Improving the Supplemental Poverty Measure

Working Paper 2017-429


Questions about the adequacy of the official poverty measure led to the development of the Supplemental Poverty Measure, designed to be released concurrently with the official poverty measure. We raise two concerns with the Supplemental Poverty Measure: a discontinuity in the economies of scale implied by the equivalence scale and the adjustment for local prices using only housing costs. We propose corrections for both issues that can be applied by anyone using the public use files of the Current Population Survey. The changes we propose would have the greatest effect on poverty rates for the elderly and would reduce the difference in poverty rates by metro status.

Authors: John A. Bishop, Jonathan Lee, Lester A. Zeager.

Keywords: supplemental poverty measure, equivalence scales, spatial price index.
JEL: I32.