview and Recommendations There is wide agreement that it is desirable to adjust poverty thresholds for differences in prices. Indeed, the current official thresholds are regularly updated for changes in the Consumer Price Index (CPI) to keep them constant in real terms. However, no adjustment has been made for spatial differences in prices, not because the adjustment is necessarily undesirable in principle, but because of the practical difficulties of adequately measuring those differences. There are no geographic area cost-of-living indexes that correspond

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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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