The Poverty of the Poverty Rate: Measure and Mismeasure of by Nicholas Eberstadt

By Nicholas Eberstadt

Due to the fact its inception in 1965, America's legit poverty cost (OPR) has been the one most vital statistic utilized by policymakers and anxious electorate to judge luck or failure within the nation's ongoing fight opposed to fabric desire. yet in a serious new exam of this generally degree, Nicholas Eberstadt fees that the OPR is, in truth, 'a damaged compass'_a unsuitable index producing more and more deceptive numbers approximately poverty within the usa. The OPR used to be initially meant to trace an absolute point of poverty over the years via evaluating a family's said pretax source of revenue opposed to a corresponding poverty threshold. yet for the prior 3 many years, the OPR has suggested traits which are jarringly inconsistent with different statistical signs of fabric deprivation. what's the explanation for this curious discrepancy? Eberstadt means that the OPR's so much significant issue is its implicit assumption that bad households will spend not more than their stated annual incomes_in different phrases, that their source of revenue degrees are a correct proxy for his or her intake degrees. within the many years because the OPR used to be unveiled, the disparity among pronounced source of revenue and bills has steadily widened, making source of revenue an ever much less trustworthy predictor of intake patterns_and, for that reason, residing standards_for America's poorer households. within the Poverty of 'The Poverty Rate,' Eberstadt contends that the defects of the present poverty price are usually not purely serious yet irremediable. Income-based measures can't supply a loyal portrait of intake styles or fabric overall healthiness within the usa. crucial even though the OPR has develop into to antipoverty coverage, this 'untrustworthy yardstick' may be discarded and changed by means of extra actual measures of deprivation.

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Such questions cannot be answered without looking at the actual design of the federal poverty measure itself. Are there evident and identifiable flaws, limitations, or shortcomings in this statistical construct that might impair its capacities to report the true prevalence of poverty and want in our country today—built-in errors, so to speak, that might themselves account for, among other things, the strange behavior of the OPR documented in the previous chapter? Many technical problems with the official poverty rate have been noted by specialists over the years since its inception.

Unemployment again correlates negatively (albeit very weakly) with the poverty rate—meaning that declining unemployment correlates with a very slight rise in the official poverty rate—while higher levels of adult education track with sharply increased OPR levels. 5 point increase in the official poverty rate. Clearly, something is badly amiss here. From the five regressions in table 3-2, we have econometric evidence that every one of the four major indices under consideration—all of them “poverty proxies” that one would routinely expect to help explain true poverty trends for modern America— can be shown to “point the wrong way” in association with the OPR for the period since 1973.

5 point increase in the official poverty rate. Clearly, something is badly amiss here. From the five regressions in table 3-2, we have econometric evidence that every one of the four major indices under consideration—all of them “poverty proxies” that one would routinely expect to help explain true poverty trends for modern America— can be shown to “point the wrong way” in association with the OPR for the period since 1973. How, then, to explain the lack of normal and regular association—actually, the positive disassociation—of the official poverty rate with per-capita income, the unemployment rate, educational attainment, and public antipoverty spending over the past three-plus decades?

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