State of Opportunity
8:35 am
Wed November 21, 2012

Have we been measuring poverty wrong this whole time?

Amber Pedersen in her home. She worked her way above the official poverty line with the help of some government programs.

With the fiscal cliff fight right around the corner, a lot of anti-poverty programs might end up on the chopping block.

The State of Opportunity team has been looking at some of those programs to examine if they are helping move people out of poverty. If you look at the official poverty rate, programs like Medicaid and food stamps seem to be hardly making a dent.

The U.S. poverty rate has hardly budged in half a century. The Census says the same share of our country is living in poverty right now as in the 1960’s.

So there’s lots of traction for accusations that programs like food stamps and Medicaid cost too much and don’t work. That criticism is not new, President Regan famously said in his 1988 State of the Union address, “My friends, some years ago the federal government declared war on poverty, and poverty won.”

But there are some who think the problem isn't in the government programs, it's in how we measure the poverty rate.

James Sullivan and his co-author Bruce Meyer say since we started measuring poverty we’ve been doing it wrong. Sullivan is an economist at the University of Notre Dame. He thinks a simple change in how poverty is measured would have huge implications. Sullivan thinks people should just be asked how they spent their money instead of how much money they earned. It's called a consumption measure. As Sullivan explains,

"The official poverty between 1970 and today has risen by two and a half percentage points. But if you look at consumption based poverty over those same four decades you see that poverty has fallen by 12 percentage points, which is a very different story.”

Find out more about that "different story" and listen to today's feature at State of Opportunity.