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Geographic Adjustments of Supplemental Poverty Measure Thresholds: Using the American Community Survey Five-Year Data on Housing Costs

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Working Paper Number SEHSD-WP2011-21

Introduction

In 2009 the Office of Management and Budget’s Chief Statistician formed the Interagency Technical Working Group (ITWG) on Developing a Supplemental Poverty Measure. That group included representatives from the U.S. Census Bureau, Bureau of Labor Statistics, Economics and Statistics Administration, Council of Economic Advisers, U.S. Department of Health and Human Services, and Office of Management and Budget. In March 2010 the Interagency Working Group issued a series of suggestions to the Census Bureau and BLS on how to develop a new Supplemental Poverty Measure (Observations from the Interagency Technical Working Group on Developing a Supplemental Poverty Measure). Their suggestions drew on the recommendations of the 1995 report of National Academy of Sciences (NAS) Panel on Poverty and Family Assistance and the extensive research on poverty measurement conducted over the past 15 years, at the Census Bureau and elsewhere. The new thresholds are not intended to assess eligibility for government programs and will not replace the official poverty thresholds.

The ITWG suggested that the poverty thresholds be adjusted for price differences across geographic areas using the best available data and statistical methodology. They noted that the American Community Survey (ACS) data appear to be the best data currently available, from which one can create a housing price index based on differences in quality‐equivalent rental prices of housing across areas and that it would be good to (1) differentiate this price index by Metropolitan Statistical Areas (MSAs) and by non‐MSA areas in each State and (2) utilize a 5‐year moving average of the data for each year. They also noted that over time this adjustment mechanism may be modified and improved.

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Page Last Revised - October 8, 2021
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