"The Uselessness of the “Official Poverty Rate”
Nicholas Ebertstadt is a must-read."
I read it, so here's my comment:
"If the poor are not overspending, is it possible they are underreporting income? There is little doubt. For one thing, the OPR measure of income ignores tens of billions in tax rebates delivered by the Earned Income Tax Credit. By the same token, the poor surely supplement their incomes off the books. But to use the underreporting phenomenon to explain why the gap between spending and income has widened so much, one would also need to explain why underreporting was increasing rapidly. Hence, the explanation for the widening gap more likely lies elsewhere."
The problem is what the figures are used for. If you want to know the actual material situation of poor people in general, his ideas make sense. However, if you're using these figures to determine benefits, it might be a lot less useful.
" Further, the complex (and, for our purposes, crucial) interplay between consumption and income can be much better captured by surveys that track specific households or individuals over time than by "snapshot" measures at a single date. Yet the government's capacity to follow the long-term dynamics of household income and consumption in America is woefully limited--a curious oversight for an information-rich society.'
I think that you have the answer. It's a lot more complicated, more expensive, and needs more upkeep than the old numbers.
"The rate is and always has been a measure of absolute material poverty--one that intentionally ignores changes in the culture and the economy that influence popular perceptions of what constitutes deprivation."
It also ignores having to be constantly checking and adjusting the figures. I could be wrong about this, but some numbers, like ratings agencies for bonds, say, stick around for reasons that don't always have to do with whether they are the most accurate system one can devise.
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