Poverty Measurement: Issues in Revising and Updating the Official
Definition (Letter Report, 04/15/97, GAO/HEHS-97-38).

Pursuant to a congressional request, GAO reviewed various issues
involved in updating the federal government's measure of poverty,
focusing on: (1) the issues associated with measuring a family's
economic well-being and setting a standard below which families are
considered poor; (2) the suggestions experts have for addressing these
issues; and (3) recent developments on these issues since the National
Research Council (NRC) Panel on Poverty and Family Assistance issued its
report in 1995.

GAO noted that: (1) the choices or issues to address in developing a
routinely available, reliable measure of a family's economic resources
include: (a) whether to directly measure a family's spending on basic
necessities or use income and other economic resources as a proxy for
their ability to buy these necessities; (b) which economic resources
should be considered available for meeting a family's basic needs; and
(c) whether existing data sources are adequate (for whichever resource
definition is selected) or should be modified to improve the reliability
of poverty estimates; (2) some issues in updating the family resource
measure seem to be fairly well resolved in the scientific community,
while additional discussion and research may be needed to reach
consensus on some of the practical details; (3) although assessing a
family's expenditures might provide a more direct picture of its
economic well-being than income, measuring income is considered to be
more feasible for obtaining routinely available poverty statistics; (4)
the panel recommended that the official poverty measure should define a
family's economic resources to include disposable money income and
near-money government benefits, although experts differ on how to make
some of the adjustments to cash income; (5) issues to address in
developing a contemporary set of poverty thresholds to represent a
"minimally adequate standard of living" for families in different
circumstances include: (a) what basis should be used to set the level of
the thresholds; (b) whether to accommodate changes over time in
standards of living as well as in prices; (c) how to quantify the
differences in needs between families of different size and composition;
and (d) whether and how to accommodate geographical differences in the
cost of living; (6) in contrast to defining family resources, additional
research may lead to consensus on some issues in selecting a set of
poverty thresholds, but other issues will require policy judgment; (7)
the panel proposed a statistical formula derived from the literature to
develop thresholds for different family sizes, but lacking an objective
way to measure the difference in needs between families, left setting
the formula's exact terms to policy judgment; and (8) the Office of
Management and Budget has not yet begun a formal review of the poverty
measure as the NRC panel recommended, but it plans to create a working *

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-97-38
     TITLE:  Poverty Measurement: Issues in Revising and Updating the 
             Official Definition
      DATE:  04/15/97
   SUBJECT:  Disadvantaged persons
             Statistical methods
             Surveys
             Cost of living
             Income statistics
             Economic analysis
             Welfare benefits
             Economic indicators
             Population statistics
IDENTIFIER:  Consumer Price Index
             BLS Consumer Expenditure Survey
             Census Bureau Survey of Income and Program Participation
             
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Cover
================================================================ COVER


Report to the Ranking Minority Member, Committee on Finance, U.S. 
Senate

April 1997

POVERTY MEASUREMENT - ISSUES IN
REVISING AND UPDATING THE OFFICIAL
DEFINITION

GAO/HEHS-97-38

Alternative Poverty Measures

(973823)


Abbreviations
=============================================================== ABBREV

  BLS - Bureau of Labor Statistics
  CEX - Consumer Expenditure Survey
  CPI - Consumer Price Index
  CPS - Current Population Survey
  GPO - Government Printing Office
  HHS - Department of Health and Human Services
  HUD - Department of Housing and Urban Development
  NRC - National Research Council
  OIRA - Office of Information and Regulatory Affairs
  OMB - Office of Management and Budget
  SIPP - Survey of Income and Program Participation
  USDA - Department of Agriculture
  WIC - Special Supplemental Food Program for Women, Infants and
     Children

Letter
=============================================================== LETTER


B-275689

April 15, 1997

The Honorable Daniel Patrick Moynihan
Ranking Minority Member
Committee on Finance
United States Senate

Dear Senator Moynihan: 

The official U.S.  poverty measure, as devised 3 decades ago,
compares a family's income with a level believed necessary to
purchase a minimum standard of living.  This measure is widely used
as an indicator of the economic well-being of the population, for
analysis of government policies, and in allocating benefits in social
welfare programs, but it has not changed significantly since 1965. 
Over the past 2 decades, researchers have questioned the accuracy of
its measurement of family resources for this purpose, as well as the
appropriateness of the level of income used to define poverty.  Two
years ago, the National Academy of Science's National Research
Council (NRC) Panel on Poverty and Family Assistance issued a report,
Measuring Poverty:  A New Approach (1995), recommending a thorough
review and updating of the definition of family income and its
standard for comparison. 

This letter responds to a request from your office that we describe
various issues involved in updating the federal government's measure
of poverty.  As agreed with your office, in this report we identify
(1) the issues associated with measuring a family's economic
well-being and setting a standard below which families are considered
poor, (2) the suggestions experts have for addressing these issues,
and (3) recent developments on these issues since the NRC panel
issued its report in 1995.  To do this work, we reviewed the panel's
report and recommendations and literature published since 1995, and
we interviewed selected experts in the areas of poverty measurement
and government statistics.  These experts included 4 academic
researchers, 3 of whom were members of the panel; the panel's study
director; and 10 federal government officials who were either
involved in the production of poverty statistics or were consumers of
those statistics.  As agreed with your office, we did not
independently analyze the various technical approaches discussed,
but, instead, are summarizing expert opinion on these issues. 
Previously, you asked for information about an experimental measure
suggested as a replacement for the current measure, which uses the
amount a family spends on goods and services, rather than its income,
as the measure of a family's well-being.  In separate correspondence
we provided a description of this methodology.\1 We conducted our
work between June 1996 and February 1997 in accordance with generally
accepted government auditing standards. 


--------------------
\1 Alternative Poverty Measures (GAO/GGD-96-183R, Sept.  10, 1996). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Defining a measure of the extent of poverty consists of two
fundamental decisions:  first, how to define a family's resources
and, second, how to select a threshold, or standard, to represent a
"minimally adequate standard of living." While the two decisions are
distinct, the two definitions must be consonant with each other so
that the eventual comparison of a family's resources with a standard
is considered fair.  Developing a useful and practical measure
involves making a number of choices that require balancing conceptual
and practical considerations as one addresses these two fundamental
decisions. 

The choices or issues to address in developing a routinely available,
reliable measure of a family's economic resources include (1) whether
to directly measure a family's spending on basic necessities or use
income and other economic resources as a proxy for their ability to
buy these necessities, (2) which economic resources should be
considered available for meeting a family's basic needs, and (3)
whether existing data sources are adequate (for whichever resource
definition is selected) or should be modified to improve the
reliability of poverty estimates. 

Some issues in updating the family resource measure seem to be fairly
well resolved in the scientific community, while additional
discussion and research may be needed to reach consensus on some of
the practical details.  Although assessing a family's expenditures
might provide a more direct picture of its economic well-being than
income, measuring income is considered to be more feasible for
obtaining routinely available poverty statistics.  The panel
recommended that the official poverty measure should define a
family's economic resources to include disposable money income and
near-money government benefits, although experts differ on how to
make some of the adjustments to cash income.  Finally, an existing
survey of income is believed capable, with some modification, of
providing more accurate and comprehensive data on family economic
resources than the source currently used for poverty statistics. 

Issues to address in developing a contemporary set of poverty
thresholds to represent a "minimally adequate standard of living" for
families in different circumstances include (1) what basis should be
used to set the level of the thresholds, (2) whether to accommodate
changes over time in standards of living as well as in prices, (3)
how to quantify the differences in needs between families of
different size and composition, and (4) whether and how to
accommodate geographical differences in the cost of living. 

In contrast to defining family resources, additional research may
lead to consensus on some issues in selecting a set of poverty
thresholds, but other issues will require policy judgment.  It is
generally recognized that determining a minimum standard of living
unavoidably requires judgment, although research can provide guidance
to bracket a set of alternatives.  We found mixed views on whether
the thresholds should be automatically updated for change in family
spending patterns as well as for change in prices.  The panel
proposed a statistical formula derived from the literature to develop
thresholds for different family sizes, but lacking an objective way
to measure the difference in needs between families, left setting the
formula's exact terms to policy judgment.  Finally, the experts we
interviewed agreed with the panel that geographic price differences
were appropriate to incorporate in the thresholds, but they were
uncertain about whether existing methods were technically adequate to
do so. 

The Office of Management and Budget (OMB) has not yet begun a formal
review of the poverty measure as the NRC panel recommended, but it
plans to create a working group soon with the Bureau of Labor
Statistics (BLS), the Bureau of the Census, and other interested
agencies to explore general issues in measuring income and poverty
and consider alternative measures to be developed and tested.  BLS
and Census staff have initiated exploratory work examining the
current feasibility of implementing some of the panel's
recommendations and modifying existing surveys.  However, since these
agencies may have several data collection projects under way to
address issues other than poverty measurement, it is important that
proposed changes to ongoing surveys are carefully coordinated. 


   BACKGROUND
------------------------------------------------------------ Letter :2


      THE OFFICIAL POVERTY MEASURE
---------------------------------------------------------- Letter :2.1

Researchers have defined poverty in a variety of ways.  It can be
defined as deprivation experienced in material terms, such as hunger
or poor housing quality; in economic terms, such as inadequate
income; or in social terms, such as isolation from the community or
feelings of low self-esteem.  In U.S.  government statistics, poverty
is defined as economic deprivation--that is, lacking the economic
resources to meet basic needs--which can put families at high risk of
material deprivation.  Although some might prefer to directly measure
a family's level of material deprivation, this is impractical for an
annual statistic because it is difficult to objectively assess the
quality of a family's standard of living and then to combine measures
for various basic needs (such as food, shelter, and clothing) into a
single indicator that can be readily analyzed. 

In 1969, the federal government officially adopted a poverty measure
to determine how many people across the country had incomes that were
inadequate to meet expenses for basic needs.  The official measure
determines a family's poverty status by comparing its resources,
defined as before-tax money income, with a standard income level, or
"threshold," designated for that family's size and composition. 
Information on income received in the previous calendar year is
collected from households by the Bureau of the Census using the March
Income Supplement of the Current Population Survey (CPS), which is
jointly sponsored by the Bureau of the Census and BLS.  Poverty
statistics are published each year that allow comparisons of economic
well-being across families, population groups, and regions and over
time. 

Thresholds for families of different size and composition were
initially defined as three times the cost of a minimum diet for a
family of that size.  This approach was based on the finding of the
U.S.  Department of Agriculture's (USDA) 1955 Household Food
Consumption Survey that, on average, families of three or more
persons spent one-third of their income on food.  Costs of a minimum
diet for various family sizes were calculated from USDA's Economy
Food Plan, the least costly food plan designed by USDA.\2 Since then,
the poverty thresholds, of which there are currently 48, have been
updated annually, to adjust for price inflation nationwide using the
Consumer Price Index (CPI).  In 1995--the year of the most recent
update--a family of four with cash income of less than $15,569 was
considered to be living in poverty. 


--------------------
\2 The original thresholds also considered sex of the family head and
farm/nonfarm residence.  In 1981, these distinctions were eliminated;
also, thresholds were extended up to families of nine or more
members. 


      CRITICISMS OF THE POVERTY
      MEASURE
---------------------------------------------------------- Letter :2.2

The problems in the official measure of poverty are well documented. 
The value of the resources a family receives from noncash government
assistance programs like the Food Stamp Program was never included in
the formal definition of income, in part because the poverty measure
was developed before the advent of such programs.  In considering the
1981 Commerce Department appropriations, the Senate Appropriations
Committee criticized the official poverty statistics for ignoring the
"billions of dollars of Government in-kind benefits, such as food
stamps, housing subsidies and medical care." In the conference
committee report, the House and Senate conferees urged the Secretary
of Commerce to "continue research and testing of techniques for
assigning monetary values to in-kind benefits, and for calculating
the impact of such benefits on income and poverty estimates."\3 In
the early 1980s, the Bureau of the Census embarked upon research
programs to examine the effects of both government in-kind (noncash)
benefits and taxes on poverty and other measures of income
distribution and has published the results since 1982.\4

A 1990 review of concepts and approaches to measuring poverty
concluded that although the official poverty thresholds "represented
a reasonable approach, given existing data, .  .  .  in the 1960s,
the rather minimal consumption data on which they were based became
outdated long ago."\5 For example, recent surveys find that food now
represents about one-seventh rather than one-third of average family
expenditures.  In addition, the report noted that the methods used to
update thresholds over time and to adjust for differences in family
size and type were questionable and sometimes inconsistent. 

In 1995, NRC's Panel on Poverty and Family Assistance published an
in-depth review of the U.S.  poverty measure addressing concepts,
measurement methods, and information needs.  In addition to reviewing
the literature and numerous experts' views, with help from federal
agencies, the panel conducted data analyses to assess the effects of
its recommended poverty concept and alternative measures on the
numbers and characteristics of persons in poverty.  It concluded that
the official measure of poverty required revision and recommended
that OMB adopt a revised measure.\6 Specifically, the panel
recommended that new thresholds be developed using actual consumer
expenditure data to represent a budget for basic needs and adjusting
that budget to reflect the needs of different family types and
geographic differences in housing costs.  It recommended that family
resources be redefined as the sum of money income and near-money
benefits, minus necessary expenses (such as taxes), and thus the net
amount available to buy the goods and services in that poverty
budget.  (App.  I reproduces the panel's recommendations in their
entirety, including some issues not discussed in this report.)

More recently, a researcher criticized the reliance of the official
poverty measure on reported income, pointing out that some families
are misidentified as poor because they can increase their purchasing
power by either taking out loans or drawing on their savings to avoid
material deprivation.\7 He and others have suggested that a family's
economic well-being is more appropriately assessed with a measure of
what it spends on goods and services than with a measure of its
income. 


--------------------
\3 U.S.  Senate Report No.  949, 96th Congress, 2nd Session, Sept. 
16, 1980, p.  33; and U.S.  House of Representatives Report No. 
1472, 96th Congress, 2nd Session, Nov.  20, 1980, p.  9. 

\4 See, for example, U.S.  Department of Commerce, Bureau of the
Census, Estimates of Poverty Including the Value of Noncash Benefits: 
1984, Technical Paper 55 (Washington, D.C.:  U.S.  Government
Printing Office (GPO), 1985); Measuring the Effect of Benefits and
Taxes on Income and Poverty:  1990, CPR P-60, #176-RD (Washington,
D.C.:  GPO, 1991); and Poverty in the United States:  1995, CPR P-60,
#194 (Washington, D.C.:  GPO, 1996). 

\5 Patricia Ruggles, Drawing the Line:  Alternative Poverty Measures
and Their Implications for Public Policy (Washington, D.C.:  The
Urban Institute Press, 1990), p.  164. 

\6 Constance F.  Citro and Robert T.  Michael, eds., Measuring
Poverty:  A New Approach (Washington, D.C.:  National Academy Press,
1995). 

\7 Nicholas Eberstadt, "A Poor Measurement," Wall Street Journal,
Vol.  CCXXVII, No.  79 (Apr.  22, 1996), p.  A22, describes the
research of Daniel T.  Slesnick, including that reported in "Gaining
Ground:  Poverty in the Postwar United States," Journal of Political
Economy, Vol.  101, No.  1 (1993), pp.  1-38. 


   ISSUES IN ASSESSING A FAMILY'S
   ECONOMIC WELL-BEING
------------------------------------------------------------ Letter :3

In developing, as well as evaluating, a poverty measure, certain
assumptions and choices must be made as one addresses two fundamental
decisions:  first, how to define a family's resources and, second,
how to select a threshold, or standard, to represent a "minimally
adequate standard of living." While the two decisions are distinct,
the two definitions must be consonant with each other so that the
eventual comparison of a family's resources with a standard is
considered fair.  For example, if government medical benefits are
considered as part of a family's resources, then need for medical
care should be considered in defining the threshold.  Although many
technical choices must be made in developing a valid and practical
measure of family economic well-being for the purposes of determining
poverty status, we identified three key choices to be made: 

  -- whether to directly measure a family's spending on basic
     necessities or to use income and other economic resources as a
     proxy for its ability to buy those necessities,

  -- which economic resources should be considered available for
     meeting a family's basic needs, and

  -- whether existing data sources are adequate or should be modified
     to improve the reliability of poverty estimates. 


      SHOULD WELL-BEING BE
      MEASURED THROUGH SPENDING OR
      ECONOMIC RESOURCES? 
---------------------------------------------------------- Letter :3.1

Some poverty researchers have proposed examining families'
consumption of goods and services, rather than their income, to
assess more directly whether they are able to obtain a minimal
standard of living.  Many on the NRC panel and some of the experts we
interviewed were sympathetic with that view.  The panel report noted
that consumption is more closely related conceptually to material
deprivation--the core concept underlying poverty--than is income. 
However, as we previously noted, efforts to directly measure material
deprivation meet with both conceptual and practical difficulties. 
For example, some readily identified deprivations, such as loss of
housing, may not result from low income but from imprudent spending
or difficulties with one's landlord.  And defining housing adequacy
would require subjective judgments to select standards for living
space; cooking and plumbing facilities; and heating and, perhaps,
cooling needs.  Even when expert-defined standards exist, assessing
the nutritional adequacy of a family's diet, for example, would
likely require a costly expert assessment and the collection of
detailed data on family meals.  Thus, measures of material
deprivation are more often recommended as a supplement to, than as a
replacement, for data on family resources.\8

Instead, researchers who assess poverty status through consumption
typically use as their measure the dollar value of a household's
reported spending (excluding taxes, gifts, and savings).  The primary
source for these data is the Consumer Expenditure Survey (CEX), which
collects detailed data from households on their expenditures. 
Because we do not know whether a family's level of expenditures is
sufficient to meet its material needs, the dollar value of
expenditures is really only a proxy for the family's level of
material deprivation.  However, some researchers still prefer to look
at what families spend rather than their income because expenditures
reflect what they were able to obtain with all their available
economic resources (including savings, assets, and credit), whereas
income is only a proxy for those resources. 

There were mixed views in the field about whether income or
expenditures were more conceptually consistent with the intended uses
of the poverty measure.  A perceived disadvantage of measuring family
well-being with income is that it tends to overstate the material
deprivation of families who experience a temporary economic setback
and of those low-income families who can use savings to maintain
their level of expenditures.  But, precisely because families can
smooth out the effects of dips in income, expenditures tend to vary
less among families and over time than income does.  Thus, for policy
planning and evaluation purposes, an expenditure-based measure might
not be as sensitive an indicator of families' economic need as income
would be.  In contrast, a perceived advantage of measuring poverty
with family income is that much of government antipoverty policy is
expressed and analyzed in terms of change in total or disposable
family income.  If poverty was measured on the basis of expenditures,
forecasting the effects of a change in economic policy would require
estimating how the expected change in family income would affect a
family's expenditures, which are more difficult to predict than
income. 

In the end, the NRC panel concluded, and experts we interviewed
concurred, that, at least at present, measuring poverty for official
purposes with expenditures was simply not feasible.  The only
available national survey of household expenditures, the CEX, is not
currently appropriate for measuring poverty.  Its sample size is too
small to support the level of detail on demographic subgroups that we
now obtain from the income surveys.  Because the CEX is also
expensive to administer and time consuming to process, experts
considered it prohibitively costly to greatly expand the survey in
its current form.  Moreover, the panel reported concerns about its
design and response rate that raised questions for them about its
quality and appropriateness as a source for an expenditures-based
poverty measure.  For example, because estimates of different types
of expenditures are currently derived from different samples
answering different surveys, the panel had questions about how to
obtain a comprehensive resource estimate for individual families. 
(App.  II provides more detail on this survey.) Nevertheless, because
the conceptual advantages of an expenditure measure of poverty have
appeal, the NRC panel also recommended research into improving
available expenditure data. 


--------------------
\8 See Maya Federman and others, "What Does It Mean to Be Poor in
America?" Monthly Labor Review (May 1996) for an analysis of the
living conditions and material deprivations reported by families with
incomes below the poverty level in nine national surveys. 


      WHICH ECONOMIC RESOURCES
      SHOULD BE COUNTED AS
      AVAILABLE TOWARD MEETING A
      FAMILY'S BASIC NEEDS? 
---------------------------------------------------------- Letter :3.2

For more than a decade, critics have pointed out that the official
poverty measure's use of gross cash income does not fully represent
the resources families actually have available to meet basic needs. 
Specifically, gross cash income excludes the value of in-kind
benefits (like food stamps and public housing rental subsidies),
which clearly increase the resources available for basic needs, and
fails to account for taxes and payment of child support, which reduce
available resources.  Since the poverty measure was developed, there
have been significant increases in payroll taxes and noncash
government transfers for low-income families, as well as significant
changes in income taxes, so these omissions have become more
problematic over time.  The NRC panel believed that it was also
critical to take into account both in-kind benefits and tax payments
in order for the poverty measure to reflect the antipoverty effects
of government tax and assistance policies. 

We found disagreement among the experts, however, about how far to go
in making these adjustments to cash income.  The NRC panel
recommended adding the value of near-cash, nonmedical in-kind
benefits (such as food stamps, rental housing subsidies, school
lunches, and home energy assistance) to families' gross money income
and deducting income taxes, Social Security taxes, payment of child
support, out-of-pocket medical expenditures, and child care and other
work-related expenses (up to a limit).  One of the panel members
dissented from the panel's recommendations on how to incorporate
out-of-pocket medical expenses and the value of public medical
insurance (Medicaid and Medicare).  Over the years, efforts to find a
generally acceptable method for valuing public medical insurance have
been unsuccessful, in part because the value of insurance to
recipients depends on whether they need to use it.  In addition, the
dollar value of expenses covered by insurance can be so large that it
exceeds the amount of money a low-income family has available for
other needs, yet it cannot be spent on those needs.  The panel's
suggestion to deduct out-of-pocket medical expenses from income,
instead of adding the value of insurance coverage to income, avoids
ascribing unrealistically large amounts of resources to families who
never made use of their insurance and those whose insurance covered
unusually high expenses.  But one panel member preferred to treat
health care as another basic need such as food, shelter, and
clothing, and incorporate out-of-pocket medical expenses as part of
the family budget used to develop the thresholds. 

Deciding which income adjustments to make also depends on how
accurate these adjustments can be made, at reasonable expense.  The
Bureau of the Census, which has developed ways to approximate values
for food and housing assistance received and taxes paid for the
families that are surveyed to produce the poverty statistics, has
used those figures to calculate adjusted poverty rates on an
experimental basis.  However, Bureau of the Census officials were not
confident about the success of this approach for some of the other
recommended income adjustments without expanding the CPS
questionnaire.  One expert stressed that if estimates are used, it is
important that they accurately reflect the real choices made by
lower-income families, because using average family expenditure
values could introduce bias into the poverty estimates. 

Another consideration raised by government officials in deciding
whether and how to change the way family economic resources are
officially defined for measuring poverty is the implications of such
a change for those government programs that link receipt of
assistance to the official poverty measure.  Some programs determine
eligibility, in part, by comparing an applicant's income with the
poverty guidelines (which are derived from the thresholds) or some
multiple of them.  Poverty guidelines are issued annually by the U.S. 
Department of Health and Human Services (HHS) by smoothing the
official poverty thresholds for different size families, increasing
the levels for Alaska and Hawaii, and updating them for price
inflation. 

To aid coordination of assistance programs, it is preferable for
programs to share a common definition of "income"; one way to
simplify a program's application process is to limit its resource
definition to gross monetary income, based on readily obtained
information.  The panel believed that its disposable income
definition of family resources is a substantial improvement over the
current measure, and so encouraged consideration of, but did not
directly recommend, the use of this definition by programs that
currently compare gross income to the administrative poverty
guidelines.  The panel recognized that, in programs that currently
employ a fairly crude measure of gross income, implementing its
proposed resource definition would require obtaining additional data
on applicants' in-kind benefits and expenses.  The panel also
recognized that this could place a burden on both clients and
administrators.  As an alternative, the panel suggested that such
programs could choose to use a simplified definition of disposable
income if the programs were willing to give up some precision in
determining eligibility status in order to minimize data burden. 


      ARE EXISTING DATA SOURCES
      ADEQUATE OR SHOULD THEY BE
      IMPROVED? 
---------------------------------------------------------- Letter :3.3

Part of the argument for using expenditures rather than income to
measure a family's economic well-being is the claim that many
apparently low-income households underreport their income.  This
claim is primarily based on the finding that in the single national
household survey that collects extensive data on family expenditures
(the CEX), low-income families report higher levels of expenditures
than income.\9 Although the Bureau of the Census acknowledges some
income underreporting in the survey that is used to derive the
official poverty statistics (the CPS), this problem is understood to
be somewhat greater in the CEX, which was not specifically designed
to measure income. 

The NRC panel recommended changing the data source for poverty
statistics from the CPS to the Survey of Income and Program
Participation (SIPP), which is also conducted by the Bureau of the
Census.  The CPS is basically a labor force survey that is
supplemented in March of each year with a large battery of income
questions used for measuring poverty.  In contrast, the SIPP was
specially designed as a survey of household income and, through both
different questions and more frequent interviews, provides more
detailed and more accurate data on income than the CPS.  In addition,
because the CPS survey does not collect certain data on expenses
(notably taxes, child care, and child support payments), estimates of
the likely value of such payments (that is, imputations) would be
required to make some of the recommended income adjustments.  In the
absence of some of the information needed, the technical adequacy of
the imputations becomes increasingly important.  Thus, many experts
prefer the SIPP because they believe it provides a more accurate
report of income for low-income people and provides most of the
information required for the additional income adjustments
recommended by the panel.  (App.  II provides more detail on these
surveys.)

Currently, the decennial census, due to its broad coverage, is the
primary source of poverty rates for small areas such as cities and
counties; yet, it does not gather the detailed information that would
be required to implement the panel's proposed resource definition. 
Officials of the Bureau of the Census indicated that they have tested
several limited questions in the National Content Survey (the main
content-testing vehicle for the year 2000 census) on the receipt of
in-kind benefits and payments for child support but that no
expansions are planned to the census long-form questionnaire at this
time.  Thus, if the panel's definition of family resources was
adopted, simulations would be required to produce comparable
estimates from the census.  Differences between estimates from the
two surveys would likely result, but some comparability problems
exist currently between poverty estimates derived from the CPS and
the census. 


--------------------
\9 In comments on an earlier draft, BLS suggested another explanation
for this anomaly:  some families that report low levels of income do
so because of business income losses, yet they may have expenditure
levels more typical of higher-income consumers. 


      DEVELOPMENTS SINCE THE NRC
      REPORT
---------------------------------------------------------- Letter :3.4

OMB has not yet acted on the panel's recommendations to revise the
poverty measure but has discussed forming an interagency working
group with BLS, the Bureau of the Census, and other interested
agencies to explore general issues in measuring income and poverty
and consider alternative measures to be developed and tested.  BLS
has not yet begun a comprehensive study of how to improve the CEX as
a tool to measure family resources for the purposes of determining
their poverty status per se, as the panel recommended, but awaits
direction from OMB and additional funds to undertake such research. 
However, efforts are under way to address some of this survey's data
quality problems that were noted by the panel. 

Staff of the Bureau of the Census, in a joint project with BLS staff,
have begun to examine the feasibility of implementing the panel's
recommendations for a revised resource definition.  After replicating
the panel's procedures on the CPS, they concluded that "[t]he Panel's
recommendation that resources be measured as disposable income places
much faith in the Census Bureau's ability to expand data collection
efforts or do better modeling in an environment in which small annual
changes in poverty are perceived as important, since there is no
national survey that currently collects all the information necessary
to portray a family's poverty status under the proposed measure."\10
Bureau of the Census staff report that researchers within the Bureau
are currently examining nearly every dimension of the resource
measure they employed (including the valuation of housing subsidies
and imputation of work, child care, and out-of-pocket medical
expenses) and are currently working on implementing the resource
measure in the SIPP instead of the CPS.\11

In 1996, the sample design of the SIPP was changed in order to focus
on collecting longitudinal information on change in families' income
and behavior over time.  As a result, the SIPP is no longer able to
provide nationally representative estimates of family income each
year.  The Bureau of the Census has developed a proposal to
supplement the SIPP's new sample design to ensure this survey's
ability to provide national estimates from year to year, comparable
to current practice.  However, additional funds would be required for
this new design.  The Bureau is also considering an alternative
process for conducting the 2010 decennial census that would involve
collecting more detailed data from samples of respondents throughout
a 10-year period rather than only once every 10 years.  However, it
is not clear at this time whether this process will be adopted and,
if so, whether it would include the detailed information on family
resources and expenses needed to implement a disposable income
definition.  Nevertheless, because government analysts are also just
beginning to recognize the implications for existing surveys of the
new reporting requirements of the 1996 welfare reform legislation, we
believe it is critical that all proposed changes to the SIPP and
census be carefully coordinated.\12


--------------------
\10 Thesia I.  Garner and others, "Experimental Poverty Measurement
for the 1990's," paper presented at the Allied Social Science
meetings (New Orleans, La.:  Jan.  4, 1997), pp.  28-29. 

\11 Kathleen Short, Martina Shea, and T.J.  Eller, "Work Related
Expenditures in a New Measure of Poverty," paper presented at the
American Statistical Association meetings (Chicago, Ill.:  Aug.  7,
1996). 

\12 The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996, P.L.  104-193, was signed into law on Aug.  22, 1996. 


   ISSUES IN UPDATING THE POVERTY
   THRESHOLDS
------------------------------------------------------------ Letter :4

The current thresholds, or levels of income below which families of
different sizes are considered poor, are based on family consumption
patterns of 4 decades ago and contain certain logical
inconsistencies.  As a consequence, many experts believe that the
thresholds should be revised, but there is less consensus on how to
do so.  Although many technical choices will need to be made in
developing thresholds, we highlight four key choices: 

  -- on what basis to set the level of a poverty threshold,

  -- whether to accommodate changes over time in standards of living
     as well as in prices,

  -- how to quantify the difference in need among families of
     different size and composition, and

  -- whether and how to accommodate geographical differences in the
     cost of living. 


      HOW SHOULD AN APPROPRIATE
      THRESHOLD LEVEL BE
      IDENTIFIED? 
---------------------------------------------------------- Letter :4.1

The NRC panel concluded that "[a]lthough judgement enters into nearly
all aspects of the poverty measure .  .  .  questions of the
threshold concept and level are more inherently matters of judgment
than other aspects of a poverty measure."\13 Many of the experts we
interviewed believed that scientists should not set the poverty
thresholds on their own but instead should provide information about
what it means to live at one income level or another (in terms of
expenditures or living conditions) and let policymakers make the
judgment.  That is, the poverty level is viewed as essentially an
arbitrary point selected to represent what society defines as
constituting a "minimally adequate standard of living." However, the
panel noted that several sources are available to inform the
selection of a particular income level:  public opinion on what level
of income is believed necessary to "get along," the distribution of
family or household income, and poverty budgets that estimate what
income levels families need to obtain basic necessities. 

From 1946 to 1989, the Gallup poll has asked the following question: 
"What is the smallest amount of money a family of four (husband,
wife, and two children) needs each week to get along in this
community?" Denton Vaughan's 1993 analysis of these data found that
the "get-along" amount, while remaining below the median level of
post-tax income for four-person families, has increased over the
years along with increases in median family income.  In contrast, the
official poverty level, in constant dollars, while similar to the
"get-along" amount from 1947 to 1950, declined sharply thereafter
relative to both median income and the "get-along" amount through the
early 1970s.  Vaughan concluded that the official poverty threshold,
by remaining fixed while real incomes and expectations rose, "is no
longer fully consistent with the standards of the American
people."\14 The NRC panel recommended against using these or similar
poll findings directly to set the poverty level because (1) responses
are quite variable, both over time and with the exact wording of the
question and (2) the knowledge that their response would be used to
set the poverty standard (and thus, perhaps, benefit levels) might
affect the way in which people respond.  Indeed, a government
official pointed out that precisely because these surveys did not
directly ask what level of resources families should be guaranteed,
these responses were not appropriate for setting guidelines that
would determine public assistance benefit levels.  However, opinion
surveys were considered a valid way of tapping societal norms, so
experts suggested that their results be used as a confirmatory source
to help bracket figures derived from other sources. 

Alternatively, poverty can be treated as a relative notion and the
poor defined as all those with income below a particular point on the
distribution of family or household income, such as the bottom fifth
or those below a point representing 50 percent of the median income. 
This approach emphasizes the socially defined aspect of poverty, that
"[t]hose whose resources are significantly below the resources of
other members of society, even if they are able to eat and physically
survive, are not able to participate adequately in their
relationships, and therefore are not able to participate fully in
society."\15 The NRC panel noted that relative thresholds are easy to
understand and calculate, are thus often used in international
comparisons of poverty, and are self-updating. 

The panel also noted that some find the relative, arbitrary, and
self-updating features of relative thresholds to be drawbacks,
instead.  For example, creating a purely relative poverty level (such
as the bottom fifth of the distribution) was unappealing because it
would mean that the statistic would no longer serve as a measure of
progress against poverty.  Every year, no matter how much family
incomes improved, one fifth of the population would automatically be
defined as poor.  That problem can be avoided, however, by defining
the threshold as a percentage of median income, which would not
require a particular proportion of the population to be labeled as
poor. 

The third major approach to setting a poverty threshold is to develop
some form of poverty budget based on expert judgment of families'
needs, the observed expenditures of low-income families, or some
combination of the two.  Poverty budgets based on expert judgments
"have the appeal of being based on the notion of minimum standards of
physical needs," but "large elements of relativity and subjective
judgment invariably enter the process" because few established
standards exist to guide the choice of what to include in these
budgets.\16 The dilemma is that there are many different ways to meet
basic nutritional needs, for example, but to cost out a poverty
budget, the expert must select one nutritionally adequate diet over
another, which requires subjective judgment.  Therefore, in practice,
experts must base their judgments on either their own beliefs about
the needs of low-income families or on observations of families'
spending patterns. 

The primary choice in developing a poverty budget is whether to
specify in detail a comprehensive poverty-level family budget or to
cost out one or a few categories of spending that can then be
multiplied by a factor to represent the rest of a family's needs. 
Comprehensive detailed budgets that attempt to mimic an entire
family's budget have the advantage of appearing to be absolute rather
than relative and provide a concrete picture of what it would look
and feel like to live at that particular income level.  But the
experts also cautioned that a carefully detailed budget was very
burdensome to create and required a substantial number of subjective
judgments to justify (such as about what to include and at what
cost). 

In contrast, a budget based on specifying one or two budget
categories, such as food, paired with a multiplier to cover the rest
of a family's needs, is much simpler to create, but using a large
multiplier can distort the measure over time if it is not reassessed. 
This is precisely what happened with the official poverty measure. 
The original formula (three times the cost of a poverty food budget)
no longer reflects contemporary family consumption patterns because
costs of different budget categories have changed differentially. 
Food costs have not risen as much as other costs since the 1950s and
standards of living have climbed, so food now represents about
one-seventh rather than one-third of family budgets.  Thus, a literal
update of the original poverty measure would multiply the current
cost of a poverty food budget by seven rather than by three. 

To ground the thresholds in families' basic needs yet avoid the
numerous judgments involved in detailing a comprehensive budget, the
NRC panel recommended developing a budget for a four-person reference
family for the three categories of food, clothing, and shelter needs
from actual family expenditure data, along with a small multiplier to
account for other needs.  It recommended basing the budget on a fixed
proportion of the median expenditures of two-adult, two-child
families on these basic needs.  It further recommended that that
proportion and the multiplier be selected in concert with both expert
judgment and public opinion concerning what constitutes a minimally
acceptable standard of living.  As one expert argued, since poverty
is, in the end, a social construct, triangulation between threshold
levels generated through expert judgment, family expenditure data,
and public opinion polling is most likely to achieve the desired
consensus. 

Another consideration in deciding whether and how to revise the
poverty thresholds is the implications of such a change for those
government programs that link receipt of assistance to the
administrative poverty guidelines.  Some programs providing cash,
in-kind benefits, or services to low-income persons have as one of
their income eligibility criteria that their income be compared with
the poverty guidelines or some multiple of them; others have their
own income standards.  Currently, the administrative poverty
guidelines issued by HHS are a simplified version of the poverty
thresholds.  If changes to the poverty thresholds were made, OMB
officials indicated that the administrative guidelines would not
necessarily be affected, unless a separate decision was made that
revised measures were more appropriate for those programs that use
the guidelines.  Nevertheless, even changing the level of these
poverty guidelines would only have direct caseload and budget
implications for some programs, and only if the newly eligible people
applied for services.  This is because only some of the programs that
link eligibility to the poverty guidelines are entitlement programs,
that is, they must provide benefits to all eligible applicants (for
example, Medicaid, food stamps, School Lunch, and School Breakfast). 
In others, legislatively set budget limits determine how many
eligible people who apply for services will actually be assisted and
how many will be put on waiting lists.  The NRC panel recommended
that program agencies carefully review the proposed measure to
determine whether it is appropriate as an eligibility standard and
whether it may need to be modified to better serve program
objectives.  "Other considerations, such as funding constraints and
competing use of scarce tax dollars, may dictate that assistance
program benefits be set at a level below the statistical poverty
thresholds."\17


--------------------
\13 Citro and Michael, Measuring Poverty, p.  99. 

\14 Denton R.  Vaughan, "Exploring the Use of the Public's Views to
Set Income Poverty Thresholds and Adjust Them Over Time," Social
Security Bulletin, 56(2) (summer 1993), p.  37. 

\15 Citro and Michael, Measuring Poverty, p.  125.  See also Peter
Townsend, The International Analysis of Poverty (Hemel Hempstead,
England:  Harvester-Wheatsheaf, 1992). 

\16 Citro and Michael, Measuring Poverty, p.  107. 

\17 Citro and Michael, Measuring Poverty, p.  320. 


      SHOULD THE THRESHOLDS
      ACCOMMODATE CHANGES OVER
      TIME IN STANDARDS OF LIVING
      AS WELL AS IN PRICES? 
---------------------------------------------------------- Letter :4.2

No matter what level is selected to represent the income needed to
purchase a "minimum adequate standard of living," some mechanism is
needed to maintain its currency over time.  Currently, the thresholds
are updated annually for price inflation, but we found mixed views on
whether to also update them regularly for real changes in income
levels or expenditures.  As noted before, by not reestimating the
food share of families' budgets, the current method's adjustment of
the 1960s' thresholds for price inflation alone is believed to have
misestimated the effect of changes in the cost of living on the
entire poverty budget.\18

In support of routinely adjusting for changes in standards of living,
the panel noted that, historically, the levels of estimated minimum
standards--whether from expert budgets, programmatic standards, or
public opinion polling--have in fact risen over time with real (that
is, inflation-adjusted) growth in both income and consumer
expenditures.  Additionally, of course, it would be administratively
simpler to have a routine mechanism for updating the thresholds,
rather than wait until serious concerns arise to instigate a major
reevaluation and revision.  To keep the thresholds current, the NRC
panel proposed updating them annually to reflect changes in median
family expenditures on food, clothing, and shelter, with the amount
averaged over the previous 3 years to reduce the thresholds'
volatility over the cycles of the economy. 

However, other experts were concerned that such annual adjustments
would turn the poverty measure into a relative standard that would no
longer provide a stable target for assessing government programs'
progress.  Moreover, they were concerned that, in the short run, a
relative threshold tied to median income (or expenditures) could end
up yielding perverse results.  For example, in an economic recession,
as median expenditures declined, so would the poverty threshold,
potentially leading to lower rather than higher poverty rates.  NRC's
proposed updating mechanism would not create a truly relative measure
because the threshold would be updated on the basis of families'
expenditures on food, clothing, and shelter, which represent about 45
percent of total expenditures for four-person households and do not
tend to rise as fast as income.  Additionally, updating thresholds
with median expenditures averaged over the past 3 years would
moderate the effect of year-to-year economic fluctuations. 


--------------------
\18 There have been discussions about moving the CPI toward a more
comprehensive measure of cost of living, but it is too early to know
whether such changes, if implemented, would address experts'
concerns. 


      HOW SHOULD THE THRESHOLDS
      REFLECT DIFFERENCES IN NEED
      AMONG FAMILIES OF DIFFERENT
      SIZE? 
---------------------------------------------------------- Letter :4.3

Thresholds for different types of families were initially developed
in an effort to ensure the equivalence of the poverty level,
conceptually, across families whose different circumstances implied
different needs.  The USDA food plans were developed to reflect
presumed differences in the food needs of children and elderly
individuals and those of nonelderly adults, and the thresholds were
developed to accommodate the economies of scale enjoyed by larger
families compared with smaller ones.  However, it was pointed out in
1990 that the initial equivalence scales (that is, the set of
differences between thresholds for different families) were not
entirely systematically based on variation in family consumption
patterns and the data that were used are now out of date. 
Additionally, the scales exhibit some abnormalities in terms of
natural economies of scale for different family sizes. 

Analysts want the thresholds to reflect only those sources of
variation in family needs for which empirical evidence of sizable
systematic variation exists.  While elderly people do have different
consumption patterns from the nonelderly, evidence that the elderly
have consistently lower income needs is limited.  Thus, the panel
proposed dropping the distinction made in the current method that
provides a lower threshold for elderly individuals living alone than
that for nonelderly adults.  In response to a legal challenge, the
distinction between female and male heads of households was removed
in 1981. 

A large body of research has developed a variety of approaches for
creating equivalence scales to represent the variation in needs among
different family types.  However, no single approach can be clearly
demonstrated to be more accurate than the others because of
conceptual difficulties in assessing whether two families of
different types are equally well-off.  For example, although married
couples with one child may spend less on food outside the home than
those without children, we have no measure of whether they are
equally well-off.  Thus, it is difficult to identify the extent of
economies of scale from simply comparing different families'
expenditure patterns.  Moreover, in any consumption-based analysis,
care must be taken to avoid simply institutionalizing the status quo. 
If larger families also tend to have lower incomes than smaller
families, their smaller per capita spending could represent the
effects of their lower income rather than lower needs. 

In the absence of an objective procedure for determining the relative
costs of living for families of different sizes and composition, the
NRC panel proposed using a statistical formula to produce thresholds
for various combinations of adults and children so that the resultant
equivalence scale would at least be logical and internally
consistent.  The panel developed a formula reflecting the general
form of the varied formulas in the literature, which treats the cost
per child as a fixed proportion of the cost per additional adult and
provides for the scale economies of larger families.  It also made
suggestions for the choice of the actual terms of the formula.  These
choices need to be carefully examined because, by raising or lowering
the thresholds for different families from what they are now, the
demographic profile of people defined as living in poverty can be
substantially changed.  For example, the panel found that applying
one of the proposed scales while retaining the current threshold for
a two-adult, two-child family would reduce the threshold for single
people and thus increase the poverty rate for that group. 


      SHOULD THRESHOLDS REFLECT
      GEOGRAPHIC DIFFERENCES IN
      COST OF LIVING AND, IF SO,
      HOW? 
---------------------------------------------------------- Letter :4.4

Another important source of variation in family circumstances that
affects the cost of meeting families' basic needs is geography.  It
has long been recognized that, "because some parts of the country
have higher prices than other parts, families that live in relatively
expensive areas actually may need higher incomes to maintain the same
level of consumption as lower income families in less expensive
places."\19 The experts we interviewed agreed that it was
conceptually appropriate to adjust the poverty thresholds to account
for reliable differences across areas in the cost of living but were
unsure about whether adequately reliable data would be available to
do so.  Another noted that such a change could cause the Congress to
consider the effects that such a change would have on the
distribution of funds to states and localities from federal programs
whose distribution formulas currently consider the differences in
poverty rates between areas. 

Long-standing data and conceptual problems have prevented any
adjustment of poverty measures for geographic differences in cost of
living in the past and may continue to do so.  Currently, no standard
index of comparative prices exists that reflects variation both
within and across regions and that covers all areas of the country. 
Previous efforts to develop such an index have been stymied by lack
of comprehensive and comparable price data on samples large enough to
provide reliable estimates for areas within regions, as well as by
the problem of how to adjust for differences in local preferences or
standards of living.  That is, while it seems reasonable to account
for differences in types of expenditures that are directly related to
the climate, such as heating costs, some other differences, such as
food preferences, may also represent differences in quality that are
related to differences in income levels between areas. 

As an alternative to a comprehensive interarea price index, the NRC
panel proposed adjusting the poverty thresholds with an interarea
price index for shelter, because shelter costs show considerable
geographical variation and are a major component of consumer
spending.  The NRC panel proposed developing an interarea housing
cost index for metropolitan areas of various population sizes within
nine regions and developed an experimental one themselves, using a
modified version of the "fair market rent" methodology developed by
the U.S.  Department of Housing and Urban Development (HUD).  To
administer rental housing subsidies, HUD sets "fair market rents" at
the 45th percentile of the rent distributions in metropolitan areas
and nonmetropolitan counties for apartments that meet specified
quality standards and that are occupied by recent movers.\20 The NRC
panel applied this methodology to rental housing data from the 1990
census to develop index values for metropolitan and nonmetropolitan
areas.  We previously reported, however, that experts have criticized
the use of the HUD method for creating an interarea price index for
adjusting poverty thresholds because HUD's estimates do not cover all
types of rental housing; fail to adjust for interarea differences in
the quality of housing; and, of course, capture only one component of
the cost of living.\21

While experts agreed it was rationally justified to adjust the
thresholds for geographic cost-of-living differences, we found little
consensus on which methodology would be both reasonably accurate and
practical for creating and maintaining such an index.  One concern is
that no single data source, including the decennial census, had both
adequately reliable data on metropolitan and nonmetropolitan areas
within regions and the detail on housing characteristics required to
accurately distinguish differences in prices from those in quality. 
Another concern is that housing prices may differ as much within
metropolitan areas as they do between them.  Moreover, because
housing markets can experience large changes within a 10-year period,
developing a method to produce reliable updates between decennial
censuses is important to ensure that the geographic adjustments do
not create more error than they were intended to reduce.  However,
there was no consensus among the experts we interviewed that a
solution to the periodic updating problem had been found. 


--------------------
\19 Ruggles, Drawing the Line, p.  82. 

\20 The data sources for the HUD rent distributions include the
decennial census, the American Housing Survey, and local-area random
digit dialing telephone surveys. 

\21 Poverty Measurement:  Adjusting for Geographic Cost-of-Living
Difference (GAO/GGD-95-64, Mar.  9, 1995). 


      DEVELOPMENTS SINCE THE NRC
      REPORT
---------------------------------------------------------- Letter :4.5

Staff of BLS, in a joint project with the Bureau of the Census, have
begun exploratory work to examine the feasibility of implementing the
panel's proposals for developing poverty thresholds should they be
asked to do so.  Applying the panel's recommended procedures to
expenditure data from 1987 to 1994, they found the thresholds seem to
be stable over time.  However, in testing alternative valuation
procedures, they found that replacing a homeowner's shelter costs
with a rental equivalence value produced higher thresholds and thus
higher poverty rates.\22 They report that BLS researchers are
currently examining (or planning to examine) numerous issues related
to the panel's recommendations, including other methods to estimate
the service flows from owned housing and vehicles, the impact of
using data from consumer units reporting a full year of expenditures,
and which Consumer Price Index to use to update the basic bundle of
expenditures. 

Professor David Betson, a member of the panel, has continued research
on the evidence underlying the current and alternative equivalence
scales and the consequences of alternative scales for who is
considered poor.  In a preliminary summary, he reports that several
different sets of scales are consistent with the research on spending
on children but yield quite different results for single adults. 
Yet, with limited research evidence on the scale relating one and two
adults, additional research will be required to choose among these
scales.\23

Additionally, BLS has been conducting some experimental work on
interarea indexes of price differences that may help resolve concerns
regarding the quality of available data for adjusting the thresholds
for geographical differences in the cost of living.  Specifically,
BLS is using sophisticated statistical techniques to isolate the
relative differences in prices among geographic locations when, as is
done in developing the CPI, price information is collected for
similar but not identical items across localities.  If these
techniques are deemed successful, an interarea price index could be
developed and regularly updated from BLS' existing data sources. 
However, the CPI sample would still need to be increased to produce
estimates for rural areas. 


--------------------
\22 Thesia I.  Garner and others, "Experimental Poverty Measurement."

\23 David M.  Betson, "Is Everything Relative?  The Role of
Equivalence Scales in Poverty Measurement" (unpublished paper, dated
March 1996, available from the author at the Department of Economics,
University of Notre Dame, South Bend, Ind.). 


   CONCLUSIONS
------------------------------------------------------------ Letter :5

Some of the issues involved in updating the poverty measure seem to
be fairly well resolved in the scientific community.  Although a
family's economic resources are only a proxy for its ability to
obtain an adequate standard of living, they clearly provide the most
reliable data for assessing and comparing families' ability to meet
their needs.  Similarly, we found agreement that the measure of a
family's economic resources should include near-money government
benefits and exclude income and payroll taxes. 

But additional discussion and research may be needed for experts to
reach consensus on other issues, such as how to incorporate
government medical assistance in a measure of disposable income and
how to accommodate geographical differences--and changes--in the cost
of living.  Even though some adjustments are clearly preferable
conceptually, not all will be considered worth the effort and expense
required. 

Updating the thresholds, in contrast, poses issues for which
scientific evidence can only bracket a set of alternatives. 
Determining what constitutes a minimally adequate standard of living
is, in essence, a social judgment that should reflect both societal
and experts' views.  A broader discussion would also seem to be
appropriate for the issue of whether to incorporate changes over time
in standards of living as well as in prices. 


   AGENCY COMMENTS AND OUR
   RESPONSE
------------------------------------------------------------ Letter :6

The Bureau of the Census, within the U.S.  Department of Commerce;
BLS, within the Department of Labor; and the Office of Information
and Regulatory Affairs (OIRA), within OMB, provided written comments
on a draft of this report.  Both OIRA and the Bureau of the Census
stated that the report was a good summary of the important issues
regarding improvements in the official measure of poverty.  But OIRA
also believed that in considering these issues, it should also be
noted that broadening the definition of income to include noncash
transfers and the net effect of direct taxes is bound to lower the
measured poverty rate unless the thresholds are adjusted to reflect a
higher level of economic well-being.  Each agency provided some
technical comments and corrections that we have incorporated, as
appropriate, throughout the text.  BLS focused its comments on issues
surrounding the use of the CEX.  BLS noted that it is engaged in
ongoing efforts to improve the CEX collection instrument to ensure
that its data are of the highest quality but thought criticism of it
was overstated in several places.  We have changed the text to
clarify that these comments pertained to use of the survey to measure
individual families' economic well-being, a purpose outside its
current mission.  The agencies' comments appear in appendixes III,
IV, and V. 


---------------------------------------------------------- Letter :6.1

We are sending copies of this report to the Chairman, Senate
Committee on Finance; the Secretary of Commerce and the Director of
the Bureau of the Census; the Secretary of Labor and the Commissioner
of BLS; the Director of OMB and the Administrator of the Office of
Information and Regulatory Affairs; and interested congressional
committees.  We will also make copies available to others on request. 

If you have any questions concerning this report or need additional
information, please call me on (202) 512-7215 or Stephanie Shipman,
Assistant Director, on (202) 512-4041. 

Sincerely yours,

Jane L.  Ross
Director, Income Security Issues


RECOMMENDATIONS OF THE NATIONAL
RESEARCH COUNCIL'S PANEL ON
POVERTY AND FAMILY ASSISTANCE
=========================================================== Appendix I

Reprinted with permission from C.  Citro and R.  Michael, eds.,
Measuring Poverty:  A New Approach (Washington, D.C.:  National
Academy Press, 1995), pp.  4-15. 

RECOMMENDATION 1.1

The official U.S.  measure of poverty should be revised to reflect
more nearly the circumstances of the nation's families and changes in
them over time.  The revised measure should comprise a set of poverty
thresholds and a definition of family resources--for comparison with
the thresholds to determine who is in or out of poverty--that are
consistent with each other and otherwise statistically defensible. 
The concepts underlying both the thresholds and the definition of
family resources should be broadly acceptable and understandable and
operationally feasible. 

RECOMMENDATION 1.2

On the basis of the criteria in Recommendation 1.1, the poverty
measure should have the following characteristics: 

  -- The poverty thresholds should represent a budget for food,
     clothing, shelter (including utilities), and a small additional
     amount to allow for other needs (e.g., household supplies,
     personal care, non-work-related transportation). 

  -- A threshold for a reference family type should be developed
     using actual consumer expenditure data and updated annually to
     reflect changes in expenditures on food, clothing, and shelter
     over the previous 3 years. 

  -- The reference family threshold should be adjusted to reflect the
     needs of different family types and to reflect geographic
     differences in housing costs. 

  -- Family resources should be defined--consistent with the
     threshold concept--as the sum of money income from all sources
     together with the value of near-money benefits (e.g., food
     stamps) that are available to buy goods and services in the
     budget, minus expenses that cannot be used to buy these goods
     and services.  Such expenses include income and payroll taxes,
     child care and other work-related expenses, child support
     payments to another household, and out-of-pocket medical care
     costs, including health insurance premiums. 

RECOMMENDATION 1.3

The U.S.  Office of Management and Budget should adopt a revised
poverty measure as the official measure for use by the federal
government.  Appropriate agencies, including the Bureau of the Census
and the Bureau of Labor Statistics, should collaborate to produce the
new thresholds each year and to implement the revised definition of
family resources. 

RECOMMENDATION 1.4

The Statistical Policy Office of the U.S.  Office of Management and
Budget should institute a regular review, on a 10-year cycle, of all
aspects of the poverty measure:  reassessing the procedure for
updating the thresholds, the family resource definition, etc.  When
changes to the measure are implemented on the basis of such a review,
concurrent poverty statistics series should be run under both the old
and new measures to facilitate the transition. 

RECOMMENDATION 2.1

A poverty threshold with which to initiate a new series of official
U.S.  poverty statistics should be derived from Consumer Expenditure
Survey data for a reference family of four persons (two adults and
two children).  The procedure should be to specify a percentage of
median annual expenditures for such families on the sum of three
basic goods and services--food, clothing, and shelter (including
utilities)--and apply a specified multiplier to the corresponding
dollar level so as to add a small amount for other needs. 

RECOMMENDATION 2.2

The new poverty threshold should be updated each year to reflect
changes in consumption of the basic goods and services contained in
the poverty budget:  determine the dollar value that represents the
designated percentage of the median level of expenditures on the sum
of food, clothing, and shelter for two-adult/two-child families and
apply the designated multiplier.  To smooth out year-to-year
fluctuations and to lag the adjustment to some extent, perform the
calculations for each year by averaging the most recent 3 years'
worth of data from the Consumer Expenditure Survey, with the data for
each of those years brought forward to the current period by using
the change in the Consumer Price Index. 

RECOMMENDATION 2.3

When the new poverty threshold concept is first implemented and for
several years thereafter, the Census Bureau should produce a second
set of poverty rates for evaluation purposes by using the new
thresholds updated only for price changes (rather than for changes in
consumption of the basic goods and services in the poverty budget). 

RECOMMENDATION 2.4

As part of implementing a new official U.S.  poverty measure, the
current threshold level for the reference family of two adults and
two children ($14,228 in 1992 dollars) should be reevaluated and a
new threshold level established with which to initiate a new series
of poverty statistics.  That reevaluation should take account of both
the new threshold concept and the real growth in consumption that has
occurred since the official threshold was first set 30 years ago. 

RECOMMENDATION 3.1

The four-person (two adult/two child) poverty threshold should be
adjusted for other family types by means of an equivalence scale that
reflects differences in consumption by adults and children under 18
and economies of scale for larger families.  A scale that meets these
criteria is the following:  children under 18 are treated as
consuming 70 percent as much as adults on average; economies of scale
are computed by taking the number of adult equivalents in the family
(i.e., the number of adults plus 0.70 times the number of children),
and then by raising this number to a power of from 0.65 to 0.75. 

RECOMMENDATION 3.2

The poverty thresholds should be adjusted for differences in the cost
of housing across geographic areas of the country.  Available data
from the decennial census permit the development of a reasonable
cost-of-housing index for nine regions and, within each region, for
several population size categories of metropolitan areas.  The index
should be applied to the housing portion of the poverty thresholds. 

RECOMMENDATION 3.3

Appropriate agencies should conduct research to determine methods
that could be used to update the geographic housing cost component of
the poverty thresholds between the decennial censuses. 

RECOMMENDATION 3.4

Appropriate agencies should conduct research to improve the
estimation of geographic cost-of-living differences in housing as
well as other components of the poverty budget.  Agencies should
consider improvements to data series, such as the BLS area price
indexes, that have the potential to support improved estimates of
cost-of-living differences. 

RECOMMENDATION 4.1

In developing poverty statistics, any significant change in the
definition of family resources should be accompanied by a consistent
adjustment of the poverty thresholds. 

RECOMMENDATION 4.2

The definition of family resources for comparison with the
appropriate poverty threshold should be disposable money and
near-money income.  Specifically, resources should be calculated as
follows: 

  -- estimate gross money income from all public and private sources
     for a family or unrelated individual (which is income as defined
     in the current measure);

  -- add the value of near-money nonmedical in-kind benefits, such as
     food stamps, subsidized housing, school lunches, and home energy
     assistance;

  -- deduct out-of-pocket medical care expenditures, including health
     insurance premiums;

  -- deduct income taxes and Social Security payroll taxes;

  -- for families in which there is no nonworking parent, deduct
     actual child care costs, per week worked, not to exceed the
     earnings of the parent with the lower earnings or a cap that is
     adjusted annually for inflation;

  -- for each working adult, deduct a flat amount per week worked
     (adjusted annually for inflation and not to exceed earnings) to
     account for work-related transportation and miscellaneous
     expenses; and

  -- deduct child support payments from the income of the payer. 

RECOMMENDATION 4.3

Appropriate agencies should work to develop one or more "medical care
risk" indexes that measure the economic risk to families and
individuals of having no or inadequate health insurance coverage. 
However, such indexes should be kept separate from the measure of
economic poverty. 

RECOMMENDATION 5.1

The Survey of Income and Program Participation should become the
basis of official U.S.  income and poverty statistics in place of the
March income supplement to the Current Population Survey.  Decisions
about the SIPP design and questionnaire should take account of the
data requirements for producing reliable time series of poverty
statistics using the proposed definition of family resources (money
and near-money income minus certain expenditures).  Priority should
be accorded to methodological research for SIPP that is relevant for
improved poverty measurement.  A particularly important problem to
address is population undercoverage, particularly of low-income
minority groups. 

RECOMMENDATION 5.2

To facilitate the transition to SIPP, the Census Bureau should
produce concurrent time series of poverty rates from both SIPP and
the March CPS by using the proposed revised threshold concept and
updating procedure and the proposed definition of family resources as
disposable income.  The concurrent series should be developed
starting with 1984, when SIPP was first introduced. 

RECOMMENDATION 5.3

The Census Bureau should routinely issue public-use files from both
SIPP and the March CPS that include the Bureau's best estimate of
disposable income and its components (taxes, in-kind benefits, child
care expenses, etc.) so that researchers can obtain poverty rates
consistent with the new threshold concept from either survey. 

RECOMMENDATION 5.4

Appropriate agencies should conduct research on methods to develop
poverty estimates from household surveys with limited income
information that are comparable to the estimates that would be
obtained from a fully implemented disposable income definition of
family resources. 

RECOMMENDATION 5.5

Appropriate agencies should conduct research on methods to construct
small-area poverty estimates from the limited information in the
decennial census that are comparable with the estimates that would be
obtained under a fully implemented disposable income concept.  In
addition, serious consideration should be given to adding one or two
questions to the decennial census to assist in the development of
comparable estimates. 

RECOMMENDATION 5.6

The Bureau of Labor Statistics should undertake a comprehensive
review of the Consumer Expenditure Survey to assess the costs and
benefits of changes to the survey design, questionnaire, sample size,
and other features that could improve the quality and usefulness of
the data.  The review should consider ways to improve the CEX for the
purpose of developing poverty thresholds, for making it possible at a
future date to measure poverty on the basis of a consumption or
expenditure concept of family resources, and for other analytic
purposes related to the measurement of consumption, income, and
savings. 

RECOMMENDATION 6.1

The official poverty measure should continue to be derived on an
annual basis.  Appropriate agencies should develop poverty measures
for periods that are shorter and longer than a year, with data from
SIPP and the Panel Study of Income Dynamics, for such purposes as
program evaluation.  Such measures may require the inclusion of asset
values in the family resource definition. 

RECOMMENDATION 6.2

The official measure of poverty should continue to use families and
unrelated individuals as the units of analysis for which thresholds
are defined and resources aggregated.  The definition of "family"
should be broadened for purposes of poverty measurement to include
cohabiting couples. 

RECOMMENDATION 6.3

Appropriate agencies should conduct research on the extent of
resource sharing among roommates and other household and family
members to determine if the definition of the unit of analysis for
the poverty measure should be modified in the future. 

RECOMMENDATION 6.4

In addition to the basic poverty counts and ratios for the total
population and groups--the number and proportion of poor people--the
official poverty series should provide statistics on the average
income and distribution of income for the poor.  The count and other
statistics should also be published for poverty measures in which
family resources are defined net of government taxes and transfers,
such as a measure that defines income in before-tax terms, a measure
that excludes means-tested government benefits from income, and a
measure that excludes all government benefits from income.  Such
measures can help assess the effects of government taxes and
transfers on poverty. 

RECOMMENDATION 7.1

Agencies responsible for federal assistance programs that use the
poverty guidelines derived from the official poverty thresholds (or a
multiple) to determine eligibility for benefits and services should
consider the use of the panel's proposed measure.  In their
assessment, agencies should determine whether it may be necessary to
modify the measure--for example, through a simpler definition of
family resources or by linking eligibility less closely to the
poverty thresholds because of possible budgetary constraints--to
better serve program objectives. 

RECOMMENDATION 8.1

The states should consider linking their need standard for the Aid to
Families With Dependent Children program to the panel's proposed
poverty measure and whether it may be necessary to modify this
measure to better serve program objectives. 


THE CEX, CPS, AND SIPP SURVEYS
========================================================== Appendix II

The following is a summary of the description of the three surveys in
Citro and Michael, Measuring Poverty, pp.  391-420. 

The Consumer Expenditure Survey (CEX) is a continuing survey of
households that primarily collects data on consumer expenditures
through a quarterly Interview Survey and a 2-week Diary Survey about
the U.S.  civilian noninstitutionalized population, including
military in civilian housing, students in college housing, and group
homes.  The CEX is sponsored by the Bureau of Labor Statistics (BLS)
and conducted by the Bureau of the Census.  The Interview Survey
sample size is 6,800 consumer units interviewed in-person at 3-month
intervals for 5 quarters; each month, one-fifth of the sample is new,
and one-fifth is completing its final interview.  The Diary Survey
sample is an additional 6,000 consumer units, each of which records
daily expenditures for 2 consecutive weeks.  Consumer units are
defined as a single person living alone or sharing a household with
others but financially independent; family members sharing a
household; two or more persons living together who share
responsibility for two of three major expenses--food, housing, and
other expenses.  The respondent is any member of the consumer unit
aged 16 or older with most knowledge of the unit's finances.  BLS
makes use of data from both the Interview and Diary Surveys to
develop a total picture of expenditures.  Researchers who analyze
expenditure data typically work with the Interview Survey, from which
users can construct annual data on expenditures and income. 

The CEX Interview Survey includes data on demographic characteristics
and work experience and job characteristics in the prior 12 months of
unit members aged 14 and over.  Detailed expenditure data are
collected quarterly on rent, housing assistance subsidies, mortgage
and home equity loan payments, and other home ownership costs such as
condominium fees; expenses of telephone, utilities, and fuels, and
home and household equipment maintenance and repair; purchases of
household equipment, appliances, furnishings, clothing, watches, and
jewelry; lease payments for and purchases of vehicles; vehicle
maintenance, repair, parts and accessories, licensing, and other
operating expenses; premiums for health and other insurance; coverage
by Medicaid and Medicare; medical and health expenditures and
reimbursements; educational expenses; trips and their expenses; and
gifts for people outside the family.  Global or usual expenditures
are obtained for books, subscriptions, membership, and entertainment
expenses; expenses for supermarkets and food stores, liquor, tobacco,
and food away from home; food stamp benefits and other meals provided
free; selected services and goods (for example, laundromats);
miscellaneous expenses (including babysitting); and occupational
expenses and contributions (including alimony, child support, and
charitable contributions).  An inventory is taken of major household
appliances and features of the dwelling unit, including descriptions
of each owned property, and the rental value of the owned home.  Data
are obtained on financial assets, including credit balances and
finance charges paid, and changes in financial assets.  Data on
income for the prior 12 months are obtained on wages,
self-employment, Social Security, and Supplemental Security Income
for each member aged 14 and over; and, for the household as a whole,
on workers' compensation and veterans' benefits, public assistance,
and interest and dividend income; income from trusts, pensions, and
annuities; net income or loss from roomers or rental property; and
income from alimony, child support, or other contributions from
persons outside the consumer unit.  Data are also obtained on taxes
paid through paycheck deductions, additional federal and state income
taxes, property and other taxes, and other taxes not reported
elsewhere (sales taxes are included in the component expenditures). 

The Current Population Survey (CPS) is a monthly survey of households
that collects primarily labor force data about the U.S.  civilian
noninstitutionalized population.  BLS sponsors the core of the CPS,
which is designed to provide monthly unemployment rates.  The Bureau
of the Census sponsors the March Income Supplement to the CPS, in
which respondents are asked supplementary questions about money
income received in the previous calendar year.  The CPS sample size
is about 60,000 households; households are considered in the sample
for 4 months, out of the sample for 8 months, and in again for 4
months.  The sample is updated continually to account for new
residential construction and periodically to incorporate information
from the decennial census.  The March CPS supplement includes
military people living in civilian housing and an additional sample
of 2,500 housing units that contained at least one adult of Hispanic
origin as of the preceding November interview. 

The core CPS interview elicits information on demographic
characteristics and labor force participation (such as hours worked,
reason for part-time work, industry, and occupation in which subjects
worked in the prior week, usual hours, and usual earnings).  The
March CPS supplement includes information on labor force
participation and job history in the prior calendar year for each
household member aged 15 or older; private and public health
insurance coverage; annual income for each household member aged 15
or older by detailed source--about 30 types of regular cash income,
including wages and salaries; net self-employment income; Social
Security and other government program cash benefits; child support;
alimony; private, government, and military pensions; retirement and
insurance payments; money from relatives or friends; interest and
dividend income; and Pell grants and other educational financial aid;
and participation in noncash benefits programs, such as energy
assistance, food stamps, public housing, and School Lunch. 

The Survey of Income and Program Participation (SIPP) is a continuing
panel survey conducted and sponsored by the Bureau of the Census. 
The sample covers the U.S.  civilian noninstitutionalized population
and members of the armed forces living off post or with their
families on post.  The reporting unit is the household, and the
respondents are household members aged 15 or older.  Up until 1996,
each sample of households (panel) was interviewed every 4 months for
32 months, and the sample size varied from 12,500 to 23,500
households per panel; new panels were introduced every year.  Under
the SIPP's current design, a new panel will be introduced every 4
years (that is, with no overlap across panels) and interviewed every
4 months for 48 months, and the panel size will be increased to
37,000 households. 

The current SIPP core interview elicits the following:  demographic
characteristics; monthly information on labor force participation,
job characteristics, and earnings; monthly information on public and
private health insurance coverage; detailed monthly information on
sources and amounts of income from public and private transfer
payments and on noncash benefits; and information for the 4-month
period on income from assets.  In total, about 65 separate sources of
cash income are identified for each household member aged 15 or over,
together with benefits from 7 in-kind programs; for a few sources,
annual amounts are obtained in special interview supplements called
"topical modules." Data are also collected, once or twice in each
panel, on a wide range of subjects, including annual income and
income taxes; educational financing and enrollment; eligibility for
selected programs (including expenditures on shelter, out-of-pocket
medical care costs, and dependent care); housing costs and financing;
individual retirement accounts; and wealth (assets, including
property, and liabilities). 


      COMPARISONS BETWEEN THE CPS
      AND SIPP
------------------------------------------------------ Appendix II:0.1

The SIPP obtains somewhat more detailed information on topics
relevant to measuring poverty than the CPS does.  For example, the
March CPS supplement asks no questions about any type of tax payment. 
The Bureau of the Census, instead, models federal and state income
taxes and payroll taxes of each household for its experimental
poverty estimates.  The SIPP includes twice for each panel questions
about tax payments for the previous year.  However, its questions on
such topics as tax liability and adjusted gross income have high
nonresponse rates, primarily because only one-third of respondents
use their tax forms to answer the questions, as they are asked to do. 
In addition, the CPS asks whether a household received benefits from
the School Lunch Program or housing assistance the previous year but
asks about the amounts received only for food stamps and energy
assistance.  The SIPP, on the other hand, obtains monthly information
on the number of people who receive and benefit amounts for food
stamps and the Special Supplemental Food Program for Women, Infants
and Children (WIC); information every 4 months about energy
assistance and the School Lunch and Breakfast programs; and
information twice a panel about public housing and subsidized
housing.  Finally, whereas the CPS does not ask questions about
expenses for medical care or child care, the SIPP obtains detailed
information on these at least once each panel. 

The National Research Council (NRC) panel, in reviewing research on
data quality in the two surveys, found that the SIPP is favored on
some indicators, such as item nonresponse rates and amounts of Social
Security and other income types collected (in comparison with
independent estimates), while the March CPS supplement fares better
on household nonresponse rates and the amount of wages and salaries
collected.  Citro and Michael report that "[o]verall, however, SIPP
appears to be doing a better job at measuring income, particularly at
the lower end of the income distribution.  SIPP's more frequent
interviews and detailed probing for receipt of different income
sources appear to be identifying more recipients of many income types
than the March CPS, although the dollar amounts reported are not
always more complete in SIPP than in the CPS."\24 As a consequence,
SIPP poverty estimates are consistently several points below those
from the March CPS.  In addition, the panel and Bureau of the Census
officials we interviewed felt that the SIPP, because of its focus on
income and program participation, was in a better position than the
CPS to provide both higher quality information on income and the
other information on family expenditures needed for a revised
definition of family resources for measuring poverty. 



(See figure in printed edition.)Appendix III

--------------------
\24 Citro and Michael, Measuring Poverty, p.  411. 


COMMENTS FROM THE BUREAU OF LABOR
STATISTICS
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)




(See figure in printed edition.)APPENDIX IV
COMMENTS FROM THE BUREAU OF THE
CENSUS
========================================================== Appendix II



(See figure in printed edition.)




(See figure in printed edition.)Appendix V
COMMENTS FROM THE OFFICE OF
INFORMATION AND REGULATORY AFFAIRS
========================================================== Appendix II



(See figure in printed edition.)


BIBLIOGRAPHY
=========================================================== Appendix 0

Betson, David M.  "Is Everything Relative?  The Role of Equivalence
Scales in Poverty Measurement." Unpublished paper, dated March 1996,
available from the author at the Department of Economics, University
of Notre Dame, South Bend, Ind. 

Citro, Constance F., and Robert T.  Michael, eds.  Measuring Poverty: 
A New Approach.  Washington, D.C.:  National Academy Press, 1995. 

Cutler, David M., and Lawrence F.  Katz.  "Macroeconomic Performance
and the Disadvantaged." Brookings Papers on Economic Activity, Vol. 
2 (1991), pp.  1-74. 

Federman, Maya, Thesia I.  Garner, Kathleen Short, W.  Bowman Cutter
IV, John Kiely, David Levine, Duane McGough, and Marilyn McMillen. 
"What Does It Mean to Be Poor in America?" Monthly Labor Review,
119(5) (May 1996), pp.  3-17. 

Fisher, Gordon M.  "Relative or Absolute:  New Light on the Behavior
of Poverty Lines Over Time." Newsletter of the Government Statistics
Section and the Social Statistics Section of the American Statistical
Association (summer 1996), pp.  10-11. 

Garner, Thesia I., Geoffrey Paulin, Stephanie Shipp, Kathleen Short,
and Chuck Nelson.  "Experimental Poverty Measurement for the 1990's."
Paper presented at the Allied Social Science meetings, New Orleans,
La., January 4, 1997. 

Johnson, David.  "Poverty Lines and the Measurement of Poverty."
Australian Economic Review, 113 (First Quarter 1996), pp.  110-126. 

Manski, Charles F., Susan E.  Mayer, Robert Haveman, Janet L. 
Norwood, Harold W.  Watts, Wendell Primus, and Walter Oi. 
"Assessments of the Panel Report." Focus, 17(1) (summer 1995), pp. 
15-28. 

Mayer, Susan E., and Christopher Jencks.  "Poverty and the
Distribution of Material Hardship." The Journal of Human Resources,
24(1) (winter 1989), pp.  88-113. 

Rogers, John, and Maureen Gray.  "CE Data:  Quintiles of Income
Versus Quintiles of Outlays." Monthly Labor Review, (Dec.  1994), pp. 
32-37. 

Ruggles, Patricia.  Drawing the Line:  Alternative Poverty Measures
and Their Implications for Public Policy.  Washington, D.C.:  The
Urban Institute Press, 1990. 

Short, Kathleen, Martina Shea, and T.  J.  Eller.  "Work Related
Expenditures in a New Measure of Poverty." Paper presented at the
American Statistical Association meetings, Chicago, Ill., August 7,
1996. 

Slesnick, Daniel T.  "Gaining Ground:  Poverty in the Postwar United
States." Journal of Political Economy, 101(1) (1993), pp.  1-38. 

U.S.  Bureau of the Census.  Estimates of Poverty Including the Value
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U.S.  Government Printing Office (GPO), 1985. 

_____.  Measuring the Effect of Benefits and Taxes on Income and
Poverty:  1990 (Current Population Reports, Series P-60, No. 
176-RD).  Washington, D.C.:  GPO, 1991. 

_____.  Income, Poverty and Valuation of Noncash Benefits:  1994
(Current Population Reports, Series P-60, No.  189).  Washington,
D.C.:  GPO, 1996. 

_____.  Poverty in the United States:  1995 (Current Population
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Vaughan, Denton R.  "Exploring the Use of the Public's Views to Set
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RELATED GAO PRODUCTS
=========================================================== Appendix 1

Alternative Poverty Measures (GAO/GGD-96-183R, Sept.  10, 1996). 

Poverty Measurement:  Adjusting for Geographic Cost-of-Living
Difference (GAO/GGD-95-64, Mar.  9, 1995). 

Federal Aid:  Revising Poverty Statistics Affects Fairness of
Allocation Formulas (GAO/HEHS-94-165, May 20, 1994). 

Poverty Trends, 1980-88:  Changes in Family Composition and Income
Sources Among the Poor (GAO/PEMD-92-34, Sept.  10, 1992). 

Noncash Benefits:  Methodological Review of Experimental Valuation
Methods Indicates Many Problems Remain (GAO/PEMD-87-23, Sept.  30,
1987). 


*** End of document. ***