Redrawing the Poverty Line
THE SOURCE: “Identifying the Disadvantaged: Official Poverty, Consumption Poverty, and the New Supplemental Poverty Measure” by Bruce D. Meyer and James X. Sullivan, in Journal of Economic Perspectives, Summer 2012.
The official U.S. poverty rate is an important benchmark for policymakers, researchers, and advocates as they grapple with the dispensation of billions of dollars in government aid. The huge sums that are involved ensure that the stakes will be high whenever anyone tries to define who is poor. The current method takes the wrong approach, argue Bruce D. Meyer, a professor of public policy at the University of Chicago, and economist James X. Sullivan of the University of Notre Dame. The most accurate way to identify society’s most disadvantaged is to look at how much people consume, not their income.
The nation’s official poverty measure debuted in the 1960s and hasn’t changed much since then, aside from adjustments for inflation. Because research at the time showed that the average family spent a third of its after-tax income on food, the poverty level was set at three times the cost of a nutritional but low-cost diet for each person in a household. In 2011, 15 percent—about 46 million Americans—lived at or below the poverty line, defined as $23,021 for a family of four.
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