Improving the Measurement of Poverty

Nathan Hutto, Columbia University
Jane Waldfogel, Columbia University
Neeraj Kaushal, Columbia University
Irwin Garfinkel, Columbia University

In this paper, we estimate 2007 national poverty rates using an improved approach that was largely conceptualized by a 1995 National Academies of Sciences panel and that is similar to the supplemental poverty measure that will soon be produced by the U.S. Census Bureau. We use poverty thresholds based on actual expenditures on shelter, food, clothing, and utilities and a measure of family income that includes earnings, cash transfers, near-cash benefits, tax credits, and tax payments. We also account for childcare and work expenses, out-of-pocket medical expenses, variation in regional cost of living, and home ownership without a mortgage. Using this methodology, overall poverty increases from 12.4% to 16%. Child poverty increases more than three percentage points, while elderly poverty increases nearly seven percentage points. We highlight a number of important areas for future research.