Hamilton Project Discussion Paper

Improving the Measurement of Poverty

ABSTRACT

The authors recommend the adoption of a new poverty measure, along the lines recommended by the National Academy of Sciences (NAS), in order to provide a more accurate measure of economic need in the United States. The current poverty measure relies on 1955 data and a methodology developed in the early 1960s. The current measure is not sensitive to changes in tax policy, in-kind benefits, work expenses, or medical payments; all of these have changed substantially over the years and affect the well-being of low-income families. The authors indicate why the NAS approach is superior to other possibilities and discuss the specific decisions that must be made to effectively implement a new poverty measure. They present data that indicate how such a change could affect poverty rates. They recommend a new NAS study to develop a measure for a “decent living standard” at a level above the poverty level, and recommend additional federal data collection and research.

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