Panel Paper: What Difference Does A Measure Make?: A Three-Fold Comparison with Policy Implications

Thursday, November 8, 2012 : 10:15 AM
Chesapeake (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Diana Pearce, School of Social Work, University of Washington

The economic distress from the recession and subsequent slow recovery has resulted in increased policy attention devoted to poverty and inequality, and their measurement.  This paper will compare the results of using three measures of poverty and income inadequacy: 1) the federal poverty measure (FPL), 2) its experimental revision, the Supplemental Poverty Measure (SPM), and 3) a basic needs budget measure, the Self-Sufficiency Standard (SSS).  Previous research by the author has demonstrated that controlling for geographic differences in living costs and family composition alters the traditional measure’s profile of poverty (e.g. higher relative rates for Hispanics compared to other measures, much higher rates for California relative to the South). 

The focus of this paper will be on two subsequent questions:

  • How and why do trends over time in rates and composition of poverty and income inadequacy, particularly since the onset of the Great Recession, differ by the measure used?
  • Given that safety net programs aim to reduce poverty and income inadequacy, how does the choice of measure affect the findings regarding program impact?   

The paper will use a combination of data and analyses.  These will primarily include ACS and Census data coded for household-level poverty status and Self-Sufficiency Standard scores as well as published analyses by Census researchers and others using the Supplemental Poverty Measure (see Short, 2011).        

The paper will begin with a short description of the three measures and how they differ conceptually and methodologically, but the paper’s focus is on comparing and contrasting the impact of the choice of a given measure on findings.

The first question will be examined through a case study of trends over time, using the state of Pennsylvania during the Great Recession and focusing on the working-age population.  Overall, the federal poverty rate for Pennsylvania households increased from 9.1 to 10.9% between 2007 and 2010, while the income inadequacy rate increased more substantially, from 20.8 to 25.6% over the same time period.  Examination of subgroups and variables, such as household composition and employment patterns will be used to explain the   larger increase in the Standard.  For example, it is expected that the Standard will be more sensitive to loss of jobs, lower wages, and decreased hours than the (much lower thresholds) of the federal poverty level or SPM. 

The second research question will address the impact of various “safety net” programs on the rates of poverty and income inadequacy as indicated by each of the three measures.  Programs examined will include unemployment compensation, tax credits, and in-kind benefits such as nutrition, child care and housing assistance.  The strengths and weaknesses of each measure in evaluating program impact will be assessed.

The paper will conclude with implications for policy of using different measures of poverty and income inadequacy.  How, for example, does the choice of measure affect the extent of apparent “need” and therefore the rationale for a given program or benefit?   How does the choice of measure change the picture of apparent effectiveness of given programs in reducing poverty and income inadequacy?