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SSRC Notes: An overview of poverty measurements

Date Added to Library: 
Tuesday, June 7, 2016 - 21:12
Priority: 
normal
Individual Author: 
Cooper, P. Mae
Teague, Shawn
Reference Type: 
Published Date: 
Year: 
2016
Language(s): 
Abstract: 

Posted by P. Mae Cooper* & Shawn Teague, Self-Sufficiency Research Clearinghouse Staff

All poverty research, policy, and practice is built on the decision of who to count as poor or in need. In actuality, there are multiple dimensions of need, and people generally fall on a spectrum of poverty, not into categories. For many practical purposes, however, a decision must be made as to who to categorize as poor, and simple metrics are critical in making that decision.

It can be easy to take poverty measurement for granted. Most researchers and practitioners use the Federal Poverty Line, or some multiple of the line, as a simple short-hand for poverty. Given how pervasive the use of this measure is, it can seem like the question of who to count as poor is essentially settled. But, in many ways, the Federal Poverty Line was set to be a convenient shorthand--to use with limited data—yet it has not changed, even while the way Americans live has transformed dramatically.

Defining who is poor is a complex undertaking, requiring multiple decisions. It generally involves defining four things: what people have, what people need, when to include them, and who to include. Sometimes, the measure also includes an implicit or explicit “why” people are in need.

For instance, the Official Poverty Measure (OPM) measures what people have with their pre-tax income and their cash benefits. It sets what they need as three times the cost of a “bare-bones” diet, adjusted for inflation. The OPM is based on income in the past year, and is measured at the family level: a person and their spouse, as well as any children that are related to them. While there is no explicit “why” criteria, the use of pre-tax income to measure resources implicitly excludes those who are needy because of money mismanagement, high taxes, or large expenses such as medical or rental costs.

Over the years, there have been many approximations that attempt to ‘pin down’ a definition of poverty. The measurements vary in precision and utility – often more precise measurements rely on data that are hard to collect or rarely available. Others are informative for a particular purpose, but not useful as a broad measure of need.

Aside from the OPM, the U.S. Census Bureau also produces estimates for a Supplemental Poverty Measure (SPM). This measure includes non-cash benefits and taxes in its measurement of resources, sets need thresholds based on a wider variety of basic costs, includes unmarried partners in its definition of family, and varies by region to reflect differences in cost-of-living. Other common poverty measures are based on spending, assets, or specific hardships rather than income; examine how poverty varies over time; set need relative to some average; or combine a number of different measures.

Whatever the measure, both research and practice could be improved with careful consideration of the definitions that we choose to use.  

Learn More about Poverty Measurement from the SSRC:

The SSRC Library contains numerous evaluation reports and stakeholder resources on measuring poverty, including:

For more resources, check out the SSRC Library and subscribe to SSRC or follow us on Twitter to receive updates about upcoming events, new library materials on self-sufficiency topics of interest to you and more.

*Mae Cooper prepared this SSRC Note while she was a Research Analyst at Child Trends and working as a part of the SSRC team.

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