Improving the Measurement of Poverty

This study estimates 2007 national poverty rates using an approach largely conceptualized by a 1995 National Academy of Sciences panel and similar to the supplemental poverty measure that will soon be produced by the U.S. Census Bureau. The study uses poverty thresholds based on expenditures for shelter, food, clothing, and utilities, as well as a measure of family income that includes earnings, cash transfers, near-cash benefits, tax credits, and tax payments. The measure also accounts for child care, work, and out-of-pocket medical expenses; variation in regional cost of living; and mortgage-free homeownership. Under this method, the rate of poverty is estimated to be higher than the rate calculated in the traditional manner, rising from 12.4 percent in the official measure to 16 percent in the new measure; the rate of child poverty is more than 3 percentage points higher, and elderly poverty is nearly 7 points higher.