Study shows official measures of American poverty off-base

August 7, 2012 By Susan Guibert, University of Notre Dame

( -- For more than 45 years, the poor in this country have been identified by the U.S. Census Bureau’s Official Poverty Measure — a tool that determines America’s poverty rate based on pretax money income, which does not reflect all the resources at a family’s disposal.

That method of calculating who is poor and who is not has been under fire by researchers for years because it doesn’t calculate the benefits of anti-poverty programs — such as food stamps and housing subsidies — into its formula. In response to the criticism, the released in fall 2011 the Supplemental Poverty Measure to more accurately assess poverty in America. A culmination of more than three decades of research on poverty measurement, the supplemental measure is used as a complement, not a replacement, for the Official Poverty Measure.

Though the new supplemental measure uses a definition of income that is conceptually closer to resources available for than pretax money income, a new study by University of Notre Dame Economist James X. Sullivan finds that even the Supplementary Poverty Measure provides an inaccurate reflection of deprivation in this country. Sullivan argues that looking at what people consume — the housing, food and other goods they are able to enjoy — provides a more accurate indicator of who is struggling to make ends meet.

“We find that the Supplementary Poverty Measure adds to the ranks as ‘poor’ people those who have higher consumption levels and are more likely to be college graduates, to own a home and a car, to live in a larger housing unit, and to have other more favorable characteristics than those who are dropped from the definition of poverty,” says Sullivan, whose research examines the consumption, saving and borrowing behavior of poor households in the U.S., and how welfare and tax policy affect the well-being of the poor.

The new study is published in the latest issue of the Journal of Economic Perspectives. Sullivan’s co-author is Bruce Meyer of the University of Chicago.

An accurate measure of poverty is critically important — the poverty rate is often cited by policymakers, researchers and advocates who are evaluating social programs that account for more than a half trillion dollars in government spending.

Both the official poverty measure and the Supplemental use income as the basis for determining poverty, which does not capture differences over time or across households in wealth accumulation, ownership of durable goods such as houses and cars, or access to credit.

“Our research shows that consumption appears to be a better predictor of deprivation than income; in particular, material hardship and other adverse family outcomes are more severe for those with low consumption than for those with low income. Consumption also appears to be more accurately reported than for the most disadvantaged families.”

Explore further: Economist's research sheds light on consumption patterns of nation's poor

Related Stories

Programs kept Wisconsin families from poverty, report finds

April 26, 2012

Temporary increases in safety net programs and tax credits for working families helped keep many in Wisconsin from poverty during the recession and its aftermath, a new report by researchers at the University of Wisconsin-Madison ...

Identifying poverty levels requires accurate measurements

February 15, 2012

When food prices spiked in 2008, the number of households that moved into poverty was overestimated by about 60 percent, according to a recent University of Illinois study. In middle-income countries such as Mexico that have ...

Recommended for you

Unprecedented study of Picasso's bronzes uncovers new details

February 17, 2018

Musee national Picasso-Paris and the Northwestern University/Art Institute of Chicago Center for Scientific Studies in the Arts (NU-ACCESS) have completed the first major material survey and study of the Musee national Picasso-Paris' ...

Humans will actually react pretty well to news of alien life

February 16, 2018

As humans reach out technologically to see if there are other life forms in the universe, one important question needs to be answered: When we make contact, how are we going to handle it? Will we feel threatened and react ...

Using Twitter to discover how language changes

February 16, 2018

Scientists at Royal Holloway, University of London, have studied more than 200 million Twitter messages to try and unravel the mystery of how language evolves and spreads.


Adjust slider to filter visible comments by rank

Display comments: newest first

1.6 / 5 (7) Aug 07, 2012
If done appropriately and honestly, this new method of calculating 'poor' would change a lot of arguments. The bleeding hearts won't like it!
4 / 5 (8) Aug 07, 2012
The bleeding hearts won't like it!

What is this about 'bleeding hearts' all the time as if it were a bad thing.

Are you really proud of being cold hearted?
3 / 5 (6) Aug 07, 2012
Are you really proud of being cold hearted?
He's just upset about the outcome of the civil war.
5 / 5 (1) Aug 07, 2012
I dont understand what this has to do with being an economic factor. In order to determine poverty we have to be honest with ourselves. The poverty level was established in the 70's as being around $14,400... if you make less than that you are poor and if you make more than you are not as poor. Well I know the value of money decreases over time and using a standard set 40 years ago as an indicator is just plain wrong... There is no way that 14,400 is an indicator of todays poverty in america.
2.3 / 5 (6) Aug 07, 2012
i wouldn't trust ANY of the 'studies' . they all have an axe to grind and are implicity trying to please a certain audience.

what does 'poor' mean. the whole notion that one can have an 'objective' definition of poverty is itself a lie. anyone pedalling that lie, is probably busy pedaling you THEIR version of what 'poor' is. One might suspect that arch-conservatives would want the definition of poverty to come to a level where the government only provided corporate welfare, but not welfare to poor people.

what kind of definition of poverty would suit this goal? one where americans were 'poor' only if they suffered the same life threatening crushing poverty experienced by the 'poor' of india. One should watch documentaries about the 'untouchables' of india. if the conservatives get their way, then whoever is left in the upper middle class will soon have no shame that America has a growing class of untouchables living at their door. Do we want the u.s to become india?
1.8 / 5 (6) Aug 07, 2012
The people who own the country and pay the politicians don't really give a damn about the poor. The are happy to contribute to 'charities' of all sorts, but will wail and moan if they are ever 'forced' through taxation to do so on a fair and equal basis.
The problem facing the US is this: Within 20 years, most things, and lots of software too, will be constructed by robots. The wealthy will own the means of production. Those who don't own a piece of the pie will be eminently disposable. All they need to do is find a way that shields them from blame.
2 / 5 (4) Aug 07, 2012
poor means you are are spending a thousand dollars a month on neccesary things such as housing but cant afford propper healthy food. Nowadays even the internet is a requirement for most things, this can cost 60 euros where i live. a lot of people cant afford healthy food, poverty is very large world wide.
1 / 5 (2) Aug 08, 2012
"cant afford propper healthy food"
This may often be because the consumer lives in a food desert, where there simply aren't choices. Poor quality food is easily available, but (maybe because of lack of demand - a vicious circle) not good quality food.

Being poor affects mobility. You may have access to mediocre food, schools, health care at reasonable cost, but no access to better quality goods and services at any price.

Measuring strictly on consumption doesn't take this in to account.
not rated yet Aug 09, 2012
Jeddy - Conservatives get their way? Liberals have had their way and gave trillions in 'stimulus' money to unions and corporate friends like Solyndra.
5 / 5 (1) Aug 12, 2012
The U.S. is already India. The only reason you don't notice it is because of the yearly 1 trillion U.S. deficit that the government is running each year.

"Do we want the u.s to become india?" - Jeddy
5 / 5 (1) Aug 12, 2012
Nope. Sorry. Not even a trillion has been granted as "stimulus", and zero dollars have gone to Unions.

Solyndra is gone in large part because Americans chose to purchase Chinese made PV cells rather than buying American made cells, and China was smart enough to subsidize the production of PV cells for a time in order to capture the market.

"Liberals have had their way and gave trillions in 'stimulus' money to unions and corporate friends like Solyndra." - RazorsTard

I have never encountered a Republican who wasn't a congenital and perpetual liar.
5 / 5 (1) Aug 12, 2012
The poor today are wildly better off than the poor were 40 years ago.

The problem is not "poverty" in itself. It isn't even income inequity as it is often claimed. It is power inequity.

Libertarian/Republican politicians have been conspiring for decades to produce a political system where spending replaces voting. Their choice is a one dollar, one vote system of governing where politicians are purchased, and policy directions are dictated by big wads of money.

In such a system the real people are constantly outvoted by the interests of Corporations and very wealthy individuals.

Such a system is noting but corruption of course, but it is the model that Libretarian/Republican ideologues hold up as "perfection"

The coming election in the U.S. will be interesting s the Republican ticket has never been more violently opposed to Democracy, Honesty, and Equity, and never been more supportive of a one dollar one vote system of political and corporate corruption.

not rated yet Sep 26, 2012
The official poverty level also does not take into account the different cost of living in various parts of the country. Does anyone really believe that it costs no more to live in New York City or Washington, DC than in northern Michigan or Alabama???

Nor does it take into account the cost of items that are necessary for working (such as child care, uniform/clothing costs, a phone, and transportation).

The existing formula simply estimates a household's food costs and multiplies it by three. It was created by a college student for her thesis about 50 years ago and was never intended to serve as a national measure of poverty.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.