New Measure of Poverty is More Accurate Than US Census Bureau
A new study showed that poverty has fallen sharply in the US in recent decades, debunking reports recently released by the U.S. Census Bureau. The two poverty reports have very different measures of poverty.
According to researchers at the University of Notre Dame and the University of Chicago, the Census Bureau’s measure is flawed and its annual-income-based poverty report is inaccurate.
The research asserted that its new consumption-based estimates of poverty is more accurate because it reflects well-being rather than the Census’ income-statistics based measures which change over time.
The research team was composed of James Sullivan, Rev. Thomas J. McDonagh, C.S.C., Associate Professor of Economics at the University of Notre Dame, and Bruce Meyer, McCormick Foundation Professor at the University of Chicago Harris School of Public Policy.
The researchers used consumption-based estimates in measuring poverty in the US. Sullivan and his teammates analyzed more than 50 years of data from the Bureau of Labor Statistics’ Consumer Expenditure Survey for their report.
The results are interesting. Sullivan’s findings contradict the US Census Bureau’s Annual income-based poverty report.
Sullivan’s finding showed that between 1960 and 2016, consumption poverty fell by 27 percentage points. Changes in tax policy, the researchers said, contributed to the decline in poverty, along with changes in Social Security and other transfer programs.
“Many factors that are critical components of well-being, such as home ownership, car ownership and the ability to borrow and save, are much better captured by consumption than income,” Sullivan said. “Our research has shown that consumption-based poverty is more highly associated with other measures of family deprivation.”
In contrary, the Census Bureau report estimates poverty in the U.S. to be 12.7 percent for 2016, which is very close to the rate in 1980, suggesting little progress or change in the fight against poverty.
With notable differences between the two reports, the researchers highlighted the need for improved measures of poverty.
Sullivan said, “Relying on the official poverty rate, many have concluded that we have lost the War on Poverty, but improved measures of poverty show that we have actually made tremendous progress.”
Meyer and Sullivan plan to release an updated Consumption-Based Poverty report on an annual basis to coincide with the Census Bureau’s report. They are in the process of setting up an online tool to make this information readily available.