|November 24th, 2012|
I recently was talking to someone who claimed that the US Federal poverty line understates poverty:
When the poverty line was developed in the 60s, the average family spent about 1/3 of their income on food. The government had reasonably good numbers for the minimum cost of food but not for other costs of living and so defined the poverty line as three times this minimum food cost. Over time food has gotten cheaper and so is now a much smaller share of people's expenses, but because the poverty line figure is still set at three times the cost of food it's much too low.This seemed unlikely, so I made a note to look it up. The US census has a history of the poverty line on its website, and it turns out that the description above is mostly correct. They really did start with the USDA economy food plan and multiply by three. But in the years since it's been adjusted for inflation, not recalculated from the cost of food each year. But it turns out they might as well have: it's still pretty close to three times the cost of food:
Example annual numbers for a male-female couple with two kids:
(This is still not a good measurement of poverty. A better one would use region-specific estimates of a minimum "basket of goods" needed to live on.)
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