Formal measurement of poverty in the United States is now about 40 years old. This paper first briefly describes the origins and basis of the official poverty thresholds adopted by the federal government in the late 1960s. Then, it discusses in some detail some of the more current issues that observers suggest must be addressed if changes are to be made. The final sections discuss recent efforts to propose alternates to the current official approach.
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Alternative Measures of Income Poverty and the Anti-Poverty Effects of Taxes and Transfers
June 2005
Working Paper Number:
CES-05-08
The Census Bureau prepared a number of alternative income-based measures of poverty to illustrate the distributional impacts of several alternatives to the official measure. The paper examines five income variants for two different units of analysis (families and households) for two different assumptions about inflation (the historical Consumer Price Index and a 'Research Series' alternative that uses current methods) for two different sets of thresholds (official and a formula-based alternative base on three parameters). The poverty rate effects are analyzed for the total population, the distributional effects are analyzed using poverty shares, and the anti-poverty effects of taxes and transfers are analyzed using a percentage reduction in poverty rates. Suggestions for future research are included.
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Lessons for Targeted Program Evaluation: A Personal and Professional History of the Survey of Program Dynamics
August 2007
Working Paper Number:
CES-07-24
The Survey of Program Dynamics (SPD) was created by the 1996 welfare reform legislation to facilitate its evaluation. This paper describes the evolution of that survey, discusses its implementation, and draws lessons for future evaluation. Large-scale surveys can be an important part of a portfolio of evaluation methods, but sufficient time must be given to data collection agencies if a high-quality longitudinal survey is expected. Such a survey must have both internal (agency) and external (policy analyst) buy-in. Investments in data analysis by agency staff, downplayed in favor of larger sample sizes given a fixed budget, could have contributed to more external acceptance. More attention up-front to reducing the potentially deleterious effects of attrition in longitudinal surveys, such as through the use of monetary incentives, might have been worthwhile. Given the problems encountered by the Census Bureau in producing the SPD, I argue that ongoing multi-purpose longitudinal surveys like the Survey of Income and Program Participation are potentially more valuable than episodic special-purpose surveys.
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The Antipoverty Impact of the EITC: New Estimates from Survey and Administrative Tax Records
April 2019
Working Paper Number:
CES-19-14R
We reassess the antipoverty effects of the EITC using unique data linking the CPS Annual Social and Economic Supplement to IRS data for the same individuals spanning years 2005-2016. We compare EITC benefits from standard simulators to administrative EITC payments and find that significantly more actual EITC payments flow to childless tax units than predicted, and to those whose family income places them above official poverty thresholds. However, actual EITC payments appear to be target efficient at the tax unit level. In 2016, about 3.1 million persons were lifted out of poverty by the EITC, substantially less than prior estimates.
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Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data
September 2009
Working Paper Number:
CES-09-26
Although the vast majority of US research on trends in the inequality of family income is based on public-use March Current Population Survey (CPS) data, a new wave of research based on Internal Revenue Service (IRS) tax return data reports substantially higher levels of inequality and faster growing trends. We show that these apparently inconsistent estimates can largely be reconciled once one uses internal CPS data (which better captures the top of the income distribution than public-use CPS data) and defines the income distribution in the same way. Using internal CPS data for 1967'2006, we closely match the IRS data-based estimates of top income shares reported by Piketty and Saez (2003), with the exception of the share of the top 1 percent of the distribution during 1993'2000. Our results imply that, if inequality has increased substantially since 1993, the increase is confined to income changes for those in the top 1 percent of the distribution.
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Health-Related Research Using Confidential U.S. Census Bureau Data
August 2008
Working Paper Number:
CES-08-21
Economic studies on health-related issues have the potential to benefit all Americans. The approaches for dealing with the growth of health care costs and health insurance coverage are ever changing and information is needed on their efficacy. Research on health-related topics has been conducted for about a decade at the Census Bureau\u2019s Center for Economic Studies and the Research Data Centers. This paper begins by describing the confidential business and demographic Census Bureau data products used in this research. The discussion continues with summaries of nearly 30 papers, including how this work has benefited the Census Bureau and its research findings. Some focus on data linkages and assessing data quality, while others address important questions in the employer, public, and individual insurance markets. This research could not have been accomplished with public-use data. The newly available data from the Agency for Healthcare Research and Quality and National Center for Health Statistics, as well as additional Census Bureau data now available in the Research Data Centers are also discussed.
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Trends in the Relative Household Income of Working-Age Men with Work Limitations: Correcting the Record Using Internal Current Population Survey Data
March 2008
Working Paper Number:
CES-08-05
Previous research measuring the economic well-being of working-age men with work limitations relative to such men without work limitations in the public use March Current Population Survey (CPS) systematically understates the mean household income of both groups; overstates the relative household income of those with work limitations; and understates the decline in their relative household income over time. Using the internal March CPS, we demonstrate this by creating a cell mean series beginning in 1975 that provides the mean reported income of all topcoded persons for each source of income in the public use March CPS data. Using our cell mean series with the public use March CPS, we closely match the yearly mean income of working-age men with and without work limitations over the period 1987-2004 in the internal data and show that this match is superior to ones using alternative methods of correcting for topcoding currently used in the disability literature. We then provide levels and trends in the relative income of working-age men with work limitations from 1980-2006, the earliest year in the March CPS that such comparisons can be made.
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Poverty Estimates for Places in the United States
September 2005
Working Paper Number:
CES-05-12
This paper first describes some historical poverty trends, overall and for demographic groups and broad locations within the U.S. from an ongoing household survey, and then presents some specific information on poverty for localities by size, from the most recent decennial census (2000). Rural poverty exceeded urban poverty in 1969 and 1979, but urban poverty in 1999 was higher than rural poverty. Non-metropolitan area poverty exceeded metropolitan area poverty in each of the four censuses, but within each of those areas, rural poverty is now less than urban poverty. Within metropolitan areas, poverty is highest for those in central cities. For urbanized areas (50,000 or more population), the poverty rate is lower as the area gets larger, with the exception of the very largest-sized areas. This higher poverty for the largest places is accounted for entirely by the higher poverty rate for the central city or cities in those urban agglomerations, as the poverty rates for the parts of the urbanized areas not in the central place continue to fall as the area itself gets larger. Some of the critical relationships affecting the poverty rate of places appear to be the location of certain types of people - female householders, non-citizens, people of color, and college graduates.
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Consistent Cell Means for Topcoded Incomes in the Public Use March CPS (1976-2007)
March 2008
Working Paper Number:
CES-08-06
Using the internal March CPS, we create and in this paper distribute to the larger research community a cell mean series that provides the mean of all income values above the topcode for any income source of any individual in the public use March CPS that has been topcoded since 1976. We also describe our construction of this series. When we use this series together with the public use March CPS, we closely match the yearly mean income levels and income inequalities of the U.S. population found using the internal March CPS data.
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Measuring Income of the Aged in Household Surveys: Evidence from Linked Administrative Records
June 2024
Working Paper Number:
CES-24-32
Research has shown that household survey estimates of retirement income (defined benefit pensions and defined contribution account withdrawals) suffer from substantial underreporting which biases downward measures of financial well-being among the aged. Using data from both the redesigned 2016 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) and the Health and Retirement Study (HRS), each matched with administrative records, we examine to what extent underreporting of retirement income affects key statistics such as reliance on Social Security benefits and poverty among the aged. We find that underreporting of retirement income is still prevalent in the CPS ASEC. While the HRS does a better job than the CPS ASEC in terms of capturing retirement income, it still falls considerably short compared to administrative records. Consequently, the relative importance of Social Security income remains overstated in household surveys'53 percent of elderly beneficiaries in the CPS ASEC and 49 percent in the HRS rely on Social Security for the majority of their incomes compared to 42 percent in the linked administrative data. The poverty rate for those aged 65 and over is also overstated'8.8 percent in the CPS ASEC and 7.4 percent in the HRS compared to 6.4 percent in the linked administrative data. Our results illustrate the effects of using alternative data sources in producing key statistics from the Social Security Administration's Income of the Aged publication.
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Measuring the Electronic Economy: Current Status and Next Steps
June 2000
Working Paper Number:
CES-00-10
The recent growth of consumer retailing over the Internet draws attention to the electronic economy. However, businesses also conduct other business processes over computer networks, and many have been doing so for some time. Uses of computer networks attract attention because of assertions that they lead to new products and services, new delivery methods, streamlined or re-engineered business processes, new business structures, and enhanced business performance. These changes, in turn, potentially affect the performance of the entire economy, including economic growth, productivity, prices, employment, trade, and the structures of businesses, regions, and markets. Evaluating these assertions, and their effects on economic performance, requires solid statistical information about the electronic economy. This paper develops principles for identifying information critical to measuring the size and evaluating the potential effects of the electronic economy, relates that information to current data collection programs, and notes relevant measurement issues. Some of the required information about the electronic economy can be collected by adding questions to existing surveys, making the scope of existing surveys consistent, or developing new surveys. However, many key pieces of information pose significant challenges to economic measurement. While some of those challenges are specific to the electronic economy, others are long-standing ones. Interest in the electronic economy highlights the importance of continuing attempts to address these challenges. Improving and enhancing the statistical system to provide information about the electronic economy, therefore, would also substantially improve the baseline information available for evaluating the performance of the entire economy.
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