The Poverty of the Official Poverty Rate

Washington regularly collects vast amounts of data for hundreds upon hundreds of social and economic indicators bearing on poverty. But within that compendium, a single number is widely taken to be more important than the others--the so-called "official poverty rate," which is based on the federal poverty measure established in the 1960s. For four decades, that rate has served as the benchmark for both policy analysis and public discourse regarding the national struggle to reduce the deprivation in our midst. Yet even a casual examination shows that this metric is deeply flawed and increasingly biased toward the overestimation of material poverty.

While the official poverty rate numbers say that the proportion of the American population living in poverty has changed little--indeed, has slightly increased--since the early 1970s, data on household spending show substantial and continuing growth in consumption among those reporting very low incomes. Indeed, it is becoming increasingly clear that the official poverty rate is of no help in figuring where we are today or even where we've come from. Happily, signs are finally on the horizon that analysts from both left and right are prepared to scrap the official rate in favor of more realistic ways to track poverty. . . .

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Nicholas Eberstadt is the Henry Wendt Scholar in Political Economy at AEI.

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