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Improving the measurement of poverty: Implications for policy and research

Improving the measurement of poverty: Implications for policy and research. Jane Waldfogel PAA Webinar April 19, 2012. Overview . One of the most important shortcomings of the official poverty measure is that it does not adequately capture the effects of key government programs.

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Improving the measurement of poverty: Implications for policy and research

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  1. Improving the measurement of poverty: Implications for policy and research Jane Waldfogel PAA Webinar April 19, 2012

  2. Overview • One of the most important shortcomings of the official poverty measure is that it does not adequately capture the effects of key government programs. • The new supplemental poverty measure (SPM) addresses this shortcoming by providing a more transparent picture of the role of government programs in reducing poverty. • In my remarks, I will illustrate this using national data as well as data from New York City. • I will also talk about directions for future research.

  3. I. The role of government programs: National evidence(Short, 2011) • In fall 2011, the Obama administration released the first SPM estimates. • Short’s report shows how using the SPM alters our understanding of the level and composition of poverty. • It also shows in a very transparent way the role that particular safety net programs play in reducing poverty, something that is not readily apparent using the official poverty measure. Short, Kathleen (2011). The Research Supplemental Poverty Measure: 2010. U.S. Census Bureau, Current Population Reports, P60-241. Washington, DC.

  4. The role of government programs: National evidence Effect of excluding individual elements on poverty rate: 2010 All persons Under 18 years Rate Change Rate Change SPM 16.0 18.2 Excluding: EITC 18.0 2.0 22.4 4.2 SNAP 17.7 1.7 21.2 3.0 Housing subsidy 16.9 0.9 19.5 1.3 School lunch 16.4 0.4 19.0 0.8 WIC 16.1 0.1 18.3 0.1 LIHEAP 16.1 0.1 18.3 0.1 Source: Short, 2011, Table 3a.

  5. II. Evidence from New York City (NYC Center for Economic Opportunity, 2011) • Mark Levitan and his colleagues at New York City’s Center for Economic Opportunity (CEO) have been working for several years now on producing alternative poverty estimates similar to the SPM. • Their analyses for 2005-2009 show very clearly the role of safety net programs in reducing poverty during the Great Recession. NYC Center for Economic Opportunity (2011). Policy Affects Poverty: The CEO Poverty Measure: 2005-2009. NYC Center for Economic Opportunity.

  6. The role of government programs: Evidence from NYC Effect of additional resources on the poverty rate of persons living in families with children (2009) One-parent families Two-parent families Rate Change Rate Change CEO poverty rate 34.6 14.0 Excluding: Taxes & tax credits 39.3 4.7 18.5 4.5 Nutrition assistance 39.5 4.9 17.3 3.3 Source: NYC CEO, 2011.

  7. The role of government programs became even more important in 2010: Evidence from NYC • Actual and hypothetical poverty rates (2010) All families with children Rate Change CEO poverty rate 23.0 Excluding: Taxes & tax credits 31.0 8.0 Food stamps 27.7 4.7 NYC Center for Economic Opportunity (2012). The CEO Poverty Measure: 2005-2010. NYC Center for Economic Opportunity.

  8. III. Next steps in improving the measurement of poverty: Historical analysis • As we have seen, using the SPM provides a clearer understanding of the role of government policy today. • But we’d also like to know how using the SPM might alter our understanding of historical trends in poverty and the role that government programs have played over time. • A group of us at Columbia are therefore extending our analyses of the SPM back in time to track how trends in poverty as measured by the SPM contrast with trends in poverty using the official measure, in particular during periods when national policies such as welfare have changed.

  9. III. Next steps: Other dimensions of poverty • The SPM improves our measurement of income poverty. • But it is also important to improve our understanding of other dimensions of poverty – such as material hardship and well-being. • Therefore a group of us at Columbia are studying the links between income poverty and food insecurity (at the national level) and links between income poverty, material hardship, and well-being (in NYC).

  10. IV. Conclusion • The introduction of the SPM represents an important advance in our understanding of poverty, and the role that government policy plays in reducing poverty. • But it also leaves some key questions open for further research – including how poverty, and the role of government policy, have changed over time, and how income poverty relates to other dimensions of poverty such as material hardship and well-being.

  11. V. Acknowledgements • These remarks draw on ongoing research with colleagues at Columbia including Irv Garfinkel, Nathan Hutto, NeerajKaushal, and Vanessa Wight. • We also gratefully acknowledge funding from: • National Institute of Child Health and Human Development (NICHD) • Annie E. Casey Foundation • Atlantic Philanthropies • Robin Hood Foundation • University of Kentucky Poverty Center

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