Why'd We Have to Make Things So Complicated? The Case for a Simpler, More Transparent SPM

Session Submission Type: Panel

Abstract

Over the last decade, the Supplemental Poverty Measure (SPM) has become a frontline measure of poverty, published annually by the U.S. Census Bureau alongside the Official Poverty Measure (OPM) and used to assess the poverty-reducing impact of policies and social safety net programs.

As a marked improvement over the OPM, the SPM accounts for variation in family size, housing tenure, and geographic cost of living, all of which help align available resources with need. At the same time, the measure has been criticized for being overly complex. As proposals to refine the SPM continue, particularly following recent recommendations from the National Academy of Sciences, the measure may become more complex and increasingly difficult to implement and interpret.

This panel brings together three papers that revisit key components of the SPM and consider ways to improve and simplify its structure. Each paper focuses on a different set of assumptions embedded in the current framework and evaluates how simpler approaches would affect measured poverty.

Wimer and Wilson first reevaluate the SPM’s approach to geographically adjusting poverty thresholds for cost-of-living differences. The current approach uses housing costs to proxy for differences in the cost of living, implicitly assuming that differences in rents reflect differences in economic need. This assumption may not hold in areas where low housing costs are associated with weaker local economic conditions. The paper proposes a simplified alternative to the current adjustment and evaluates how it affects poverty thresholds and resulting poverty rates across regions.           

Fox then revisits the unit of analysis used to measure poverty in the SPM. The SPM defines a resource unit as an expanded family of related individuals, cohabiting partners, and their children who are assumed to share resources. The underlying assumption is that resources, either in the form of cash or in-kind transfers, are shared within units but not across units within the same household. This assumption can be difficult to implement in survey data, particularly when relationship information is sparse, and may not fully capture how resources are shared in practice among individuals living together. The paper considers an alternative approach that defines poverty at the household level and evaluates how it affects measured poverty.             

Lastly, Creamer reassesses how SPM thresholds are updated over time. The current approach updates thresholds annually using recent expenditure data to reflect changes in consumption patterns and prices. This approach implicitly assumes that annual changes in expenditures reflect changes in the baseline level of need rather than changes in prices alone. Although this approach is intended to capture shifts in living standards, it also complicates comparisons over time. The paper proposes a simplified approach in which thresholds are updated less frequently and adjusted for inflation between revisions, and evaluates how this affects measured poverty.

Policy Area

• Poverty and Income Policy

Chair

• Karen Chatfield, National Center for Children in Poverty at Bank Street Graduate School of Education

Discussant

• Jose Pacas, Constellation Lab

Organizer

• Danielle Wilson, Columbia University

Individual Presentations

• Reevaluating Geographic Adjustments in the Supplemental Poverty Measure - Presenting Author: Christopher Wimer, Columbia University

• Moving to the Household Unit of Analysis for Poverty Measurement - Presenting Author: Liana E Fox, U.S. Census Bureau

• A Decennial Anchoring Approach to SPM Poverty Thresholds - Presenting Author: John Creamer, U.S. Census Bureau

• Improved estimates of poverty of place for the United States: A county-level Supplemental Poverty Measure - Presenting Author: Darcy Lee Sullivan, University of Kansas