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The Supplemental Expenditure Poverty Measure: A New Method for Measuring Poverty

Author

Listed:
  • John Fitzgerald

    (Bowdoin College)

  • Robert Moffitt

    (Johns Hopkins University)

Abstract
We propose a new measure of the rate of poverty we call the supplemental expenditure poverty measure (SEPM), based on expenditure in the Consumer Expenditure Survey. It treats household expenditure as a measure of resources available to purchase the minimum bundle necessary to meet basic needs. Our measure differs from conventional income and consumption poverty in both concept and measurement, and it has advantages relative to both. Poverty rates using our basic measure are very close in level and recent trend to those of the most preferred income-based poverty rate produced by the US Census Bureau. But the SEPM poverty rate differs from the US Census Bureau measure at different levels of the poverty line. For example, the number of individuals living in either poor or almost poor households is 5 percentage points greater (about 16 million individuals) using our measure. We also construct an augmented measure that adds additional potential liquid resources. This "maximal resources" measure indicates that if disadvantaged households used up all their bank balances and maximized their credit card borrowing, 9.6 percent of the population (over 31 million individuals) would still be poor and unable to purchase the goods necessary for the basic needs of life.

Suggested Citation

  • John Fitzgerald & Robert Moffitt, 2022. "The Supplemental Expenditure Poverty Measure: A New Method for Measuring Poverty," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 53(1 (Spring), pages 253-305.
    • Handle: RePEc:bin:bpeajo:v:53:y:2022:i:2022-01:p:253-305
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    File URL: https://www.brookings.edu/articles/the-supplemental-expenditure-poverty-measure-a-new-method-for-measuring-poverty/
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    Cited by:

    1. Hua Zan & Jessie X. Fan & Benvin Lozada, 2024. "The economic disparity between Hispanic and non‐Hispanic White households: An analysis of middle‐class achievement," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(1), pages 93-107, January.
    2. Jonathan Fisher & Bradley L. Hardy, 2023. "Money matters: consumption variability across the income distribution," Fiscal Studies, John Wiley & Sons, vol. 44(3), pages 275-298, September.
    3. Schanzenbach, Diane Whitmore, 2023. "Understanding SNAP: An overview of recent research," Food Policy, Elsevier, vol. 114(C).

    More about this item

    Keywords

    poverty measurement; disadvantaged households; US economy;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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