BOOK REVIEWS
Measuring Poverty: A New Approach. By The
National Research Council, Panel on Poverty and
·Family ·Assistance: Concepts, Information Needs, and
Measurement Methods, National Acadeiny Press,
1995.
Reviewed by Larry R. Spain*
Measuring Poverty: A New Approach is a report of the Panel
on Poverty and Family Assistance of the National Research Coun~
cil, commissioned by. the Bureau of. Labor Statistics of the U.S.
Depar.tment.,of- Labor to undertake a study of the official poverty
guideline and alternatives to it. In particular, the study was to ex~
plore "concepts, . . . measurement methods, and information
needs for a poverty measure, but not necessarily to specify a new
poverty 'line'.''1
How do we define poverty? How and why should we measure
the extent and distribution of poverty over time and among vari~
ous groups by race, age, and gender? What are the policy implica~
tions .and effects on the poverty rate in the selection of one mea~
sure of poverty over another? Should. a poverty threshold be linked
to public assistance benefits provided to the poor? These are some
* Associate Clinical Professor and Director. of Legal Clinic, University of North Dakota
School of Law.
1. NATIONAL RESEARCH CoUNcn., PANEL ON PoVERTY AND FAMn.Y AssiSTANCE, MEASURING PoVERTY: A NEw APPROACH xv (Constance F. Citro & Robert T. Michael, eds., l995).
173
Poverty Law Journal
174
[Vol. 2
of the principal questions addressed by this extensive report of the
Nationf;l.l Research Council.
Measuring Poverty: A New Approach starts with a definition
of poverty as, in essence, a matter of economic deprivation, a lack
of access to minimally adequate resources. 2 The poverty threshold
is defined as that amount of resources, including money and certain in-kind benefits, which are deemed essential to attain a minimally adequate standard of living. 3
The current poverty threshold originated more than thirty
years ago through the work of an analyst with the Social Security
Administration, Mollie Orshansky, who used cost estimates for
what was considered a minimally adequate nutritional ·food .budget
for families of various sizes imd types. The resulting figure was
then multiplied by a factor of three on the assumption that the
cost of food represented one-third of expenditures for all necessities. 4 However, this methodology has been.frequ~ntly criticized as
no longer representing an accurate measure of poverty, primarily
due to changes in consumption patterns and differing concepts
over time of what constitutes a minimally adequate standard of
living IUld, conseq'Uently, underestimating the extent of poverty.6
In fact, the original author of the poverty standard has noted its
deficiencies since it was first developed.6
Es~blishi1;1_g
a measure o(poverty is indeed a controversial undertaking inasmuch as, in at least · some respects, it .represents· a
subjective and sometimes arbitrary process representing a variety
of value judgments and not necessarily a precise measurement by
scientific sta.IJ.dards:7 On the other hand, the development of a poverty standard can, as this book suggests, result from a thorough
aiid detailed consideration and evaluation of alternative ana1,ytic8l
I
2. Id. at 19.
3. 1d. at 2.
4. PATRICIA. RuGGLES, DRAWING THE LINE, ALTERNATIVE P-OLICY MEAStiRES ANP THEIR
IMPLICATIONS POR PUBUC POLICY 4 {1990).
5. Id. at 47-52, 167-68; Maggie Spade, Poverty Measures Mask the Depth of Poverty
in America, 28 QLEARINGHOUSE REVIEW 517 {1994).
6. Mollie Orshansky, Who's Who Among the Poor: A Demographic View of Poverty,
Soc. SEC. BULL., July 1965, at 9.
7. In fa~;:t, one of the panel members, John F. Cogan, wrote a dissent to the Report of
the Panel on Poverty and Family Assistance on the basis that its recommendations for revision of the official poverty measure were not based on scientific evidence and fell outside the
National Research Co:uncil's mission "to deliver science advice" to the government. -NATIONAL RESEARCH COUNCIL, supra note 1, app. A, at 385-90.
1996]
Measuring Poverty
175
methods for measuring poverty on which a consensus can be arrived at among experts in the field. The Panel also recognizes that
there is a need for constant refinement in the measurement of poverty· and offers suggestions throughout its report as to additional
subjects of research which should be undertaken and further data
collection which should be pursued to improve measurement techniques. The Panel thus recognizes that the measurement .of poverty will require an evolving, not a static, methodology.
The report and recommendations from this study resulted
from the review of· an extensive body of literature on poverty and
poverty measurement and gave serious and thoughtful consideration to alternative measures for assessing the numbers and characteristics of individuals in poverty. While the Panel's report inchides a thorough analysis of statistical issues and alternative
methods for measurement of poverty, as well as the basis for their
conclusions and ultimate recommendations, it is·not so technical in
nature as to be of no interest to those not trained in statistical and
economic measurement techniques. For the general reader, however, the amount of detail and analysis of the varying methods of
measuring poverty and· their effect on poverty rates· can, at times,
be overwhelming. On the other hand, for those desiring only a
summary of the various conceptual approaches to defining poverty
and the rationale for the Panel's recommended changes in the officiai·:melfSmtn>fpoverty innoiitechtiical.language, Chapter 1, "Introduction and Overview,"8 satisfies those needs.
To replace the current poverty guide~ines, Measuring Poverty:
A New Approach recommends the use of a poverty threshold consisting of a budget for the three basic categories of food, clothing,
and shelter (including utilities), plus a small additional amount for
other needs (e.g. household supplies, personal care, and transportation), based on actual consumption data adjusted for family type
and geographical differences in housing costs, to be updated annually.9 This marks a significant departure from the current measure
of poverty in that it recognizes the need in constructing a threshold of poverty to utilize actual expenditure data for those goods
and services deemed necessary for a minimal standard of living,
while acknowledging explicitly that there exist differences in costs
B. Id. at 17-96.
9. Id. at 4-5.
176
Poverty Law Journal
[Vol. 2
of living, primarily in the area of housing, based on geographical
location.
In failing to recommend a specific poverty threshold in favor
of a suggested range for establishing such a threshold, the Panel
may have fulfilled its mission, but opened the door for criticism.
Such an approach explicitly acknowledges that establishing a mea~
sure of poverty is ultimately a matter of judgment to be exercised
by policymakers who will conceptualize poverty as a social or polit~
ical value judgment, while ignoring the degree of economic dispar~
ity that exists for a significant part of our society.
In comparing available resources to the poverty threshold for
determining whether one is in poverty, the Panel rejects the standard of gross income utilized by the current poverty guidelines for
a standard which includes money and near-money disposable income as well as the receipt of in-kind benefits such as food stamps,
subsidized housing, school lunches, and utility assistance; however,
the Panel would exclude taxes and certain work-related expenses,
child care expenses, child support paid to another household, and
out-of-pocket medical expenses, including insurance premiums. 10
Such an approach, which takes into consideration the receipt of inkind benefits, is a concept that enjoys nearly universal consensus
within the research community.11
The use of "countable income" in determining whether one is
Included within t he iio-verty-~popuiatioi:i represents an improvement
over the existing measure inasmuch as it recognizes only that income "actually available" for the purchase of goods and services,
and is a concept familiar to those who have worked with public
benefit programs. While many conservatives have argued that a
valid poverty measure must take into account the value of all inkind benefits an individual receives, including medical care, the
Panel rejects the notion of including the value of medical care in
assessing whether one is in poverty. In ·contrast, the Panel recommends only that those out-of-pocket medical expenses incurred by
an individual be considered a deduCtion from income for the reason that there are far too many variables involved in assessing
medical needs, and the receipt of medical benefits does not necessarily free up income for other items of consumption. 12
10. Id. at 9~10.
11. Id. at 219.
12. Id. at 225.
1996]
Measuring Poverty
177
The results of this study and possible implementation of its
recommendations in a new measure of poverty has important pub~
lie policy implications and, for that reason alone, is an important
contribution to the field of research on poverty. Inasmuch as the
poverty thresholds are tied directly to eligibility requirements for
at least twenty~five public benefit programs, ranging from food
stamps to medical assistance,13 any change in the official poverty
standard will necessarily have an effect on the pool of eligible re~
cipients as well as program costs, in a time when there is intense
public debate about reducing governmental costs for social pro~
grams and to "end welfare as we know it." Such effects which will
result from the adoption of a new measure of poverty may well
explain why, despite considerable criticism of the existing poverty
threshold, no alternative measure has been capable of achieving
consensus in an increasingly partisan society. The report does include a discussion of the effects that their recommended measure
will have on the rate and distribution of poverty in society. One of
the more interesting results is that, compared with the current
standard, the recommended methodology would result in a lower
poverty rate for individuals in families on public assistance and a
higher rate for persons in working families. 14
Throughout the report, the Panel is quite explicit as to the
many policy issues which must be resolved when devising a mea~
sure of poverty and· forces the reader to move from an abstract
notion-·-of-the'"com:-ept-~uff)l)Verty to-the ·more practical realities of
obtaining a more thorough understanding of the many dimensions
of economic deprivation in our society. The measurement of pov~
erty, particularly over time, is a key economic indicator which per~
mits us to make an assessment of the degree of progress we, as a
society, have made in alleviating the most basic of human needs.
While this book is an important resource for policy-makers, it
should also be suggested reading for anyone with a genuine interest in providing services to the poor to gain a better understanding
of the issues involved in measuring the extent of poverty in our
society. For those individuals involved in implementing and administering the delivery of benefits and services to the poor as a
means of improving their standard of living, Measuring Poverty: A
New Approach will result in those individuals gaining additional
13. /d. at 14.
14. Id. at 259.
178
Poverty Law Journal
[Vol. 2
insight into how th,e poor as a group are identified and enable
them to consider alternative services in order to focus on the peo~
ple who are most in need. Finally, the general public, whose per~
ceptions and attitudes regarding the poor often dictate and control
public policy, would benefit from reading this book by gaining a
greater level of understanding of the distribution and significant
level of economic deprivation which exists in our society and our
general economic well~ being.
'