Panel Paper: Evaluating the Success of President Johnson’s War on Poverty: Revisiting the Historical Record Using a Full-Income Poverty Measure

Friday, November 8, 2019
Plaza Building: Concourse Level, Plaza Court 4 (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Richard Burkhauser1, Kevin Corinth2, James Elwell1 and Jeff Larrimore3, (1)Cornell University, (2)American Enterprise Institute, (3)Federal Reserve Board

To evaluate success in President Johnson’s War on Poverty it is necessary to evaluate that success based on his scientifically arbitrary but policy relevant terms of engagement. No existing poverty measure is capable of measuring its success. We do so here by developing a Full-Income Poverty Measure (FPM) anchored to the Official Poverty Measure in 1963 (approximately equal to the one-fifth of Americans President Johnson declared to be in poverty at that time). We update nominal FPM thresholds for inflation each year and include as resources all sources of income (incorporating taxes as well as cash and in-kind transfers, including the market value of employer and government provided health insurance). Using Current Population Survey data, we show that our FPM-based poverty rate fell from 19.5 percent in 1963 to 2.3 percent in 2017. This compares to a reduction from 19.5 to 12.3 percent over the same period based on the Official Poverty Measure. Our wider income definition, the use of a more accurate inflation measure, and the use of a household rather than a family sharing unit are important drivers of this difference in poverty trends.