The Poverty of the Poverty Rate: Measure and Mismeasure of Material Deprivation in Modern America

Overview

Since its inception in 1965, America's official poverty rate (OPR) has been the single most important statistic used by policymakers and concerned citizens to evaluate success or failure in the nation's ongoing struggle against material need. But in a critical new examination of this widely followed measure, Nicholas Eberstadt charges that the OPR is, in reality, "a broken compass"—a flawed index generating increasingly misleading numbers about poverty in the United States. The OPR was originally intended to ...
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Overview

Since its inception in 1965, America's official poverty rate (OPR) has been the single most important statistic used by policymakers and concerned citizens to evaluate success or failure in the nation's ongoing struggle against material need. But in a critical new examination of this widely followed measure, Nicholas Eberstadt charges that the OPR is, in reality, "a broken compass"—a flawed index generating increasingly misleading numbers about poverty in the United States. The OPR was originally intended to track an absolute level of poverty over time by comparing a family's reported pretax income against a corresponding poverty threshold. But for the past three decades, the OPR has reported trends that are jarringly inconsistent with other statistical indicators of material deprivation. What is the reason for this curious discrepancy? Eberstadt suggests that the OPR's most serious problem is its implicit assumption that poor families will spend no more than their reported annual incomes—in other words, that their income levels are an accurate proxy for their consumption levels. In the decades since the OPR was unveiled, the disparity between reported income and expenditures has progressively widened, making income an ever less reliable predictor of consumption patterns—and, consequently, living standards—for America's poorer families. In The Poverty of "The Poverty Rate," Eberstadt contends that the defects of the current poverty rate are not only severe but irremediable. Income-based measures cannot offer a faithful portrait of consumption patterns or material well-being in the United States. Central though the OPR has become to antipoverty policy, this "untrustworthy yardstick" should be discarded and replaced by more accurate measures of deprivation.
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Product Details

  • ISBN-13: 9780844742465
  • Publisher: Aei Press
  • Publication date: 11/25/2008
  • Pages: 196
  • Product dimensions: 6.00 (w) x 8.90 (h) x 0.60 (d)

Meet the Author

Nicholas Eberstadt is the Henry Wendt Scholar in Political Economy at the American Enterprise Institute.
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Table of Contents

List of Illustrations ix

Acknowledgments xiii

Introduction 1

Why This Book 3

A Road Map for This Study 5

1 What Is the Official Poverty Rate, and What Does It Actually Measure? 6

2 Poverty Trends in Modern America, According to the Official Poverty Rate 12

3 The Official Poverty Rate versus Other Statistical Indicators Bearing on Material Deprivation in America: Growing Discrepancies and Contradictions 17

4 Systematic Differences between Income and Expenditures among Poorer Households in Modern America: A Blind Spot for the Official Poverty Rate 28

Unresolved Technical Criticisms of the Federal Poverty Measure 29

Contrasting Measures of Material Standing: Income versus Consumption, Consumer Expenditures, and Consumer Outlays 33

Income versus Expenditures for Lower-Income Americans: Evidence from the Consumer Expenditure Survey 36

Do Reported Expenditures Understate Consumption Levels for Lower-Income Households? 40

The Declining Reliability of Income as a Predictor of Household Budgets for Poverty-Level Families 44

5 Accounting for the Widening Reported Gap between Income and Consumption for Lower-Income Americans 48

Unsustainable "Overspending" by the Poor? 49

Changes in CE Survey Methods and Practices 57

Income Underreporting 59

Increased Year-to-Year Income Variability 63

A Continuing Puzzle 73

6 Trends in Living Standards for Low-Income Americans: Indications from Physical and Biometric Data 76

The Principal Categories of Expenditures of Low-Income Consumers 78

Food and Nutrition 80

Housing and Home Appliances 82

Transportation 86

Health and Medical Care 88

Living Standards for America's Poor: ConstantProgress under a "Constant" Measure 95

Conclusion: Wanted-New Poverty Measure(s) for Modern America 98

The Case against the Official Poverty Rate 98

Don't "Mend" It-End It 102

New Directions 107

Appendix 111

Notes 127

Bibliography 153

Index 167

About the Author 175

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