How Poverty is Measured Today

Many Americans have a limited understanding of what it means to live in poverty. Economics is the study of the manner in which individuals or parties handle scarcity, which is the circumstance that occurs when the availability of resources to satisfy a desire is insufficient in meeting that particular want. Given the aforementioned definition, poverty can be defined as the condition in which scarcity is so overwhelming that one is not simply deprived of luxury, but also of the resources necessary to live a healthy and stable life. This interpretation of the term poverty is a more qualitative description. Albeit this qualitative description, the ways in which poverty are measured in the U.S. today rely too heavily on quantitative measurement in the form of income and consumption.

In the United States there are three primary means of measurement to assess poverty, the Census Bureau Method, the Supplemental Poverty Measure, and the Consumption-Based Method. The Census Bureau Method utilizes a series of money income thresholds dependent on family size and structure in order to determine who does (or does not) live in poverty. These thresholds are constant throughout the nation and are not dependent on geographical location. If a family’s total income falls below the established threshold, then the family is officially impoverished. One can claim that the Supplemental Poverty Measure provides a more insightful and encompassing definition of poverty because it also takes into account the monetary value of the government aid low-income families and individuals have received. Lastly, the Consumption-Based Method defines poverty by looking at one’s consumption over the course of a given year.

Although some of these means of measurement incorporate factors that go beyond income, these standards are still heavily number-based in a way that provide an insubstantial description of poverty that neglects the influence of non-economical factors on the economy. To get an accurate representation of the state of poverty in the United States, poverty must be considered using qualitative factors as well. One example of such a novel perspective is seen in Daniel Patrick Moynihan’s, Counselor to the President for Urban Affairs, memorandum to President Nixon. The memo unofficially titled the “Benign Neglect” memo summarizes the cultural and living conditions of blacks such that Nixon would have some platform from which he could actively take charge against the issue of black poverty in the urban underclass. In tis case, Moynihan uses quantitative factors in the form of percentages and family income in conjunction with more qualitative factors such a description of the skewed family structures and dynamics in the black-populated, urban underclasses. Although there are some faults with Moynihan’s specific approach, I find his attempt to discuss poverty as defined by both quantitative and qualitative terms to be a more progressive and accurate description of poverty. I will discuss more in-depth the ways in which poverty ought to be measured in our current society.

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How Poverty is Measured Today

4 thoughts on “How Poverty is Measured Today

  1. Nicole, you have chosen to discuss how poverty is measured, and you make some good observations about the flaws in measurement. Your best point is the impact of geographic location on the poverty line index because the current index does not adjust for the cost of living. The theme of your project is poverty and public policy so I am wondering when you are going to dive into the meaty issues. Your first two posts have a strong economic lens, and that is important for targeting social programs and producing economic reports, but it dances around the larger question of what poverty really is and why current social programs are not having a strong impact (they are more defensive — let’s prevent things from getting worse — than offensive — let’s improve the current state of affairs).

    I’m also assuming your focus is on urban poverty rather than rural poverty, and that is instructive because sociologists have identified a strong correlation between urban poverty and race. That correlation challenges the notion that there are social programs that will work to eliminate poverty, and raises a couple of important questions: 1) Is poverty an economic issue or is it simply measured by economics? and similarly 2) Is poverty an economic condition or is it something else we don’t fully understand? Is it a mindset? Is it a social disease? How does one know one is impoverished?

    If I were doing your project, I would shift my focus from economics to education (not that they are completely unrelated). For many years, sociologists have believed that impoverished neighborhoods result in terrible schools that produce dropouts, unemployment, and other stimuli for poverty. More recently, as explained in the film, “Waiting for Superman,” it appears that a few sociologists now believe the reverse. Poor educational systems (“dropout factories”) have produced kids who give up by the 8th grade, and therefore form the roots of an impoverished neighborhood. These social scientists believe if we fixed education, it would go long way to reduce poverty. Of course, fixing education is equally daunting, but some progress has been made with charter schools in Harlem, for example.

    I leave you with this food for thought, and anxiously anticipate where you might go with your thinking. You are grappling with one of the most complex societal issues — it has many tentacles — and it is May. I hope you will continue your work after you leave Choate, and I hope you will share your thinking on this blog because others will benefit from the exchange of your ideas with theirs.

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    1. Hi, Mr. Backon. Thanks again for commenting on my blog! I appreciate your insightful questions and thoughts.

      As I write these blog entries, my intended audience is the general public, which includes those who do not know anything about public policy. Therefore, although my blog posts thus far have focused primarily on economics, it is that way for a reason. The most effective approach to studying public policy, in my opinion, is to know the underlying context of the public policy issues that are being studied. So although I believe examining the deficits in education are pertinent to understanding the perpetuation of poverty, I think it is also important to first know how economics influences the ways in which these situations are perceived and interpreted. Consequently, I wouldn’t say that I am skirting around the question of why current social programs lack efficacy in ameliorating poverty, but rather I am still building up to it.

      When developing the syllabus for this course, I came up with a series of questions related to poverty and public policy that I found interesting. As this course progresses, I am reading more material that allows me to understand the background information related to these questions in order to produce a well developed-response to them. For instance, the first question I attempted to answer in my first, three blog posts is “What is poverty and how do we measure it?” In my next several blog posts, I hope to answer more thorough questions such as “Why has there been an increase in the stratification of wealth and income and a deepening concentration of poverty and racial disparities despite policies being passed to ensure equal opportunities for disadvantaged minorities?” and “How have social welfare policies in America evolved over time?” and “How effective are our current poverty alleviation programs?” Ultimately, by the end of this course I hope to have answers – or more accurately, thoughts and opinions – about these questions and some of the one’s you mentioned in your comment. I intend on taking an interdisciplinary approach that involves using knowledge of economics, sociology, and politics such that I can have a well-rounded understanding of these issues.

      Lastly, I do recognize that it is May. Although I plan on having these questions addressed by then, I do recognize that all of these issues that I am focusing on regarding urban poverty are ones that cannot be entirely understood in a single term. Therefore, as you had said, I plan to continue studying these topics in my coursework in college as well.

      Thanks again for reading!
      Nicole

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  2. JMW says:

    Nicole,

    This is a very interesting take on the effectiveness of current methods of measuring poverty. Your writing raises several questions for me. First, what, specifically, how does the Consumption Method evaluate particular goods and services? Is one’s ability to pay for say, a manicure or maintain a pet, a determining factor in whether or not an individual or family is impoverished? Would the ability to pay for items such as, say, more costly food items including fruits and vegetables, push someone above the poverty line? Would only purchasing unhealthy foods such as McDonald’s keep someone below the line and “prove” that person or family’s poverty? If so, then I wholeheartedly agree with your position regarding the incomplete nature of current measures of poverty. Second, I wonder about your use of Moynihan’s memo to Nixon as an example of a way in which poverty can better be assessed. Are you advocating that we consider race in our assessment of poverty levels? If so, I dare say that you are entering very provocative territory!

    Well done.

    JMW

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    1. Hi, JMW. Thank you for your comment! After reading your questions I did a bit more research on the Consumption-Based Method for measuring poverty and began to rethink my previous claims. I would like to note, that when I said the Consumption-based Method might prove to be a more accurate poverty measure, I was comparing it to the primary current assessor (i.e.: the Census Bureau Method). I had made this claim because I found it beneficial that the Consumption-based Method does not solely rely on income, but rather certain factors of living (e.g.: insurance, education, appliances and amenities, family type, etc.) to measure poverty. However, once I delved into a paper written by Bruce D. Meyer and James X. Sullivan titled “Identifying the Disadvantaged: Official Poverty, Consumption Poverty, and the New Supplemental Poverty Measure,” I realized that judging poverty solely as a metric of consumption is just as inaccurate perceiving it as a metric of income. To be specific, I found that analyses of poverty done through the Consumption-based Method seldom take into account the quality of the service or good being consumed. Take your example of someone’s ability to pay for a manicure or maintain a pet, for instance. Even if that person lives in “impoverished” conditions, spending more money on goods and services such as a pet and manicures might place that individual higher above the poverty line that someone of the same income that does not spend money on such things. Relatedly, buying only unhealthy foods like McDonalds would place someone lower, and possibly below the poverty time, compared to someone who purchases more costly, yet healthy food products. This information has led me to realize that the Consumption-Based Method is not as trustworthy as it first seems, chiefly because it fails to distinguish a necessary resource from a luxury item.

      And to briefly answer your question regarding Moynihan’s memo, yes, I think that race should be a factor taken into account when assessing poverty levels. I think poverty is not purely an economic issue, but a condition that can also relate to issues of race and politics. Although I will explore this topic more in my future blog posts, I think I should note beforehand that I do not believe that poverty is a sociological condition that is inherent in certain racial or ethnic groups (e.g.: African Americans). I believe that as William Julius Wilson states in his book The Truly Disadvantaged, some of the characteristics, especially behavioral traits, exhibited by people in impoverished areas, such as ghettos, are more so a “reaction and adaptation” to their limited access to resources rather than a suppressed mentality derived from slavery that is triggered by economic constraint.

      Thanks for sharing your thoughts!
      Nicole

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