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Crossing the line: New models differ on what it means to be poor

Published: Saturday, Dec. 29 2012 9:24 a.m. MST

What to measure

Setting aside what people actually need, measuring their resources is also a contentious matter. While both the official and supplementary measures focus on income, for example, some argue that it makes more sense to look at what people actually consume.

Someone who has a bad year in sales or who goes back to school for a year or two may survive a lean year by consuming savings or by using credit. For them, Meyer said, “one year’s income is a noisy measure of their life situation.”

To reduce this noise, Meyer and Sullivan use government surveys to track household spending. They argue their model is better at catching the real poor and filtering out those who are not.

Changing the formula changes the outcomes. Consumption-based poor had much smaller homes than either of the two income-based poor. They were also much less likely to have finished high school and were also much more likely to be Hispanic.

Elderly assets

On the other hand, the new supplementary measure finds more elderly poor because it factors in medical costs, which grow with age, and because it emphasizes current income over consumption of existing assets.

Betson thinks the leap in elderly poor in the SPM simply reflects reality. “How can you have a measure that doesn’t account for medical care?” he asked. “If you are ignoring medical care in your poverty measure, the elderly are going to look pretty good. You are ignoring the largest component of their needs.”

On the other side is Meyer, who argues that the elderly have more resources than income measures capture.

“With the elderly, if you just focus on their income you will miss that many of the elderly have substantial assets that they can draw down,” Meyer said, noting that more than 80 percent of those 65 or over own their own home. They may not own those homes outright, he acknowledges, “but if you bought a house 20 years ago, the mortgage is probably much lower than rent equivalent.”

Married with children

All three models are fairly close on the poverty rates among single-parent households, but they differ sharply on married couples with children.

Thirty-eight percent of poor households in the consumption model are married with children, compared to just 25 percent in the new supplementary measure (SPM). The official Orshansky model splits the difference at 32 percent.

Meyer is not quite sure how to account for this gap. One possibility is that anti-poverty programs systematically favor single parents over married families. Another might be that married families are more likely to resist assistance and muddle through on their own. Whatever the explanation, Meyer said, “these numbers do suggest we should pay attention more for how our programs affect married couples.”

This is one place where, as Betson argues, differences between competing models may actually shed light on issues that would have remained hidden had any one measurement held sway.

In a response to Meyer and Sullivan, Betson and coauthor Constance Citro argued that we may be able to “make use of the strengths of each type of measure to enrich policy analysis and public understanding of the extent and condition of the poor in the United States.”

In any case, it seems clear that a half-century of unchallenged dominance enjoyed by the old poverty formula is rapidly ending.

Email: eschulzke@deseretnews.com

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