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<h1 itemprop="headline">The Supplemental Poverty Measure (<abbr class="spell">SPM</abbr>) and the Aged: How and Why the <abbr class="spell">SPM</abbr> and Official Poverty Estimates Differ</h1>
<div id="hByline">by <span itemprop="author">Benjamin Bridges and Robert&nbsp;V. Gesumaria</span><br>Social Security Bulletin, <abbr title="Volume">Vol.</abbr>&nbsp;73, <abbr title="Number">No.</abbr>&nbsp;4, 2013 (released November 2013)</div>
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<p id="synopsis" itemprop="description">In 2011, the Census Bureau released its first report on the Supplemental Poverty Measure (<abbr class="spell">SPM</abbr>). The <abbr class="spell">SPM</abbr> addresses many criticisms of the official poverty measure and is intended to provide an improved statistical picture of poverty. This article examines the extent of poverty identified by the two measures. First, we look at how the <abbr class="spell">SPM</abbr> and official estimates differ for various age groups. One finding is that the <abbr class="spell">SPM</abbr> poverty rate exceeds the official rate for each subgroup of the aged <span class="nobr">(65&ndash;69,</span> <span class="nobr">70&ndash;74,</span> <span class="nobr">75&ndash;79,</span> and 80 or older) by 4.3 to 8.3&nbsp;percentage points. Then, we look at why the <abbr class="spell">SPM</abbr> poverty rate for the aged is higher than the official rate. The most important factor here is the difference in the treatment of medical-out-of-pocket expenses.</p>
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<p>The authors are with the Office of Economic Analysis and Comparative Studies, Office of Research, Evaluation, and Statistics, Office of Retirement and Disability Policy, Social Security Administration.</p>
<p><i>Acknowledgments:</i> We thank Linda Del Bene, Howard Iams, Patrick Purcell, Kathleen Short, Brad Trenkamp, and especially Michael Leonesio for helpful comments on earlier drafts; we also thank Linda Del Bene for preparing the tabular material.</p>
<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> are those of the authors and do not necessarily represent the views of the Social Security Administration.</p>
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<h2>Introduction</h2>
<div class="abbrtable">
<table role="presentation">
<caption>Selected Abbreviations</caption>
<colgroup span="1" style="width:25%"></colgroup>
<colgroup span="1"></colgroup>
<tbody>
<tr>
<td><abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr></td>
<td>Current Population Survey's Annual Social and Economic Supplement</td>
</tr>
<tr>
<td><abbr class="spell">FCSU</abbr></td>
<td>food, clothing, shelter, and utilities</td>
</tr>
<tr>
<td><abbr>LIHEAP</abbr></td>
<td>Low-Income Home Energy Assistance Program</td>
</tr>
<tr>
<td><abbr>MOOP</abbr></td>
<td>medical out-of-pocket [expenses]</td>
</tr>
<tr>
<td><abbr class="spell">MSA</abbr></td>
<td>metropolitan statistical area</td>
</tr>
<tr>
<td><abbr>SNAP</abbr></td>
<td>Supplemental Nutrition Assistance Program</td>
</tr>
<tr>
<td><abbr class="spell">SPM</abbr></td>
<td>supplemental poverty measure</td>
</tr>
<tr>
<td><abbr>WIC</abbr></td>
<td>Special Supplemental Nutrition Program for Women, Infants, and Children</td>
</tr>
</tbody>
</table>
</div>
<p>The current official poverty measure was developed in the early 1960s by Mollie Orshansky of the Social Security Administration. Only a few minor changes have been made since it was first adopted as the official measure in 1969 (Orshansky 1963, 1965a, 1965b; Fisher&nbsp;1992).<sup><a href="#mn1" id="mt1">1</a></sup> The official measure consists of a set of thresholds for families of different sizes and compositions that are compared with before-tax cash income to determine a family's poverty status. Those poverty thresholds are the minimum amounts of such income that families of particular sizes and composition need in order to be considered not poor. When they were developed, the official thresholds represented the cost of a minimum food diet multiplied by 3 (to allow for expenditures on other goods and services). These thresholds have been kept constant in real terms over time by increasing their money values to keep pace with increases in the general price level.</p>
<p>Concerns about the weaknesses of the official measure have increased markedly over time. Critics of the official measure point out that the official income or resource measure fails to account for noncash government benefits, taxes, medical out-of-pocket (<abbr>MOOP</abbr>) expenses, and work expenses. They also argue that the official thresholds are based on a very narrow measure of necessary expenditures, that is, food, and are based on very old data. Critics also point out that the official thresholds fail to adjust for geographic differences in the cost of living.</p>
<p>In November&nbsp;2011, the Census Bureau released its first report on the Supplemental Poverty Measure, or <abbr class="spell">SPM</abbr> (Short&nbsp;2011). The <abbr class="spell">SPM</abbr> addresses the concerns of the official measure's critics and is intended to provide an improved statistical picture of poverty. It is designed to provide information on economic need at the national level and within large subpopulations.<sup><a href="#mn2" id="mt2">2</a></sup></p>
<p>The <abbr class="spell">SPM</abbr> income or resource measure is cash income plus <span class="nobr">in-kind</span> government benefits (such as food stamps and housing subsidies) minus nondiscretionary expenditures (taxes, <abbr>MOOP</abbr> expenses, and work expenses). The <abbr class="spell">SPM</abbr> thresholds are based on a broad measure of necessary expenditures (food, clothing, shelter, and utilities (or <abbr class="spell">FCSU</abbr>)) and are based on recent, annually updated expenditure data. The <abbr class="spell">SPM</abbr> thresholds are adjusted for geographic differences in the cost of&nbsp;living.</p>
<p>The two measures (official and <abbr class="spell">SPM</abbr>) produce rather different pictures of who is counted as poor. Thus, one's view regarding the relative merits of the two poverty measures is relevant to his or her views regarding appropriate public policy. For the aged, key public policies are those affecting Social Security, Medicare, Medicaid, and Supplemental Security Income (<abbr class="spell">SSI</abbr>).</p>
<p>This article focuses on the measurement of poverty among people aged&nbsp;65 or older. In the next section, we discuss the evolution of the <abbr class="spell">SPM</abbr>. In the following section, we describe in more detail the various features of the <abbr class="spell">SPM</abbr> (resource measure, threshold measure, and unit definition) and contrast them with the corresponding features of the official measure. In the next two sections, we present an empirical examination for 2011 of the two poverty measures. First, for various groups, we compare the <abbr class="spell">SPM</abbr> poverty estimates with official estimates. That is, we look at how the <abbr class="spell">SPM</abbr> and official estimates differ. We present some estimates for all age groups, but focus on the aged&nbsp;(65 or older). Then, for the aged as a whole, we estimate the effects of various features of the <abbr class="spell">SPM</abbr> on poverty levels. In effect, we look at why <abbr class="spell">SPM</abbr> estimates for the aged differ from official estimates.</p>
<p>We conclude this introduction by previewing some of our empirical findings. For the total population, the <abbr class="spell">SPM</abbr> poverty rate (16.1&nbsp;percent) exceeds the official rate (15.1&nbsp;percent).<sup><a href="#mn3" id="mt3">3</a></sup> For broad age groups, the <abbr class="spell">SPM</abbr> and official measures give quite different results. The <abbr class="spell">SPM</abbr> shows much <i>more</i> poverty for people aged&nbsp;65 or older (the poverty rate increases from 8.7&nbsp;percent to 15.1&nbsp;percent) and much <i>less</i> poverty for those younger than age&nbsp;18 (the poverty rate decreases from 22.3&nbsp;percent to 18.2&nbsp;percent). For all detailed subgroups of the aged <span class="nobr">(65&ndash;69,</span> <span class="nobr">70&ndash;74,</span> <span class="nobr">75&ndash;79,</span> and 80 or older), the <abbr class="spell">SPM</abbr> poverty rates markedly exceed the official rates.</p>
<p>Many people are classified as poor by only one of the two measures. For the aged, the official measure and the <abbr class="spell">SPM</abbr> classify 3.6&nbsp;million and 6.3&nbsp;million as poor, respectively. Some 3.2&nbsp;million aged adults are counted as nonpoor by the official measure, but as poor by the <abbr class="spell">SPM</abbr>. On the other hand, some 0.6&nbsp;million aged adults are counted as poor by the official measure, but as nonpoor by the <abbr class="spell">SPM</abbr>.</p>
<p>We examine poverty of the aged (65 or older) for various demographic and socioeconomic groups. For all of the groups examined, <abbr class="spell">SPM</abbr> poverty exceeds official poverty. Compared with the official measure, the <abbr class="spell">SPM</abbr> shows larger increases in poverty rates for (1)&nbsp;people in units that have homeowners with mortgages than for those in units that have homeowners without mortgages, (2)&nbsp;people residing inside metropolitan statistical areas (<abbr class="spell">MSA</abbr>s) than for those residing outside <abbr class="spell">MSA</abbr>s, and (3)&nbsp;married people than for the nonmarried.</p>
<p>The combined effect of all changes (from the official to the <abbr class="spell">SPM</abbr>) in the <i>resource</i> measure increases the poverty rate of the aged by 5.5&nbsp;percentage points. When subtracting taxes and other nondiscretionary expenses, only the subtraction of <abbr>MOOP</abbr> expenses results in a large increase in the measured poverty rate (7.1&nbsp;percentage points). This effect is substantially larger than that of any other change in the poverty measure. When adding noncash transfers, the addition of housing subsidies produces the largest decrease in the poverty rate (1.2&nbsp;percentage points). The combined effect of all the changes in the <i>threshold</i> measure increases the poverty rate by 1.6&nbsp;percentage points.</p>
<h2>Evolution of the <abbr class="spell">SPM</abbr></h2>
<p>What ultimately became the official poverty measure was developed by Mollie Orshansky in the <span class="nobr">1963&ndash;1964</span> period (Orshansky 1963, 1965a, 1965b). In May&nbsp;1965, the Office of Economic Opportunity&mdash;newly established as part of the Johnson administration's War on Poverty&mdash;adopted the Orshansky measure as a working or quasi-official definition of poverty.<sup><a href="#mn4" id="mt4">4</a></sup> In August&nbsp;1969, the Orshansky measure was designated as the federal government's official statistical definition of poverty (Fisher&nbsp;1992).</p>
<p>Over time, concerns about the adequacy of the official measure increased. As a result, in the early 1990s at the request of Congress, the National Academy of Sciences (<abbr class="spell">NAS</abbr>) conducted an independent scientific study of the concepts, measurement methods, and information needs for a poverty measure. For that purpose, <abbr class="spell">NAS</abbr> established the Panel on Poverty and Family Assistance, which released its report, <i>Measuring Poverty: A New Approach</i> (Citro and Michael&nbsp;1995). Based on its assessment of the weaknesses of the official poverty measure, the <abbr class="spell">NAS</abbr> panel recommended a considerably different poverty measure that it believed would reflect much better contemporary government policy and economic and social realities.</p>
<p>Over the next 15&nbsp;years or so, numerous government and nongovernment studies examined alternative poverty measures. For example, the Census Bureau released studies that presented a set of experimental poverty measures based on the recommendations of the <abbr class="spell">NAS</abbr> panel (Short&nbsp;2001; Short and others 1999). These studies suggested that the new measures would identify a rather different population as poor than that identified by the official poverty measure.</p>
<p>In 2009, the Office of Management and Budget formed a working group of representatives from a number of government agencies to consider improving the measurement of poverty. This working group was asked to develop a set of initial starting points to permit the Census Bureau, in cooperation with the Bureau of Labor Statistics, to produce a supplemental poverty measure. The Interagency Technical Working Group on Developing a Supplemental Poverty Measure (<abbr class="spell">ITWG</abbr>) issued its report in 2010.<sup><a href="#mn5" id="mt5">5</a></sup></p>
<p>The Census Bureau released its first report on the <abbr class="spell">SPM</abbr> in 2011 (Short&nbsp;2011). That report described the new measure in some detail and presented estimates of <abbr class="spell">SPM</abbr>-based poverty for 2009 and 2010. The second annual <abbr class="spell">SPM</abbr> report, which was released in November&nbsp;2012, presented estimates for 2011 (Short&nbsp;2012). The recently released <abbr class="spell">SPM</abbr> is largely based on the recommendations of the <abbr class="spell">NAS</abbr> panel. Deviations of the <abbr class="spell">SPM</abbr> from the panel's recommendations reflect suggestions from the <abbr class="spell">ITWG</abbr> and more current research.</p>
<h2>Descriptions and Comparisons of Various Features of the Two Poverty Measures</h2>
<p>Measurement of poverty within the population has three critical elements: (1)&nbsp;resource measures (What should be counted as resources?); (2)&nbsp;threshold measures (What minimum resources are required to be considered nonpoor?); and (3)&nbsp;unit measures (How does one combine individuals into resource-sharing units?). In this section, we consider each of those elements in turn.<sup><a href="#mn6" id="mt6">6</a></sup> The <abbr class="spell">SPM</abbr> and official poverty estimates examined in this article use the public-use version of the 2012 Current Population Survey's Annual Social and Economic Supplement (<abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>), which gives income information for calendar year 2011.<sup><a href="#mn7" id="mt7">7</a></sup> In the rest of this section, we describe the <abbr class="spell">SPM</abbr> elements as they were implemented for the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</p>
<h3>Resource Measures</h3>
<p>The official resource measure is unit before-tax money income.<sup><a href="#mn8" id="mt8">8</a></sup> People in units whose before-tax money income is less than the unit's threshold are classified as poor. Proponents of the <abbr class="spell">SPM</abbr> believe that the official resource measure has the following major weaknesses:<sup><a href="#mn9" id="mt9">9</a></sup></p>
<ol>
<li>Effects of government programs that alter the resources available to families and, thus, their poverty status are not reflected in this measure. These are <span class="nobr">in-kind</span> public benefits, refundable tax credits, and various taxes<i>. Some of these</i> are large. For example, in fiscal year 2011, federal outlays for the Supplemental Nutrition Assistance Program or <abbr>SNAP</abbr> (formerly known as the Food Stamp Program) amounted to about $80&nbsp;billion or 2.1&nbsp;percent of all federal outlays. Federal expenditures for refundable tax credits and for housing subsidies were about $80&nbsp;billion and $40&nbsp;billion (Falk&nbsp;2012). All three of these <span class="nobr">in-kind</span> benefit programs are designed to assist the low-income population.<sup><a href="#mn10" id="mt10">10</a></sup></li>
<li>Expenses that are necessary to hold a job and earn income are not accounted for. These expenses include transportation costs for getting to work and the costs of childcare for working families. More than 80&nbsp;percent of the population under study are members of <abbr class="spell">SPM</abbr> units with work expenses. For those units, such expenses can be substantial; unit work expenses on average amount to 12&nbsp;percent of <abbr class="spell">SPM</abbr> poverty thresholds.</li>
<li><abbr>MOOP</abbr> expenses are not accounted for. More than 95&nbsp;percent of our sample universe are members of <abbr class="spell">SPM</abbr> units with <abbr>MOOP</abbr> expenses, which include expenses for health insurance premiums; own medical care (hospital visits, medical providers, dental services, prescription medicine, vision aids, and medical supplies); and over-the-counter health-related products. For those units, <abbr>MOOP</abbr> expenses can be large; unit <abbr>MOOP</abbr> expenses on average amount to 22&nbsp;percent of <abbr class="spell">SPM</abbr> thresholds. In addition, there is great dispersion around this average; a minority of units have very high <abbr>MOOP</abbr> expenses relative to their poverty thresholds.</li>
</ol>
<p>The <abbr class="spell">SPM</abbr> resource measure attempts to overcome the weaknesses of the official resource measure. The <abbr class="spell">SPM</abbr> resource measure is the sum of cash income <i>plus</i> refundable tax credits and any government <span class="nobr">in-kind</span> benefits that families can use to meet their basic needs, which are represented in the thresholds, <i>minus</i> taxes and other nondiscretionary expenses for critical goods not included in the thresholds. These thresholds represent the amount needed for a basic set of goods that consists of <abbr class="spell">FCSU</abbr> and an additional amount allowed for other basic needs (for example, household supplies, personal care, nonwork-related transportation). The importance of these various additions to and subtractions from cash income varies greatly across age groups.</p>
<p>The <abbr class="spell">SPM</abbr> resource measure includes the following government <span class="nobr">in-kind</span> benefit programs: (1)&nbsp;Housing subsidies; (2)&nbsp;Low-Income Home Energy Assistance Program (<abbr>LIHEAP</abbr>); (3)&nbsp;National School Lunch Program; (4)&nbsp;Supplemental Nutrition Assistance Program (<abbr>SNAP</abbr>); and (5)&nbsp;Special Supplemental Nutrition Program for Women, Infants, and Children (<abbr>WIC</abbr>). For programs (1), (3), and (5), the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on recipiency, but not on amounts received. In estimating the amounts of these benefits, the Census Bureau uses information from other government agencies.<sup><a href="#mn11" id="mt11">11</a></sup></p>
<p>Housing subsidies, <abbr>LIHEAP</abbr> benefits, and <abbr>SNAP</abbr> benefits go to both aged and nonaged people. On the other hand, school lunch and <abbr>WIC</abbr> benefits are intended to help nonaged people. Housing assistance programs usually take the form of rental subsidies and mortgage-interest subsidies targeted to very low-income people and are either dwelling based (public housing) or tenant based (vouchers). <abbr>SNAP</abbr> benefits are also targeted to low-income people. <abbr>LIHEAP</abbr> is not a large enough program to have much effect on the poverty rates of aged people or members of any other age group.</p>
<p>The <abbr class="spell">SPM</abbr> resource measure also includes the following refundable tax credits: (1)&nbsp;Earned Income Tax Credit (<abbr class="spell">EITC</abbr>) and (2)&nbsp;the additional federal childcare tax credit. These credits are intended to help low-income working families, especially those with children.</p>
<p>The following expenses are deducted in deriving <abbr class="spell">SPM</abbr> resources: (1)&nbsp;federal individual income tax (after nonrefundable credits), (2)&nbsp;state individual income tax, (3)&nbsp;Social Security tax payments by employees and the self-employed plus federal employee retirement payroll deductions, (4)&nbsp;child support paid, (5)&nbsp;<abbr>MOOP</abbr> expenses, and (6)&nbsp;work expenses (including childcare expenses). The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> does not collect information on taxes, refundable tax credits, or work expenses. The Census Bureau applies a tax-calculating computer program to the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> to simulate taxes and tax credits and uses information from another household survey to estimate work expenses.<sup><a href="#mn12" id="mt12">12</a></sup></p>
<p>It should be clear that the relative impact of various types of expenses on household resources tends to vary by age. Low-income aged units typically have no or low income tax liabilities. Payroll taxes and work expenses affect working families. Child support payments come mostly from nonaged people.</p>
<p><abbr>MOOP</abbr> expenses are very important for the aged population. As stated earlier, <abbr>MOOP</abbr> expenses include the payment of health insurance premiums plus other medically necessary items, such as prescription drugs and doctor copayments that are not paid for by health insurance.<sup><a href="#mn13" id="mt13">13</a></sup> Subtracting <abbr>MOOP</abbr> expenses from income, in addition to subtracting taxes and work expenses, leaves the amount of income that the family has available to purchase the basic bundle of goods included in the threshold.</p>
<h3>Threshold Measures</h3>
<p>The official measure uses a set of thresholds for families of different size and composition. The threshold values depend on unit size, number of children, and age of the unit head (younger than age&nbsp;65 or aged&nbsp;65 or older). At the time they were developed, the official thresholds represented the cost of a minimum food diet multiplied by 3 (to allow for expenditures on other goods and services).<sup><a href="#mn14" id="mt14">14</a></sup> The thresholds are updated each year using the <abbr class="spell">US</abbr> Consumer Price Index for all&nbsp;items.</p>
<p>Proponents of the <abbr class="spell">SPM</abbr> believe that the official threshold measure has the following major weaknesses:</p>
<ol>
<li>The official thresholds are based on only one category of necessary expenditures, that is, food. (For 2011, food expenditures accounted for only 36&nbsp;percent of the bundle of necessary expenditures or <abbr class="spell">FCSU</abbr> that form the basis of the <abbr class="spell">SPM</abbr> thresholds.) The expenditure information used is more than 50&nbsp;years old. The share of food in expenditures is much lower now than it was 50&nbsp;years ago. The threshold levels are fixed in real terms and do not reflect real increases over time in spending on basic needs.</li>
<li>The measure does not adjust for differences in <abbr class="spell">FCSU</abbr>-expenditure needs resulting from differences in housing status. For example, homeowners with mortgages on average need to make sizable mortgage payments. (In determining <abbr class="spell">SPM</abbr> thresholds for 2011, the <abbr class="spell">FCSU</abbr> needs of units that have owners with mortgages are estimated to be 21&nbsp;percent larger than those of units that have owners with no mortgages.)</li>
<li>The measure does not adjust for geographic differences in the cost of living. Such differences are often large. (For 2011, the geographic adjustment factors used in the <abbr class="spell">SPM</abbr> range from .80 for the lowest-cost area to 1.48 for the highest-cost area.)</li>
<li>The thresholds use family size and composition adjustments that in some cases produce questionable results. For example, in some cases, single-parent families have higher thresholds than married-couple families of the same size, implying that children cost more than adults in certain size families. The evidence used in setting thresholds for aged units and for <span class="nobr">one-person</span> nonaged units is quite weak. In addition to these questionable results, the fact that the equivalence scales are implicit and not transparent is a substantial weakness.</li>
</ol>
<p>The <abbr class="spell">SPM</abbr> threshold measure attempts to overcome the weaknesses of the official threshold measure and has the following properties:</p>
<ol>
<li>As stated earlier, these thresholds represent the amount needed for a basic set of goods that consists of <abbr class="spell">FCSU</abbr> and an additional amount allowed for other basic needs (household supplies, personal care, nonwork-related transportation). The basic <abbr class="spell">FCSU</abbr> needs reflect expenditures on this basic bundle of goods around the 33<sup>rd</sup> percentile of the expenditure distribution, as reported in the Bureau of Labor Statistics' Consumer Expenditure Survey (<abbr class="spell">CE</abbr>).<sup><a href="#mn15" id="mt15">15</a></sup> The <abbr class="spell">SPM</abbr> thresholds for 2011 are based on <span class="nobr">2007&ndash;2011</span> data from the <abbr class="spell">CE</abbr>. To include other basic needs in the threshold, the basic <abbr class="spell">FCSU</abbr> needs are multiplied by 1.2. Over time, the thresholds are not fixed in real terms. Each year the thresholds are updated using the most recent <abbr class="spell">CE</abbr> data.</li>
<li>The <abbr class="spell">SPM</abbr> thresholds are adjusted for differences in shelter and utilities expenditure needs and depend on housing-status group. Those groups are made up of units that have owners with mortgages, owners with no mortgages, and renters. The adjustments are based on <abbr class="spell">CE</abbr> data.</li>
<li>The thresholds are adjusted for geographic differences in housing costs. The adjustment factors are for more than 300 areas and are based on American Community Survey estimates of apartment rents.</li>
<li>The threshold for units with two children (the base threshold) is derived from <abbr class="spell">CE</abbr> data as described in item #1. The thresholds for other unit types (differing in size and number of children) are then derived by applying an explicit equivalence scale to this base threshold. Equivalence scales are measures of the relative cost of living of units of different size and composition that are otherwise similar. For example, if a unit of two adults can live as well as a unit of two adults and two children while spending only <span class="nobr">three-fourths</span> as much, then relative to the reference unit of two adults and two children, the equivalence scale value for a <span class="nobr">two-adult</span> unit is <span class="nobr">three-fourths</span>. For the purpose of poverty measurement, using an equivalence scale adjusts the threshold value for the reference unit to provide corresponding thresholds for other unit types. The three-parameter <abbr class="spell">SPM</abbr> equivalence scale used has the following four properties: (1)&nbsp;a child always costs less than an adult; (2)&nbsp;the scale always exhibits economies of scale in consumption; (3)&nbsp;the scale does not depend on the age of the unit head; and (4)&nbsp;for <span class="nobr">one-person</span> nonaged units, the <abbr class="spell">SPM</abbr> scale value is rather different from the official scale value.<sup><a href="#mn16" id="mt16">16</a></sup></li>
</ol>
<h3>Unit Measures</h3>
<p>The official measure uses as its unit of analysis the Census-defined family, which includes all people residing together who are related by birth, marriage, or adoption; it treats all unrelated individuals aged&nbsp;15 or older independently. Proponents of the <abbr class="spell">SPM</abbr> unit criticize the failure of the official unit to include all people at an address who are likely to share resources. In particular, they believe that the official unit concept does not treat cohabiters and their relatives properly.</p>
<p>Proponents of the <abbr class="spell">SPM</abbr> believe that the <abbr class="spell">SPM</abbr> unit better represents the unit that shares economic resources. The <abbr class="spell">SPM</abbr> unit includes all related people at the same address plus any cohabiters and their relatives and any coresident unrelated children who are cared for by the family (such as foster children).<sup><a href="#mn17" id="mt17">17</a></sup> Most aged people whose <abbr class="spell">SPM</abbr> units differ from their official units are in <abbr class="spell">SPM</abbr> units that contain cohabiters&mdash;some aged and others nonaged.</p>
<h2>Official and <abbr class="spell">SPM</abbr> Poverty Estimates: A&nbsp;Comparison</h2>
<p>In this section, we begin our empirical examination of the two poverty measures. For the various age groups, we compare the <abbr class="spell">SPM</abbr> poverty estimates with official estimates; that is, we look at the degree to which the two estimates differ. Then in the following section, for people aged&nbsp;65 or older, we estimate the effects of various features of the <abbr class="spell">SPM</abbr> on poverty levels. In effect, we look at why <abbr class="spell">SPM</abbr> estimates for the aged differ from the official estimates.</p>
<p>We begin this section by looking at poverty for the total population and for various groups of aged and nonaged people. Next, we examine deep poverty and the distribution of people by welfare-ratio intervals. Then we examine movements into and out of poverty. Finally, we look at poverty of the aged for various demographic and socioeconomic groups.</p>
<h3>Poverty by Age Groups</h3>
<p>Table&nbsp;1 gives numbers and percentages of people in poverty for the total population, broad age groups, and narrow age subgroups. For the total population, the <abbr class="spell">SPM</abbr> poverty rate (16.1&nbsp;percent) exceeds the official rate (15.1&nbsp;percent) by 1.0&nbsp;percentage points.<sup><a href="#mn18" id="mt18">18</a></sup> The number of people poor under the <abbr class="spell">SPM</abbr> (49.8&nbsp;million) exceeds the number poor under the official measure (46.6&nbsp;million) by 3.2&nbsp;million or 7&nbsp;percent.<sup><a href="#mn19" id="mt19">19</a></sup></p>
<div class="table" id="table1">
<table>
<caption><span class="tableNumber">Table&nbsp;1. </span>Number and percentage of people in poverty, by the two poverty measures and selected age groups,&nbsp;2011</caption>
<colgroup span="1" style="width:12em"></colgroup>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="2" style="width:8em"></colgroup>
<colgroup span="2" style="width:8em"></colgroup>
<colgroup span="1" style="width:8em"></colgroup>
<thead>
<tr>
<th rowspan="2" class="stubHeading" scope="colgroup">Age group</th>
<th rowspan="2" scope="colgroup">Total number</th>
<th colspan="2" class="spanner" scope="colgroup">Official poverty</th>
<th colspan="2" class="spanner" scope="colgroup"><abbr class="spell">SPM</abbr> poverty</th>
<th rowspan="2" scope="colgroup">Percentage point difference between <abbr class="spell">SPM</abbr> and official poverty rates</th>
</tr>
<tr>
<th scope="col">Number</th>
<th scope="col">Percent</th>
<th scope="col">Number</th>
<th scope="col">Percent</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub2" scope="row">Total population</th>
<td>308,827</td>
<td>46,618</td>
<td>15.1</td>
<td>49,797</td>
<td>16.1</td>
<td>1.0</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">Younger than 18</th>
<td>74,108</td>
<td>16,506</td>
<td>22.3</td>
<td>13,484</td>
<td>18.2</td>
<td>-4.1</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row"><span class="nobr">18&ndash;64</span></th>
<td>193,213</td>
<td>26,492</td>
<td>13.7</td>
<td>30,052</td>
<td>15.6</td>
<td>1.8</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;61</span></th>
<td>27,814</td>
<td>2,983</td>
<td>10.7</td>
<td>3,798</td>
<td>13.7</td>
<td>2.9</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">62&ndash;64</span></th>
<td>10,157</td>
<td>1,097</td>
<td>10.8</td>
<td>1,369</td>
<td>13.5</td>
<td>2.7</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">65 or older</th>
<td>41,507</td>
<td>3,620</td>
<td>8.7</td>
<td>6,260</td>
<td>15.1</td>
<td>6.4</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">65&ndash;69</span></th>
<td>13,599</td>
<td>1,026</td>
<td>7.5</td>
<td>1,615</td>
<td>11.9</td>
<td>4.3</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">70&ndash;74</span></th>
<td>9,784</td>
<td>713</td>
<td>7.3</td>
<td>1,363</td>
<td>13.9</td>
<td>6.6</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">75&ndash;79</span></th>
<td>7,331</td>
<td>730</td>
<td>10.0</td>
<td>1,236</td>
<td>16.9</td>
<td>6.9</td>
</tr>
<tr>
<th class="stub1" scope="row">80 or older</th>
<td>10,792</td>
<td>1,152</td>
<td>10.7</td>
<td>2,045</td>
<td>19.0</td>
<td>8.3</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="7">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="lastNote" colspan="7">NOTE: Numbers are in&nbsp;thousands.</td>
</tr>
</tfoot>
</table>
</div>
<p>For broad age groups of the aged and nonaged populations, the <abbr class="spell">SPM</abbr> and official measures give quite different results. Compared with the official measure, the <abbr class="spell">SPM</abbr> shows much <i>more</i> poverty for the aged (adults aged&nbsp;65 or older) and much <i>less</i> poverty for children (those younger than age&nbsp;18). For the group aged&nbsp;65 or older, the <abbr class="spell">SPM</abbr> poverty rate (15.1&nbsp;percent) exceeds the official rate (8.7&nbsp;percent) by 6.4&nbsp;percentage points or by 73&nbsp;percent.<sup><a href="#mn20" id="mt20">20</a></sup> As we stated earlier, <abbr>MOOP</abbr> expenses are very important for the aged population. On the other hand, for the group younger than age&nbsp;18, the <abbr class="spell">SPM</abbr> rate (18.2&nbsp;percent) falls short of the official rate (22.3&nbsp;percent) by 4.1&nbsp;percentage points or by 18&nbsp;percent.<sup><a href="#mn21" id="mt21">21</a></sup> Note that for the official measure, the rate for children is much higher than that for the aged; however, for the <abbr class="spell">SPM</abbr>, the poverty rate for children is only modestly higher than that for the aged. For the group aged&nbsp;<span class="nobr">18&ndash;64,</span> the <abbr class="spell">SPM</abbr> rate (15.6&nbsp;percent) exceeds the official rate (13.7&nbsp;percent) by 13&nbsp;percent.</p>
<p>For the aged population, we also look at poverty rates for narrow age subgroups (Table&nbsp;1). For each of those age subgroups, the <abbr class="spell">SPM</abbr> rates exceed the official poverty rates. This excess tends to increase with age, increasing from 4.3&nbsp;percentage points for the subgroup aged&nbsp;<span class="nobr">65&ndash;69</span> to 8.3&nbsp;percentage points for the subgroup aged&nbsp;80 or older.</p>
<p>In addition, we look at poverty rates for the <span class="nobr">near-aged</span> subgroups <span class="nobr">(55&ndash;61</span> and <span class="nobr">62&ndash;64).</span> For those subgroups, the <abbr class="spell">SPM</abbr> poverty rates exceed the official rates by a little less than 3&nbsp;percentage points or by about 25&nbsp;percent. Note that these differences are smaller than those for the groups aged&nbsp;65 or older.</p>
<h3>Deep Poverty by Age Groups</h3>
<p>We say that people in units with unit resources less than 50&nbsp;percent of the unit threshold are in deep <abbr class="spell">SPM</abbr> or deep official poverty.<sup><a href="#mn22" id="mt22">22</a></sup> Table&nbsp;2 gives numbers and percentages of people in deep poverty for the total population, broad age groups, and narrow age subgroups&mdash;the same groups shown in Table&nbsp;1.</p>
<div class="table" id="table2">
<table>
<caption><span class="tableNumber">Table&nbsp;2. </span>Number and percentage of people in deep poverty,<sup>a</sup> by the two poverty measures and selected age groups,&nbsp;2011</caption>
<colgroup span="1" style="width:12em"></colgroup>
<colgroup span="1" style="width:8em"></colgroup>
<colgroup span="2" style="width:8em"></colgroup>
<colgroup span="2" style="width:8em"></colgroup>
<colgroup span="1" style="width:8em"></colgroup>
<thead>
<tr>
<th rowspan="2" class="stubHeading" scope="colgroup">Age group</th>
<th rowspan="2" scope="colgroup">Total number</th>
<th colspan="2" class="spanner" scope="colgroup">Official deep poverty</th>
<th colspan="2" class="spanner" scope="colgroup"><abbr class="spell">SPM</abbr> deep poverty</th>
<th rowspan="2" scope="colgroup">Percentage point difference between <abbr class="spell">SPM</abbr> and official deep poverty rates</th>
</tr>
<tr>
<th scope="col">Number</th>
<th scope="col">Percent</th>
<th scope="col">Number</th>
<th scope="col">Percent</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub2" scope="row">Total population</th>
<td>308,827</td>
<td>20,727</td>
<td>6.7</td>
<td>16,141</td>
<td>5.2</td>
<td>-1.5</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">Younger than 18</th>
<td>74,108</td>
<td>7,624</td>
<td>10.3</td>
<td>3,789</td>
<td>5.1</td>
<td>-5.2</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row"><span class="nobr">18&ndash;64</span></th>
<td>193,213</td>
<td>12,164</td>
<td>6.3</td>
<td>10,578</td>
<td>5.5</td>
<td>-0.8</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;61</span></th>
<td>27,814</td>
<td>1,239</td>
<td>4.5</td>
<td>1,463</td>
<td>5.3</td>
<td>0.8</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">62&ndash;64</span></th>
<td>10,157</td>
<td>439</td>
<td>4.3</td>
<td>579</td>
<td>5.7</td>
<td>1.4</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">65 or older</th>
<td>41,507</td>
<td>940</td>
<td>2.3</td>
<td>1,773</td>
<td>4.3</td>
<td>2.0</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">65&ndash;69</span></th>
<td>13,599</td>
<td>272</td>
<td>2.0</td>
<td>457</td>
<td>3.4</td>
<td>1.4</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">70&ndash;74</span></th>
<td>9,784</td>
<td>185</td>
<td>1.9</td>
<td>340</td>
<td>3.5</td>
<td>1.6</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">75&ndash;79</span></th>
<td>7,331</td>
<td>198</td>
<td>2.7</td>
<td>407</td>
<td>5.5</td>
<td>2.9</td>
</tr>
<tr>
<th class="stub1" scope="row">80 or older</th>
<td>10,792</td>
<td>285</td>
<td>2.6</td>
<td>569</td>
<td>5.3</td>
<td>2.6</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="7">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="note" colspan="7">NOTE: Numbers are in&nbsp;thousands.</td>
</tr>
<tr>
<td class="lastNote" colspan="7">a. People in units with resources less than 50&nbsp;percent of the poverty threshold.</td>
</tr>
</tfoot>
</table>
</div>
<p>For the total population, the <abbr class="spell">SPM</abbr> deep poverty rate (5.2&nbsp;percent) falls short of the official measure deep poverty rate (6.7&nbsp;percent) by 1.5&nbsp;percentage points or by 22&nbsp;percent; in contrast, we just saw that the <abbr class="spell">SPM</abbr> rate (16.1&nbsp;percent) exceeds the official poverty rate (15.1&nbsp;percent) by 1.0&nbsp;percentage points or by 7&nbsp;percent. It follows that the number of people in poverty (but not in deep poverty) under the <abbr class="spell">SPM</abbr> substantially exceeds the number in poverty (but not in deep poverty) under the official measure.</p>
<p>For broad age groups of the aged and nonaged populations, the <abbr class="spell">SPM</abbr> and official measures give quite different results for deep poverty. Compared with the official measure, for deep poverty (as well as for poverty) the <abbr class="spell">SPM</abbr> shows a much higher rate for the aged (adults aged&nbsp;65 or older) and a much lower rate for children (those younger than age&nbsp;18). For the group aged&nbsp;65 or older, the <abbr class="spell">SPM</abbr> deep poverty rate (4.3&nbsp;percent) exceeds the official deep poverty rate (2.3&nbsp;percent) by 2.0&nbsp;percentage points or by 89&nbsp;percent. On the other hand, for the group younger than age&nbsp;18, the <abbr class="spell">SPM</abbr> rate (5.1&nbsp;percent) falls short of the official rate (10.3&nbsp;percent) by 5.2&nbsp;percentage points or by 50&nbsp;percent. Notice that for both deep poverty and poverty, as determined by the official measure, the rate for children is much higher than that for aged adults; on the other hand, for both deep poverty and poverty, as determined by the <abbr class="spell">SPM</abbr>, the rate for children is only modestly higher than that for aged adults. For people aged&nbsp;<span class="nobr">18&ndash;64,</span> the <abbr class="spell">SPM</abbr> deep poverty rate (5.5&nbsp;percent) falls short of the official deep poverty rate (6.3&nbsp;percent) by 0.8&nbsp;percentage points or about 13&nbsp;percent.</p>
<p>For the aged, we also look at deep poverty rates for narrow age subgroups (Table&nbsp;2). For each of those age subgroups, the <abbr class="spell">SPM</abbr> rates exceed the official deep poverty rates. This difference tends to increase with age, increasing from 1.4&nbsp;percentage points for the <span class="nobr">65&ndash;69</span> subgroup to 2.6&nbsp;points for the 80-or-older subgroup.</p>
<p>In addition, we look at deep poverty rates for the near aged <span class="nobr">(55&ndash;61</span> and <span class="nobr">62&ndash;64).</span> For those subgroups, the <abbr class="spell">SPM</abbr> deep poverty rates exceed the official rates by 0.8 and 1.4&nbsp;percentage points. Note that these differences are smaller than those for the subgroups aged&nbsp;70 or&nbsp;older.</p>
<h3>Welfare-Ratio Classes by Age Groups</h3>
<p>We next compare distributions of economic welfare measured using <abbr class="spell">SPM</abbr> concepts with those measured using official poverty measure concepts. Table&nbsp;3 shows the percentage distributions of people in broad age groups and narrow age subgroups by welfare-ratio intervals. Welfare ratio is the ratio of unit resources to the unit poverty threshold.<sup><a href="#mn23" id="mt23">23</a></sup> People in poverty and in deep poverty are those in units with welfare ratios less than 1.0 and less than 0.5, respectively.</p>
<div class="table" id="table3">
<table>
<caption><span class="tableNumber">Table&nbsp;3. </span>Percentage distribution of people, by welfare-ratio<sup>a</sup> intervals, the two poverty measures, and selected age groups,&nbsp;2011</caption>
<colgroup span="1" style="width:12em"></colgroup>
<colgroup span="7" style="width:8em"></colgroup>
<thead>
<tr>
<th rowspan="2" class="stubHeading" scope="colgroup">Age group</th>
<th colspan="7" class="spanner" scope="colgroup">Welfare-ratio intervals</th>
</tr>
<tr>
<th scope="col">Less than 0.50</th>
<th scope="col"><span class="nobr">0.50&ndash;0.99</span>&nbsp;<sup>b</sup></th>
<th scope="col"><span class="nobr">1.00&ndash;1.24</span>&nbsp;<sup>b</sup></th>
<th scope="col"><span class="nobr">1.25&ndash;1.49</span>&nbsp;<sup>b</sup></th>
<th scope="col"><span class="nobr">1.50&ndash;1.99</span>&nbsp;<sup>b</sup></th>
<th scope="col"><span class="nobr">2.00&ndash;3.99</span>&nbsp;<sup>b</sup></th>
<th scope="col">4.00 or more</th>
</tr>
</thead>
<tbody>
<tr>
<td>&nbsp;</td>
<th colspan="7" class="panel" scope="rowgroup">Official</th>
</tr>
<tr>
<th class="stub2" scope="row">Total population</th>
<td>6.7</td>
<td>8.4</td>
<td>4.8</td>
<td>5.1</td>
<td>9.5</td>
<td>30.5</td>
<td>35.1</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">Younger than 18</th>
<td>10.3</td>
<td>12.0</td>
<td>6.0</td>
<td>6.0</td>
<td>10.3</td>
<td>29.1</td>
<td>26.3</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row"><span class="nobr">18&ndash;64</span></th>
<td>6.3</td>
<td>7.4</td>
<td>4.0</td>
<td>4.4</td>
<td>8.5</td>
<td>30.2</td>
<td>39.1</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;61</span></th>
<td>4.5</td>
<td>6.3</td>
<td>3.3</td>
<td>3.2</td>
<td>6.8</td>
<td>26.0</td>
<td>49.9</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">62&ndash;64</span></th>
<td>4.3</td>
<td>6.5</td>
<td>3.3</td>
<td>4.3</td>
<td>7.7</td>
<td>29.0</td>
<td>44.9</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">65 or older</th>
<td>2.3</td>
<td>6.5</td>
<td>5.8</td>
<td>6.5</td>
<td>12.6</td>
<td>34.2</td>
<td>32.2</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">65&ndash;69</span></th>
<td>2.0</td>
<td>5.5</td>
<td>4.0</td>
<td>4.3</td>
<td>8.8</td>
<td>31.6</td>
<td>43.8</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">70&ndash;74</span></th>
<td>1.9</td>
<td>5.4</td>
<td>5.6</td>
<td>5.7</td>
<td>12.5</td>
<td>34.9</td>
<td>34.1</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">75&ndash;79</span></th>
<td>2.7</td>
<td>7.3</td>
<td>6.0</td>
<td>7.1</td>
<td>15.2</td>
<td>35.8</td>
<td>25.8</td>
</tr>
<tr>
<th class="stub1" scope="row">80 or older</th>
<td>2.6</td>
<td>8.0</td>
<td>8.1</td>
<td>9.6</td>
<td>15.8</td>
<td>35.6</td>
<td>20.2</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="7" class="panel" scope="rowgroup"><abbr class="spell">SPM</abbr></th>
</tr>
<tr>
<th class="stub2" scope="row">Total population</th>
<td>5.2</td>
<td>10.9</td>
<td>8.6</td>
<td>8.4</td>
<td>15.0</td>
<td>34.2</td>
<td>17.7</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">Younger than 18</th>
<td>5.1</td>
<td>13.1</td>
<td>10.4</td>
<td>10.9</td>
<td>17.5</td>
<td>31.6</td>
<td>11.4</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row"><span class="nobr">18&ndash;64</span></th>
<td>5.5</td>
<td>10.1</td>
<td>7.6</td>
<td>7.5</td>
<td>14.2</td>
<td>35.3</td>
<td>19.9</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;61</span></th>
<td>5.3</td>
<td>8.4</td>
<td>6.1</td>
<td>5.5</td>
<td>10.8</td>
<td>34.0</td>
<td>30.0</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">62&ndash;64</span></th>
<td>5.7</td>
<td>7.8</td>
<td>6.2</td>
<td>5.5</td>
<td>11.9</td>
<td>35.1</td>
<td>27.7</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">65 or older</th>
<td>4.3</td>
<td>10.8</td>
<td>9.7</td>
<td>8.4</td>
<td>14.3</td>
<td>33.6</td>
<td>18.9</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">65&ndash;69</span></th>
<td>3.4</td>
<td>8.5</td>
<td>7.1</td>
<td>6.3</td>
<td>12.8</td>
<td>35.7</td>
<td>26.3</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">70&ndash;74</span></th>
<td>3.5</td>
<td>10.5</td>
<td>8.8</td>
<td>7.8</td>
<td>14.1</td>
<td>34.5</td>
<td>20.8</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">75&ndash;79</span></th>
<td>5.5</td>
<td>11.3</td>
<td>11.2</td>
<td>9.9</td>
<td>15.2</td>
<td>31.8</td>
<td>15.0</td>
</tr>
<tr>
<th class="stub1" scope="row">80 or older</th>
<td>5.3</td>
<td>13.7</td>
<td>12.7</td>
<td>10.6</td>
<td>15.8</td>
<td>31.4</td>
<td>10.6</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="8">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="note" colspan="8">NOTE: Row percentages sum to approximately&nbsp;100.0.</td>
</tr>
<tr>
<td class="note" colspan="8">a. The ratio of unit resources to the unit poverty threshold.</td>
</tr>
<tr>
<td class="lastNote" colspan="8">b. Less than the lower bound of the next interval.</td>
</tr>
</tfoot>
</table>
</div>
<p>Compared with the official measure, for the total population the <abbr class="spell">SPM</abbr> shows a higher share of people in each of the middle welfare-ratio classes (the nonpoor with welfare ratios less than 2.00) and a much lower share in the top welfare-ratio class (4.00 or more). This pattern also holds for most of the age groups shown in Table&nbsp;3. The lower shares in the top welfare-ratio class result in large part from the subtraction of tax payments in computing the <abbr class="spell">SPM</abbr> resource measure.</p>
<h3>&ldquo;Movements&rdquo; Into and Out of Poverty by Age&nbsp;Groups</h3>
<p>When the basis for poverty measurement changes, the composition of the population designated as poor also changes. We now discuss the effects on poverty status (movements into and out of poverty) of changing the way that poverty is measured&mdash;from the official measure to the <abbr class="spell">SPM</abbr>.</p>
<p>Table&nbsp;4 gives percentages of people who exit poverty, stay in poverty, and enter poverty for broad age groups and narrow age subgroups. We have seen that for the total population, the <abbr class="spell">SPM</abbr> poverty rate (16.1&nbsp;percent) exceeds the official rate (15.1&nbsp;percent) by 1.0&nbsp;percentage points. Switching to the <abbr class="spell">SPM</abbr> moves some people into poverty (those who are official nonpoor who become <abbr class="spell">SPM</abbr> poor) and others out of poverty (those who are official poor who become <abbr class="spell">SPM</abbr> nonpoor). The switch to the <abbr class="spell">SPM</abbr> moves about 5.0&nbsp;percent of the population into poverty and about 3.9&nbsp;percent out of poverty. The number of people entering poverty is about 25&nbsp;percent greater than the number exiting poverty. Some 11.2&nbsp;percent of the population is considered poor under both poverty measures.</p>
<div class="table" id="table4">
<table>
<caption><span class="tableNumber">Table&nbsp;4. </span>Percentage of people in selected age groups, by poverty-status components of the two sets of poverty rates,&nbsp;2011</caption>
<colgroup span="1" style="width:12em"></colgroup>
<colgroup span="5" style="width:8em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Age group</th>
<th scope="col">Official poor&nbsp;<sup>a</sup></th>
<th scope="col">Exit poverty&nbsp;<sup>b</sup></th>
<th scope="col">Stay in poverty&nbsp;<sup>c</sup></th>
<th scope="col">Enter poverty&nbsp;<sup>d</sup></th>
<th scope="col"><abbr class="spell">SPM</abbr> poor&nbsp;<sup>e</sup></th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub2" scope="row">Total population</th>
<td>15.1</td>
<td>3.9</td>
<td>11.2</td>
<td>5.0</td>
<td>16.1</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">Younger than 18</th>
<td>22.3</td>
<td>7.4</td>
<td>14.8</td>
<td>3.4</td>
<td>18.2</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row"><span class="nobr">18&ndash;64</span></th>
<td>13.7</td>
<td>3.1</td>
<td>10.6</td>
<td>5.0</td>
<td>15.6</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">55&ndash;61</span></th>
<td>10.7</td>
<td>2.1</td>
<td>8.7</td>
<td>5.0</td>
<td>13.7</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">62&ndash;64</span></th>
<td>10.8</td>
<td>1.8</td>
<td>9.0</td>
<td>4.4</td>
<td>13.5</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">65 or older</th>
<td>8.7</td>
<td>1.4</td>
<td>7.3</td>
<td>7.7</td>
<td>15.1</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">65&ndash;69</span></th>
<td>7.5</td>
<td>1.3</td>
<td>6.3</td>
<td>5.6</td>
<td>11.9</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">70&ndash;74</span></th>
<td>7.3</td>
<td>1.1</td>
<td>6.2</td>
<td>7.8</td>
<td>13.9</td>
</tr>
<tr>
<th class="stub1" scope="row"><span class="nobr">75&ndash;79</span></th>
<td>10.0</td>
<td>1.9</td>
<td>8.1</td>
<td>8.8</td>
<td>16.9</td>
</tr>
<tr>
<th class="stub1" scope="row">80 or older</th>
<td>10.7</td>
<td>1.4</td>
<td>9.3</td>
<td>9.6</td>
<td>19.0</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="6">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="note" colspan="6">a. &quot;Exit poverty&quot; column + &quot;Stay in poverty&quot; column.</td>
</tr>
<tr>
<td class="note" colspan="6">b. Official poor, but <abbr class="spell">SPM</abbr> nonpoor.</td>
</tr>
<tr>
<td class="note" colspan="6">c. Official poor and <abbr class="spell">SPM</abbr> poor.</td>
</tr>
<tr>
<td class="note" colspan="6">d. Official nonpoor, but <abbr class="spell">SPM</abbr> poor.</td>
</tr>
<tr>
<td class="lastNote" colspan="6">e. &quot;Stay in poverty&quot; column + &quot;Enter poverty&quot; column.</td>
</tr>
</tfoot>
</table>
</div>
<p>For the aged (adults 65 or older), the <abbr class="spell">SPM</abbr> poverty rate (15.1&nbsp;percent) exceeds the official rate (8.7&nbsp;percent) by 6.4&nbsp;percentage points. Switching to the <abbr class="spell">SPM</abbr> moves about 7.7&nbsp;percent of the aged population into poverty and only about 1.4&nbsp;percent out of poverty. The number of aged people entering poverty is more than five times the number exiting poverty (Table&nbsp;4). Some 7.3&nbsp;percent of the aged are considered poor under both poverty measures.</p>
<p>For children (younger than age&nbsp;18), the <abbr class="spell">SPM</abbr> poverty rate (18.2&nbsp;percent) falls short of the official rate (22.3&nbsp;percent) by about 4.0&nbsp;percentage points. A switch to the <abbr class="spell">SPM</abbr> moves about 3.4&nbsp;percent of children into poverty and about 7.4&nbsp;percent out of poverty. The number of children entering poverty is less than half of the number exiting poverty. A very sizable share of children (14.8&nbsp;percent) are considered poor under both poverty measures. For adults in each of the narrow age subgroups <span class="nobr">(65&ndash;69,</span> <span class="nobr">70&ndash;74,</span> <span class="nobr">75&ndash;79,</span> and 80 or older), the number entering poverty is at least four times the number exiting poverty.</p>
<p>Joint percentage distributions are presented in Table&nbsp;5 for people aged&nbsp;65 or older&mdash;by their official measure and <abbr class="spell">SPM</abbr> welfare-ratio classes&mdash;for those who leave poverty, those who stay in poverty, those who enter poverty, and those who remain nonpoor. For people aged&nbsp;65 or older, much of the movement into and out of poverty occurs near the poverty line. Thus, of the 3.2&nbsp;million aged adults entering poverty, some 53&nbsp;percent move from the <span class="nobr">1.00&ndash;1.49</span> official welfare-ratio class to the <span class="nobr">0.50&ndash;0.99</span> <abbr class="spell">SPM</abbr> class.<sup><a href="#mn24" id="mt24">24</a></sup> Similarly, of the 0.6&nbsp;million exiting poverty, 90&nbsp;percent move from the <span class="nobr">0.50&ndash;0.99</span> official welfare-ratio class to the <span class="nobr">1.00&ndash;1.49</span> <abbr class="spell">SPM</abbr> class.<sup><a href="#mn25" id="mt25">25</a></sup> Of those poor under both poverty measures, 16&nbsp;percent move into deep poverty and only 3&nbsp;percent move out of deep poverty.</p>
<div class="table" id="table5">
<table>
<caption><span class="tableNumber">Table&nbsp;5. </span>Changes in poverty status of people aged&nbsp;65 or older, by welfare-ratio<sup>a</sup> interval, 2011: Joint percentage distributions by change category</caption>
<colgroup span="1" style="width:12em"></colgroup>
<colgroup span="6" style="width:8em"></colgroup>
<thead>
<tr>
<th rowspan="2" class="stubHeading" scope="colgroup">Official measure welfare-ratio interval</th>
<th colspan="6" class="spanner" scope="colgroup"><abbr class="spell">SPM</abbr> welfare-ratio interval</th>
</tr>
<tr>
<th scope="col">Less than 0.50</th>
<th scope="col"><span class="nobr">0.50&ndash;0.99</span>&nbsp;<sup>b</sup></th>
<th scope="col"><span class="nobr">1.00&ndash;1.49</span>&nbsp;<sup>b</sup></th>
<th scope="col"><span class="nobr">1.50&ndash;1.99</span>&nbsp;<sup>b</sup></th>
<th scope="col"><span class="nobr">2.00&ndash;3.99</span>&nbsp;<sup>b</sup></th>
<th scope="col">4.00 or more</th>
</tr>
</thead>
<tbody>
<tr>
<td>&nbsp;</td>
<th colspan="6" class="panel" scope="rowgroup">People who exit poverty&nbsp;<sup>c</sup></th>
</tr>
<tr>
<th class="stub0" scope="row">Less than 0.50</th>
<td>0.0</td>
<td>0.0</td>
<td>1.9</td>
<td>0.0</td>
<td>1.4</td>
<td>0.0</td>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">0.50&ndash;0.99</span>&nbsp;<sup>b</sup></th>
<td>0.0</td>
<td>0.0</td>
<td>89.8</td>
<td>2.0</td>
<td>4.5</td>
<td>0.4</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="6" class="panel" scope="rowgroup">People who enter poverty&nbsp;<sup>d</sup></th>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">1.00&ndash;1.49</span>&nbsp;<sup>b</sup></th>
<td>8.3</td>
<td>52.6</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">1.50&ndash;1.99</span>&nbsp;<sup>b</sup></th>
<td>3.8</td>
<td>23.7</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">2.00&ndash;3.99</span>&nbsp;<sup>b</sup></th>
<td>2.3</td>
<td>8.3</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<th class="stub0" scope="row">4.00 or more</th>
<td>0.5</td>
<td>0.4</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="6" class="panel" scope="rowgroup">People poor under both measures</th>
</tr>
<tr>
<th class="stub0" scope="row">Less than 0.50</th>
<td>26.8</td>
<td>3.4</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">0.50&ndash;0.99</span>&nbsp;<sup>b</sup></th>
<td>15.6</td>
<td>54.2</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
<td>0.0</td>
</tr>
<tr>
<td>&nbsp;</td>
<th colspan="6" class="panel" scope="rowgroup">People not poor under both measures</th>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">1.00&ndash;1.49</span>&nbsp;<sup>b</sup></th>
<td>0.0</td>
<td>0.0</td>
<td>8.2</td>
<td>0.7</td>
<td>0.1</td>
<td>0.0</td>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">1.50&ndash;1.99</span>&nbsp;<sup>b</sup></th>
<td>0.0</td>
<td>0.0</td>
<td>7.2</td>
<td>4.8</td>
<td>0.5</td>
<td>0.0</td>
</tr>
<tr>
<th class="stub0" scope="row"><span class="nobr">2.00&ndash;3.99</span>&nbsp;<sup>b</sup></th>
<td>0.0</td>
<td>0.0</td>
<td>4.6</td>
<td>11.2</td>
<td>23.8</td>
<td>0.3</td>
</tr>
<tr>
<th class="stub0" scope="row">4.00 or more</th>
<td>0.0</td>
<td>0.0</td>
<td>0.1</td>
<td>0.3</td>
<td>15.7</td>
<td>22.3</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="7">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="note" colspan="7">NOTE: For each change category (people who exit poverty, people who enter poverty, people poor under both measures, and people not poor under both measures), the percentages sum to approximately&nbsp;100.0.</td>
</tr>
<tr>
<td class="note" colspan="7">a. The ratio of unit resources to the unit poverty threshold.</td>
</tr>
<tr>
<td class="note" colspan="7">b. Less than the lower bound of the next higher interval.</td>
</tr>
<tr>
<td class="note" colspan="7">c. Official poor, but <abbr class="spell">SPM</abbr> nonpoor.</td>
</tr>
<tr>
<td class="lastNote" colspan="7">d. Official nonpoor, but <abbr class="spell">SPM</abbr> poor.</td>
</tr>
</tfoot>
</table>
</div>
<h3>Poverty of the Aged by Various Demographic and Socioeconomic Characteristics</h3>
<p>We now turn to more detailed comparisons of <abbr class="spell">SPM</abbr> and official poverty for the aged (adults 65 or older). We examine poverty for various demographic and socioeconomic groups.</p>
<p>Table&nbsp;6 shows poverty numbers; poverty rates; and differences in poverty by sex, race, Hispanic origin, nativity, housing-tenure status, residence, region, health insurance coverage, Social Security beneficiary status, and marital status. For all of the categories shown in this table, <abbr class="spell">SPM</abbr> poverty exceeds official poverty. These differences generally range from 3.4 to 9.8&nbsp;percentage points.</p>
<div class="table" id="table6">
<table>
<caption><span class="tableNumber">Table&nbsp;6. </span>Percentage of people aged&nbsp;65 or older in poverty, by the two poverty measures and selected characteristics, 2011</caption>
<colgroup span="1" style="width:18em"></colgroup>
<colgroup class="shaded" span="1" style="width:6em"></colgroup>
<colgroup span="2" style="width:7em"></colgroup>
<colgroup span="2" style="width:7em"></colgroup>
<thead>
<tr>
<th rowspan="2" class="stubHeading" scope="colgroup">Characteristic</th>
<th rowspan="2" scope="colgroup">Number</th>
<th colspan="2" class="spanner" scope="colgroup">Percent</th>
<th colspan="2" class="spanner" scope="colgroup">Difference between <abbr class="spell">SPM</abbr> and official poverty rates</th>
</tr>
<tr>
<th scope="col">Official poor</th>
<th scope="col"><abbr class="spell">SPM</abbr> poor</th>
<th scope="col">Percentage point</th>
<th scope="col">Percent</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub3" scope="row">Total population</th>
<td>41,507</td>
<td>8.7</td>
<td>15.1</td>
<td>6.4</td>
<td>73</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Sex</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Male</th>
<td>18,332</td>
<td>6.2</td>
<td>12.3</td>
<td>6.1</td>
<td>99</td>
</tr>
<tr>
<th class="stub1" scope="row">Female</th>
<td>23,174</td>
<td>10.7</td>
<td>17.3</td>
<td>6.6</td>
<td>61</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Race&nbsp;<sup>a</sup> and Hispanic origin</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">White</th>
<td>35,732</td>
<td>7.7</td>
<td>13.9</td>
<td>6.2</td>
<td>81</td>
</tr>
<tr>
<th class="stub2" scope="row">White, not Hispanic</th>
<td>32,904</td>
<td>6.7</td>
<td>12.7</td>
<td>6.0</td>
<td>89</td>
</tr>
<tr>
<th class="stub1" scope="row">Black</th>
<td>3,640</td>
<td>17.3</td>
<td>23.8</td>
<td>6.5</td>
<td>37</td>
</tr>
<tr>
<th class="stub1" scope="row">Asian</th>
<td>1,555</td>
<td>11.7</td>
<td>20.8</td>
<td>9.1</td>
<td>78</td>
</tr>
<tr>
<th class="stub1" scope="row">Hispanic (any race)</th>
<td>3,036</td>
<td>18.7</td>
<td>27.4</td>
<td>8.7</td>
<td>46</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Nativity</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Native born</th>
<td>36,541</td>
<td>7.7</td>
<td>13.7</td>
<td>6.0</td>
<td>77</td>
</tr>
<tr>
<th class="stub1" scope="row">Foreign born</th>
<td>4,965</td>
<td>15.9</td>
<td>25.3</td>
<td>9.3</td>
<td>59</td>
</tr>
<tr>
<th class="stub2" scope="row">Naturalized citizen</th>
<td>3,625</td>
<td>14.9</td>
<td>24.1</td>
<td>9.2</td>
<td>61</td>
</tr>
<tr>
<th class="stub2" scope="row">Not a citizen</th>
<td>1,341</td>
<td>18.6</td>
<td>28.4</td>
<td>9.8</td>
<td>52</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Unit housing-tenure status</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Owner with mortgage</th>
<td>11,056</td>
<td>4.7</td>
<td>13.1</td>
<td>8.4</td>
<td>176</td>
</tr>
<tr>
<th class="stub1" scope="row">Owner with no mortgage/rent free&nbsp;<sup>b</sup></th>
<td>24,114</td>
<td>7.4</td>
<td>12.7</td>
<td>5.2</td>
<td>70</td>
</tr>
<tr>
<th class="stub1" scope="row">Renter</th>
<td>6,337</td>
<td>20.5</td>
<td>27.6</td>
<td>7.1</td>
<td>35</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Residence&nbsp;<sup>c</sup></th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Inside <abbr class="spell">MSA</abbr>s</th>
<td>33,541</td>
<td>8.7</td>
<td>15.8</td>
<td>7.0</td>
<td>81</td>
</tr>
<tr>
<th class="stub1" scope="row">Outside <abbr class="spell">MSA</abbr>s</th>
<td>7,676</td>
<td>8.6</td>
<td>12.0</td>
<td>3.4</td>
<td>40</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Region</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Northeast</th>
<td>7,948</td>
<td>8.9</td>
<td>15.9</td>
<td>7.0</td>
<td>78</td>
</tr>
<tr>
<th class="stub1" scope="row">Midwest</th>
<td>9,257</td>
<td>7.3</td>
<td>12.1</td>
<td>4.8</td>
<td>65</td>
</tr>
<tr>
<th class="stub1" scope="row">South</th>
<td>15,390</td>
<td>10.1</td>
<td>16.0</td>
<td>5.9</td>
<td>58</td>
</tr>
<tr>
<th class="stub1" scope="row">West</th>
<td>8,912</td>
<td>7.7</td>
<td>15.9</td>
<td>8.3</td>
<td>108</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Health insurance coverage</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Private insurance&nbsp;<sup>d</sup></th>
<td>24,098</td>
<td>4.5</td>
<td>11.0</td>
<td>6.5</td>
<td>144</td>
</tr>
<tr>
<th class="stub1" scope="row">Public insurance only</th>
<td>16,719</td>
<td>14.0</td>
<td>20.0</td>
<td>6.0</td>
<td>43</td>
</tr>
<tr>
<th class="stub1" scope="row">No insurance</th>
<td>690</td>
<td>28.1</td>
<td>39.1</td>
<td>11.0</td>
<td>39</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Social Security beneficiary status</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Beneficiary</th>
<td>35,169</td>
<td>6.8</td>
<td>13.3</td>
<td>6.5</td>
<td>96</td>
</tr>
<tr>
<th class="stub1" scope="row">Not a beneficiary</th>
<td>6,337</td>
<td>19.4</td>
<td>24.9</td>
<td>5.4</td>
<td>28</td>
</tr>
<tr>
<th class="stub0" scope="rowgroup">Marital status</th>
<td>&nbsp;</td>
<td colspan="4"></td>
</tr>
<tr>
<th class="stub1" scope="row">Married&nbsp;<sup>e</sup></th>
<td>23,551</td>
<td>3.9</td>
<td>11.0</td>
<td>7.1</td>
<td>181</td>
</tr>
<tr>
<th class="stub1" scope="row">Not married&nbsp;<sup>f</sup></th>
<td>17,956</td>
<td>15.0</td>
<td>20.4</td>
<td>5.4</td>
<td>36</td>
</tr>
<tr>
<th class="stub2" scope="row">Widowed</th>
<td>10,661</td>
<td>13.5</td>
<td>19.2</td>
<td>5.7</td>
<td>42</td>
</tr>
<tr>
<th class="stub2" scope="row">Divorced</th>
<td>4,517</td>
<td>15.4</td>
<td>19.9</td>
<td>4.5</td>
<td>30</td>
</tr>
<tr>
<th class="stub2" scope="row">Never married</th>
<td>1,820</td>
<td>19.3</td>
<td>25.0</td>
<td>5.7</td>
<td>29</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="6">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="note" colspan="6">NOTE: Numbers are in&nbsp;thousands.</td>
</tr>
<tr>
<td class="note" colspan="6">a. The race categories exclude people who report more than one race.</td>
</tr>
<tr>
<td class="note" colspan="6">b. Includes nonowners who live rent free.</td>
</tr>
<tr>
<td class="note" colspan="6">c. Excludes a small number of people in cases where confidentiality rules prevent identification of <abbr class="spell">MSA</abbr> status on the public-use data file. Such identification is available on the Census Bureau's internal data file.</td>
</tr>
<tr>
<td class="note" colspan="6">d. Most people also have public insurance coverage.</td>
</tr>
<tr>
<td class="note" colspan="6">e. Married with spouse present in the household.</td>
</tr>
<tr>
<td class="lastNote" colspan="6">f. In addition to people who are widowed, divorced, or never married, this category also includes those who are married with spouse absent from the household.</td>
</tr>
</tfoot>
</table>
</div>
<p>For housing-status categories, the percentage point increases (<abbr class="spell">SPM</abbr> poverty rate minus the official poverty rate) are larger for people in units that have owners with mortgages than for those in units that have owners with no mortgages or those in units that have renters. These differences in part reflect the fact that the <abbr class="spell">SPM</abbr> thresholds take housing status into account.</p>
<p>For residence categories, the percentage point increases are larger for people residing inside <abbr class="spell">MSA</abbr>s. For region categories, the percentage point increases are largest for the West and Northeast and smallest for the Midwest and South. These patterns of percentage point differences reflect the fact that the <abbr class="spell">SPM</abbr> threshold incorporates adjustments for geographic differences in housing costs.</p>
<p>For Social Security beneficiary-status categories, the percentage point increase is a bit larger for beneficiaries than for nonbeneficiaries. In part, this difference reflects the fact that <abbr>MOOP</abbr> expenses are more important for units with beneficiaries.</p>
<p>For marital-status categories, the percentage point increase is larger for married people than for the nonmarried. We later discuss the fact that this difference in part reflects equivalence scale differences between the two poverty measures.</p>
<p>For the demographic characteristics shown in Table&nbsp;6, the excesses of <abbr class="spell">SPM</abbr> poverty over official poverty range from 28&nbsp;percent to 181&nbsp;percent. For most of the categories (sex, residence, and so forth), the groups with the largest <i>percentage</i> increases in poverty are those with the lowest official poverty rates.<sup><a href="#mn26" id="mt26">26</a></sup> For example, although the percentage point increases for whites (6.2&nbsp;percent) and blacks (6.5&nbsp;percent) are similar, the percentage increase for whites (81&nbsp;percent) substantially exceeds that for blacks (37&nbsp;percent). The official poverty rates for whites and blacks are 7.7&nbsp;percent and 17.3&nbsp;percent.</p>
<p>Thus, we find that percentage increases in poverty are larger for men than for women, for the native born than for the foreign born, and for people in units that have owners with mortgages than for those in units that have owners with no mortgages or those in units that have renters. In addition, we find that percentage increases in poverty are larger for people with private health insurance, for Social Security beneficiaries, and for married people.</p>
<h2>Effects of Various Features of the <abbr class="spell">SPM</abbr> on Poverty of the Aged</h2>
<p>The substantial increase in measured poverty among the aged population can be attributed to specific features of the <abbr class="spell">SPM</abbr>. We next examine the effects of the <abbr class="spell">SPM</abbr>'s resource measure, threshold measure, and unit measure.</p>
<h3>Effects of Elements of the Resource Measure</h3>
<p>We first examine the effects on poverty of including noncash transfers and refundable tax credits in the resource measure. Then we look at the effects of excluding taxes and other nondiscretionary expenses from resources.</p>
<p class="noindent"><span class="h4">Noncash transfers and refundable tax credits</span>. We compare <abbr class="spell">SPM</abbr> poverty rates including and not including each program's benefits (transfer or tax credit) in the resource measure. In other words, for each of the government programs, we compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we use <abbr class="spell">SPM</abbr> resources minus the benefits of the program as our resource measure, but we continue to use the <abbr class="spell">SPM</abbr> thresholds and <abbr class="spell">SPM</abbr> units.<sup><a href="#mn27" id="mt27">27</a></sup> We view the change in poverty as the result of a specified change in the way poverty is measured.</p>
<p>There is another way to view the change in poverty. We could look at the change in poverty as the result of a change in program policy for a given measure of poverty, namely, the effect on poverty&mdash;as measured by the <abbr class="spell">SPM</abbr>&mdash;of introducing the program. Our estimate of the increase in resources because of the introduction of the program equals the amount of program benefits.<sup><a href="#mn28" id="mt28">28</a></sup> It does not include any changes in other resource components that are due to the program's behavioral (for example, work effort) and interprogram effects.<sup><a href="#mn29" id="mt29">29</a></sup></p>
<p>The six programs considered here are refundable tax credits,<sup><a href="#mn30" id="mt30">30</a></sup> housing subsidies, <abbr>LIHEAP</abbr>, school lunches, <abbr>SNAP</abbr>, and <abbr>WIC</abbr>. The top section of Table&nbsp;7 gives the percentage point decreases in the <abbr class="spell">SPM</abbr> poverty rate of the aged population attributed to each of those six programs. Only two of the programs&mdash;housing subsidies and <abbr>SNAP</abbr>&mdash;have much effect on the <abbr class="spell">SPM</abbr> poverty rates of the aged. When including housing subsidies and <abbr>SNAP</abbr> in the resource measure, the measured poverty rate is reduced by 1.2 and 0.7&nbsp;percentage points. Those two programs target aged and nonaged low-income people. <abbr>LIHEAP</abbr> is not a large enough program to have much effect on the poverty rates of aged people or members of any other age group. School lunches and <abbr>WIC</abbr> benefits are intended to help nonaged people. Refundable tax credits are intended to help working families, especially those with children.<sup><a href="#mn31" id="mt31">31</a></sup> The sum of the six individual program effects is 2.2&nbsp;percentage points.</p>
<div class="table" id="table7">
<table>
<caption><span class="tableNumber">Table&nbsp;7. </span>Effect on the <abbr class="spell">SPM</abbr> poverty rate of individual additions to and subtractions from <abbr class="spell">SPM</abbr> resources for people aged&nbsp;65 or older,&nbsp;2011</caption>
<colgroup span="1" style="width:27em"></colgroup>
<colgroup span="1" style="width:6em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col"><abbr class="spell">SPM</abbr> resource additions and subtractions</th>
<th scope="col">Change in poverty rate (percentage points)</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="rowgroup">Additions (refundable tax credits and noncash transfers)</th>
<td colspan="1"></td>
</tr>
<tr>
<th class="stub1" scope="row">Refundable tax credits</th>
<td>-0.2</td>
</tr>
<tr>
<th class="stub1" scope="row">Housing subsidies</th>
<td>-1.2</td>
</tr>
<tr>
<th class="stub1" scope="row"><abbr>LIHEAP</abbr> (energy assistance)</th>
<td>-0.1</td>
</tr>
<tr>
<th class="stub1" scope="row">School lunches</th>
<td><sup>a</sup>&nbsp;-0.0</td>
</tr>
<tr>
<th class="stub1" scope="row"><abbr>SNAP</abbr> (formerly the Food Stamp Program)</th>
<td>-0.7</td>
</tr>
<tr>
<th class="stub1" scope="row"><abbr>WIC</abbr></th>
<td><sup>a</sup>&nbsp;-0.0</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="rowgroup">Subtractions (taxes and other nondiscretionary expenses)</th>
<td colspan="1"></td>
</tr>
<tr>
<th class="stub1" scope="row">Federal income taxes</th>
<td>0.2</td>
</tr>
<tr>
<th class="stub1" scope="row"><abbr>FICA</abbr> taxes</th>
<td>0.2</td>
</tr>
<tr>
<th class="stub1" scope="row">State income taxes</th>
<td>0.1</td>
</tr>
<tr>
<th class="stub1" scope="row">Child support paid</th>
<td>0.1</td>
</tr>
<tr>
<th class="stub1" scope="row"><abbr>MOOP</abbr> expenses</th>
<td>7.1</td>
</tr>
<tr>
<th class="stub1" scope="row">Work expenses</th>
<td>0.3</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="rowgroup">Combined effect of all <abbr class="spell">SPM</abbr> additions and subtractions</th>
<td><sup>b </sup>5.5</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="2">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="note" colspan="2">a. Negative but greater than&nbsp;-0.05.</td>
</tr>
<tr>
<td class="lastNote" colspan="2">b. Because of the interaction effect and rounding, this value does not equal the sum of the individual changes.</td>
</tr>
</tfoot>
</table>
</div>
<p class="noindent"><span class="h4">Taxes and other nondiscretionary expenses</span>. For each expense element, we compare <abbr class="spell">SPM</abbr> poverty rates subtracting and not subtracting the element in calculating the resource measure. In other words, for each of the expense elements, we compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we use <abbr class="spell">SPM</abbr> resources plus the expense-element amount as our resource measure, but we continue to use the <abbr class="spell">SPM</abbr> thresholds and <abbr class="spell">SPM</abbr>&nbsp;units.</p>
<p>The six expense items considered here are federal income taxes,<sup><a href="#mn32" id="mt32">32</a></sup> <abbr>FICA</abbr> taxes,<sup><a href="#mn33" id="mt33">33</a></sup> state income taxes,<sup><a href="#mn34" id="mt34">34</a></sup> child support paid, <abbr>MOOP</abbr> expenses, and work expenses. The bottom section of Table&nbsp;7 gives the percentage point increases in the <abbr class="spell">SPM</abbr> poverty rate of the aged population attributed to each of those six expense items. Only <abbr>MOOP</abbr> expenses have much effect on <abbr class="spell">SPM</abbr> poverty of the aged. Subtracting <abbr>MOOP</abbr> expenses in calculating the resource measure results in a large increase in measured poverty; this subtraction increases the poverty rate by 7.1&nbsp;percentage points.<sup><a href="#mn35" id="mt35">35</a></sup> More than 98&nbsp;percent of aged adults are members of <abbr class="spell">SPM</abbr> units with <abbr>MOOP</abbr> expenses. For those units, <abbr>MOOP</abbr> expenses can be high; people in such units have <abbr>MOOP</abbr> expenses on average that amount to 40&nbsp;percent of their unit's <abbr class="spell">SPM</abbr> poverty threshold. In addition, there is great dispersion around that average; a minority of aged adults have very high <abbr>MOOP</abbr> expenses relative to their poverty thresholds. The poverty-rate effect of each of the other expense elements is 0.3&nbsp;percentage points or less. Because of personal exemptions and other factors, low-income aged adults typically have no or low income tax liabilities. Payroll taxes and work expenses affect working families, including a sizable number with aged adults.<sup><a href="#mn36" id="mt36">36</a></sup> Child support payments come mostly from nonaged people. The sum of these six individual expense effects is 8.0&nbsp;percentage points.</p>
<p class="noindent"><span class="h4">All resource elements</span>. Here we compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we replace the <abbr class="spell">SPM</abbr> resource measure with the official resource measure, but use the <abbr class="spell">SPM</abbr> thresholds and <abbr class="spell">SPM</abbr> units. We find that the <abbr class="spell">SPM</abbr> poverty rate (15.1&nbsp;percent) exceeds this modified poverty rate by 5.5&nbsp;percentage points (Table&nbsp;7).</p>
<p>The combined effect on poverty of all the differences between the <abbr class="spell">SPM</abbr> resource measure and the official resource measure need not equal the sum of the effects of the 12 individual differences. There can be interaction effects. An example of an interaction effect is the following: Although including either <abbr>SNAP</abbr> benefits or a housing subsidy in the resource measure may not move a unit out of poverty, including both benefits may move the unit out of poverty.<sup><a href="#mn37" id="mt37">37</a></sup></p>
<p>The sum of the six poverty-increasing resource measure components (8.0&nbsp;percentage points) exceeds the sum of the six poverty-reducing resource measure components (2.2&nbsp;percentage points) by 5.8&nbsp;percentage points. The fact that the 5.8&nbsp;percentage point excess and the difference between the <abbr class="spell">SPM</abbr> poverty rate and the modified rate (5.5&nbsp;percentage points)&mdash;the combined effect of all resource additions and subtractions&mdash;are similar indicates that the net interaction effect is small.</p>
<h3>Effects of Elements of the Threshold Measure</h3>
<p>We now examine the effects of various elements of the <abbr class="spell">SPM</abbr> threshold measure; that is, housing-status adjustments, geographic adjustments, threshold level, equivalence scales, and scale adjustments for the aged. In addition, we consider the combined effect of the various elements of the <abbr class="spell">SPM</abbr> threshold measure. These effects (in percentage points) on the <abbr class="spell">SPM</abbr> poverty rate of the aged are given in Table&nbsp;8.</p>
<div class="table" id="table8">
<table>
<caption><span class="tableNumber">Table&nbsp;8. </span>Effect on the <abbr class="spell">SPM</abbr> poverty rate of individual features of the <abbr class="spell">SPM</abbr> threshold for people aged&nbsp;65 or older,&nbsp;2011</caption>
<colgroup span="1" style="width:22em"></colgroup>
<colgroup span="1" style="width:6em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col">Threshold feature</th>
<th scope="col">Change in poverty rate (percentage points)</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="row">Housing-status adjustment</th>
<td>-2.8</td>
</tr>
<tr>
<th class="stub0" scope="row">Geographic adjustment</th>
<td>-0.1</td>
</tr>
<tr>
<th class="stub0" scope="row">Threshold level</th>
<td>2.8</td>
</tr>
<tr>
<th class="stub0" scope="row">Equivalence scale</th>
<td>1.3</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">Combined effect of all <abbr class="spell">SPM</abbr> threshold features</th>
<td><sup>a</sup>&nbsp;1.6</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="2">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="lastNote" colspan="2">a. Because of the interaction effect and rounding, this value does not equal the sum of the individual changes.</td>
</tr>
</tfoot>
</table>
</div>
<p class="noindent"><span class="h4">Housing-status adjustments</span>. The <abbr class="spell">SPM</abbr> thresholds depend on housing-status group. The groups are units that have owners with mortgages, owners without mortgages, and renters. All thresholds for units that have owners without mortgages are 15&nbsp;percent lower than they would be if the thresholds did not depend on housing status. Correspondingly, the thresholds for units that have owners with mortgages and renters are 3&nbsp;percent and 1&nbsp;percent higher than they would be if the thresholds did not depend on housing status.<sup><a href="#mn38" id="mt38">38</a></sup></p>
<p>To estimate the effect of housing-status adjustments, we remove those adjustments from the <abbr class="spell">SPM</abbr> thresholds and compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we use those modified thresholds. We find that the housing-status adjustment decreases the poverty rate by a substantial 2.8&nbsp;percentage points (Table&nbsp;8).<sup><a href="#mn39" id="mt39">39</a></sup> Almost 60&nbsp;percent of poor people in the absence of this adjustment are in units that have owners with no mortgages; the adjustment markedly lowers their thresholds and moves many of those people out of poverty. The adjustment decreases the poverty rate for those in units that have owners with no mortgages by 5.4&nbsp;percentage points.<sup><a href="#mn40" id="mt40">40</a></sup> For people in units that have owners with mortgages or those in units that have renters, there are small increases in the poverty rates.</p>
<p class="noindent"><span class="h4">Geographic adjustments</span>. The <abbr class="spell">SPM</abbr> thresholds are adjusted to reflect geographic differences in living costs. The adjustment factors depend on housing- status group and area rent. Rent data for more than 300 areas are from the American Community Survey. For a given housing-status group, the geographic adjustment factor is derived by multiplying an area's rent index value by the group's share of housing (shelter + utilities) expenditures in its threshold and adding that product to the group's nonhousing share. The rent index is the ratio of the area's rent to the national average rent.<sup><a href="#mn41" id="mt41">41</a></sup></p>
<p>The rent-index values range from about .60 to about 1.90. The housing shares of units that have owners with mortgages, owners without mortgages, and renters are .507, .401, and .497, respectively (Bureau of Labor Statistics&nbsp;2012). For adults aged&nbsp;65 or older, the geographic adjustment factors average about 1.01 and range from .80 to 1.48.</p>
<p>We remove these geographic adjustments from the <abbr class="spell">SPM</abbr> thresholds and compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we use those modified thresholds.<sup><a href="#mn42" id="mt42">42</a></sup> We find that the geographic adjustment has very little effect on the overall poverty rate of the aged (Table&nbsp;8). The adjustment does move a sizable number of people into poverty and a sizable number out of poverty. It raises thresholds for people in higher-cost areas and thus moves some of them into poverty; on the other hand, it lowers thresholds for people in lower-cost areas and thus moves some of them out of poverty. It increases poverty in two regions (the Northeast and West) and decreases poverty in the other two regions (the Midwest and South).<sup><a href="#mn43" id="mt43">43</a></sup> The adjustment decreases poverty substantially for people living outside <abbr class="spell">MSA</abbr>s.</p>
<p class="noindent"><span class="h4">Threshold level</span>. With no housing-status adjustment and no geographic adjustment, the <abbr class="spell">SPM</abbr> threshold for the <span class="nobr">two-adult</span> <span class="nobr">two-child</span> unit for 2011 would have been $25,000;<sup><a href="#mn44" id="mt44">44</a></sup> the <span class="nobr">two-adult</span> <span class="nobr">two-child</span> official threshold for 2011 was $22,811. Thus, for this base unit, the official threshold is only 91.24&nbsp;percent of the <abbr class="spell">SPM</abbr> threshold.</p>
<p>To estimate the effect of the threshold-level difference, we remove that difference by multiplying each unit's <abbr class="spell">SPM</abbr> threshold by .9124. We then compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we use those modified thresholds. This change increases the poverty rate for the aged by a substantial 2.8&nbsp;percentage points (Table&nbsp;8).</p>
<p class="noindent"><span class="h4">Equivalence scales</span>. There are substantial differences between the official and <abbr class="spell">SPM</abbr> equivalence scales. Both scales depend on unit size and number of unit children, but depend on those two factors in somewhat different ways. The official scale also depends on the age of the unit head; small units with aged heads have lower scale values than corresponding units with nonaged heads.</p>
<p>First, we estimate the total effect of using the <abbr class="spell">SPM</abbr> equivalence scale on poverty of the aged. We then estimate the role of the official threshold's differential treatment of small aged and nonaged units in the total effect of using the <abbr class="spell">SPM</abbr> scale.</p>
<p>We incorporate the official equivalence scale into the <abbr class="spell">SPM</abbr> thresholds as follows. For each poverty measure, the equivalence scale value is set equal to 1.00 for a <span class="nobr">two-adult</span> <span class="nobr">two-child</span> unit. For each unit type, we compute the ratio of the official scale value to the <abbr class="spell">SPM</abbr> scale value, where unit type is defined by unit size, number of unit children, and whether the unit head is at least age&nbsp;65. We next multiply each unit's <abbr class="spell">SPM</abbr> threshold by the ratio of scale values to get modified thresholds. We find that using the <abbr class="spell">SPM</abbr> equivalence scale increases the poverty rate for the aged by 1.3&nbsp;percentage points (Table&nbsp;8), an increase of 0.5&nbsp;million people.</p>
<p>We now turn to the role of the differential treatment of aged units. For <span class="nobr">one-person</span> units, the official threshold value for people aged&nbsp;65 or older is 92.19&nbsp;percent of the threshold for those younger than age&nbsp;65. For <span class="nobr">two-adult</span> <span class="nobr">no-child</span> units, the official threshold for a unit with the head aged&nbsp;65 or older is 90.26&nbsp;percent of the threshold for a unit with the head younger than age&nbsp;65. For <span class="nobr">one-adult</span> <span class="nobr">one-child</span> units, the threshold for a unit with the head aged&nbsp;65 or older is 99.63&nbsp;percent of the threshold for a unit with the head younger than age&nbsp;65. That differential treatment of the aged in the official scale plays an important role in the effect on poverty of using the <abbr class="spell">SPM</abbr> equivalence scale. We incorporate the differential treatment of the aged into the <abbr class="spell">SPM</abbr> thresholds as follows. For each aged <abbr class="spell">SPM</abbr> unit, we multiply the unit's <abbr class="spell">SPM</abbr> threshold by the appropriate adjustment factor (.9219, .9026, or .9963) to get modified thresholds. We find that removing the differential treatment of the aged increases their poverty rate by 2.2&nbsp;percentage points.<sup><a href="#mn45" id="mt45">45</a></sup> Recall that the overall effect of using the <abbr class="spell">SPM</abbr> equivalence scale increases the poverty rate for aged adults by 1.3&nbsp;percentage points. Thus, properties of the <abbr class="spell">SPM</abbr> equivalence scale other than the absence of differential treatment of the aged cause a <i>decrease</i> in the poverty rate for the aged of 0.9&nbsp;percentage points (2.2&nbsp;&minus;&nbsp;1.3). The key property is that the <abbr class="spell">SPM</abbr> equivalence scale has a relatively low scale value for <span class="nobr">one-person</span> units (shown below).</p>
<p>The overall effect of using the <abbr class="spell">SPM</abbr> equivalence scale reflects (1)&nbsp;the effect of the differential treatment of the aged and (2)&nbsp;the differences between the <abbr class="spell">SPM</abbr> equivalence scales and the official scales for the nonaged. About <span class="nobr">five-sixths</span> of the aged population is in either a <span class="nobr">one-person</span> or <span class="nobr">two-adult</span> <span class="nobr">no-child</span> unit. For nonaged <span class="nobr">two-adult</span> <span class="nobr">no-child</span> units, the <abbr class="spell">SPM</abbr> and official equivalence scale values are about the same (.655 and .660). On the other hand, for nonaged <span class="nobr">one-person</span> units, the <abbr class="spell">SPM</abbr> scale value (.463) falls short of the official scale value (.513) by about 10&nbsp;percent; this shortfall decreases poverty for <span class="nobr">one-person</span> units.</p>
<p>The shortfall is also reflected in the equivalence scale effects on married and nonmarried people. About <span class="nobr">five-sixths</span> of the aged married population are in <span class="nobr">two-adult</span> <span class="nobr">no-child</span> units, and about <span class="nobr">five-sixths</span> of the aged nonmarried population are in <span class="nobr">one-person</span> units. Using the <abbr class="spell">SPM</abbr> equivalence scale affects married and nonmarried people quite differently. The poverty rate for married people increases by 2.1&nbsp;percentage points, but the rate for nonmarried people shows little change.<sup><a href="#mn46" id="mt46">46</a></sup></p>
<p class="noindent"><span class="h4">All threshold elements</span>. We can examine the combined effect on aged poverty of the housing and geographic adjustments, threshold level, and equivalence scale. For each <abbr class="spell">SPM</abbr> unit, we replace the <abbr class="spell">SPM</abbr> threshold with the official threshold, which depends on <abbr class="spell">SPM</abbr> unit size, number of unit children, and whether the unit head is at least age&nbsp;65. We then compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we use those modified thresholds, but continue to use the <abbr class="spell">SPM</abbr> resource measure and <abbr class="spell">SPM</abbr> units.</p>
<p>We find that using the <abbr class="spell">SPM</abbr> thresholds increases aged poverty by 1.6&nbsp;percentage points (Table&nbsp;8). The sum of the four individual threshold component effects&mdash;(1)&nbsp;housing adjustment (decreases poverty rate by 2.8&nbsp;percentage points), (2)&nbsp;geographic adjustment (decreases poverty by 0.1&nbsp;points), (3)&nbsp;threshold level (increases poverty by 2.8&nbsp;points), and (4)&nbsp;equivalence scale (increases poverty by 1.3&nbsp;points)&mdash;is a poverty rate increase of 1.2&nbsp;percentage points. Thus, the interaction effect is a poverty rate increase of 0.4&nbsp;percentage points (1.6&nbsp;&minus;&nbsp;1.2).</p>
<h3>Effects of Unit Definition</h3>
<p>We can compare official poverty of the aged (65 or older) with the poverty that results when we use the <abbr class="spell">SPM</abbr> unit, but use the official resource and threshold concepts.<sup><a href="#mn47" id="mt47">47</a></sup> We find that replacing the official unit with the <abbr class="spell">SPM</abbr> unit reduces the poverty rate for aged adults by 0.3&nbsp;percentage points (Table&nbsp;9). For the total population, the reduction is a much larger 1.4&nbsp;percentage points.<sup><a href="#mn48" id="mt48">48</a></sup></p>
<div class="table" id="table9">
<table>
<caption><span class="tableNumber">Table&nbsp;9. </span>Effect on the <abbr class="spell">SPM</abbr> poverty rate of features of the <abbr class="spell">SPM</abbr> for people aged&nbsp;65 or older,&nbsp;2011</caption>
<colgroup span="1" style="width:20em"></colgroup>
<colgroup span="1" style="width:6em"></colgroup>
<thead>
<tr>
<th class="stubHeading" scope="col"><abbr class="spell">SPM</abbr> feature</th>
<th scope="col">Change in poverty rate (percentage points)</th>
</tr>
</thead>
<tbody>
<tr>
<th class="stub0" scope="row">All resources</th>
<td>5.5</td>
</tr>
<tr>
<th class="stub0" scope="row">All thresholds</th>
<td>1.6</td>
</tr>
<tr>
<th class="stub0" scope="row">Unit</th>
<td>-0.3</td>
</tr>
<tr class="topPad1">
<th class="stub0" scope="row">Combined effect of all <abbr class="spell">SPM</abbr> features</th>
<td><sup>a</sup>&nbsp;6.4</td>
</tr>
</tbody>
<tfoot>
<tr>
<td class="firstNote" colspan="2">SOURCE: The public-use version of the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</td>
</tr>
<tr>
<td class="lastNote" colspan="2">a. Because of the interaction effect and rounding, this value does not equal the sum of the individual changes.</td>
</tr>
</tfoot>
</table>
</div>
<p>The majority of aged adults stay in the same unit, that is, their <abbr class="spell">SPM</abbr> unit is the same as their official unit. Only about 2.5&nbsp;percent of them end up in a new unit, that is, in an <abbr class="spell">SPM</abbr> unit that differs from their official unit. Some 95&nbsp;percent of those <span class="nobr">new-unit</span> adults end up in larger <abbr class="spell">SPM</abbr> units, that is, their <abbr class="spell">SPM</abbr> unit is larger than their official unit.<sup><a href="#mn49" id="mt49">49</a></sup> Replacing the official unit with the <abbr class="spell">SPM</abbr> unit moves about an eighth of those <span class="nobr">new-unit</span> adults out of poverty; a very small number moves into poverty. In larger units, greater resource sharing and economies of scale tend to reduce the number of people in poverty.</p>
<h3>Effects of All Components of the <abbr class="spell">SPM</abbr></h3>
<p>For aged adults, the <abbr class="spell">SPM</abbr> poverty rate exceeds the official rate by 6.4&nbsp;percentage points. The combined effect of all changes in the resource measure (from the official to the <abbr class="spell">SPM</abbr>) increases the poverty rate by 5.5&nbsp;percentage points. The combined effect of all the changes in the threshold measure increases the poverty rate by 1.6&nbsp;percentage points. On the other hand, replacing the official unit with the <abbr class="spell">SPM</abbr> unit reduces the poverty rate by 0.3&nbsp;percentage points. The sum of the resource, threshold, and unit effects (5.5&nbsp;+&nbsp;1.6&nbsp;&minus;&nbsp;0.3) is 6.8&nbsp;percentage points. Thus, the interaction effect in this case is -0.4&nbsp;percentage points (6.4&nbsp;&minus;&nbsp;6.8).</p>
<h2>Summary of Empirical Findings</h2>
<p>First, we summarize our comparisons of official and <abbr class="spell">SPM</abbr> poverty estimates. Then, we summarize our analysis of the effects of the various features of the <abbr class="spell">SPM</abbr> on poverty of the aged.</p>
<h3>Comparison of Official and <abbr class="spell">SPM</abbr> Estimates</h3>
<p>We find that for the total population under study, the <abbr class="spell">SPM</abbr> poverty rate (16.1&nbsp;percent) exceeds the official rate (15.1&nbsp;percent). For broad age groups, the <abbr class="spell">SPM</abbr> and official measures give quite different results. Compared with the official measure, the <abbr class="spell">SPM</abbr> shows much <i>more</i> poverty for the aged&mdash;those aged&nbsp;65 or older (an increase in the poverty rate from 8.7&nbsp;percent to 15.1&nbsp;percent) and much <i>less</i> poverty for children&mdash;those younger than age&nbsp;18 (a decrease from 22.3&nbsp;percent to 18.2&nbsp;percent). For aged adults, we also look at poverty rates for narrow age subgroups <span class="nobr">(65&ndash;69,</span> <span class="nobr">70&ndash;74,</span> <span class="nobr">75&ndash;79,</span> and 80 or older). For each of these subgroups, the <abbr class="spell">SPM</abbr> poverty rate exceeds the official rate.</p>
<p>For the total population, the <abbr class="spell">SPM</abbr> deep poverty rate (5.2&nbsp;percent) <i>falls short</i> of the official measure deep poverty rate (6.7&nbsp;percent). For broad age groups, the <abbr class="spell">SPM</abbr> and official measure give quite different results for deep poverty. Compared with the official measure, for deep poverty (as well as for poverty), the <abbr class="spell">SPM</abbr> shows a much higher rate for aged adults and a much lower rate for children.</p>
<p>Switching to the <abbr class="spell">SPM</abbr> moves 7.7&nbsp;percent of the aged population into poverty, but moves 1.4&nbsp;percent out of poverty. Much of this movement into and out of poverty occurs near the poverty line. We examine poverty of aged adults for various demographic and socioeconomic groups (<a href="#table6">Table&nbsp;6</a>). For all of the groups shown in this table, <abbr class="spell">SPM</abbr> poverty exceeds official poverty.</p>
<p>The percentage point increases in poverty rates (the <abbr class="spell">SPM</abbr> rate minus the official rate) are larger for those in units that have owners with mortgages than for those in units that have owners without mortgages or those in units that have renters, larger for people residing inside <abbr class="spell">MSA</abbr>s than for those residing outside <abbr class="spell">MSA</abbr>s, and larger for married people than for those not married.</p>
<h3>Effects of <abbr class="spell">SPM</abbr> Features on Poverty of the Aged</h3>
<p>For the group aged&nbsp;65 or older, the <abbr class="spell">SPM</abbr> poverty rate (15.1&nbsp;percent) exceeds the official poverty rate (8.7&nbsp;percent) by 6.4&nbsp;percentage points.</p>
<p>The combined effect of all the changes in the resource measure is an increase in the poverty rate of 5.5&nbsp;percentage points. Of the subtractions of taxes and other nondiscretionary expenses, only the subtraction of <abbr>MOOP</abbr> expenses results in a large increase in the measured poverty rate (7.1&nbsp;percentage points). This effect is substantially larger than that of any other change in resource measure, threshold measure, or unit definition. Of the additions of noncash transfers and refundable tax credits, the addition of housing subsidies produces the largest decrease in the poverty rate (1.2&nbsp;percentage points).</p>
<p>The combined effect of all the changes in the threshold measure increases the poverty rate by 1.6&nbsp;percentage points. Raising the threshold level and using the <abbr class="spell">SPM</abbr> equivalence scale increase the poverty rate by 2.8&nbsp;percentage points and 1.3&nbsp;percentage points, respectively. On the other hand, the housing-status adjustment decreases the poverty rate by 2.8&nbsp;percentage points.</p>
<p>Replacing the official unit with the <abbr class="spell">SPM</abbr> unit reduces the poverty rate slightly, by 0.3&nbsp;percentage points.</p>
<h2>Concluding Comments</h2>
<p>The <abbr class="spell">SPM</abbr> produces a picture of who is counted as poor that is quite different from that produced by the official poverty measure. Thus, one's view regarding the relative merits of the two poverty measures is quite relevant to his or her views regarding appropriate public policy. For the aged population, key public policies include those affecting Social Security, Medicare, Medicaid, and Supplemental Security Income.</p>
<p>The effects of certain types of government policies on the economic well-being of the low-income population would be better measured using the <abbr class="spell">SPM</abbr> than the official measure. For example, consider policies that eliminate Social Security payroll taxes for aged workers or increase <abbr>SNAP</abbr> benefits. The effects of these policies would be reflected in <abbr class="spell">SPM</abbr> estimates, but not in official poverty estimates.</p>
<p>Additional research on the <abbr class="spell">SPM</abbr> should prove very fruitful. We need further research evaluating the <abbr class="spell">SPM</abbr> and testing alternative methods of improving it. Research is needed on components of both the resource and threshold measures. For example, research on the valuation of work expenses, adjustments for the underreporting of income and expenses, and geographic adjustments of thresholds should be given high priority.</p>
<p>In addition, it would be worthwhile to conduct more research on how and why the <abbr class="spell">SPM</abbr> and official poverty estimates differ. This research could focus on specific groups such as children and nonaged adults.</p>
<h2 id="appendix">Appendix</h2>
<p>The sources of the dollar values for the various <span class="nobr">in-kind</span> benefits, refundable tax credits, tax liabilities, and other nondiscretionary expense items given in the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> data file are discussed in this Appendix. We begin by discussing <span class="nobr">in-kind</span> benefits and taxes and refundable tax credits.</p>
<ul>
<li><span class="h4">Housing subsidies.</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on recipiency, but not on amounts received. To estimate amounts of such assistance, the Department of Housing and Urban Development program rules are applied to <abbr class="spell">CPS</abbr> households.</li>
<li><span class="h4">Low-Income Home Energy Assistance Program (<abbr>LIHEAP</abbr>).</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on amounts received.</li>
<li><span class="h4">National School Lunch Program.</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on recipiency, but not on amounts received. To value benefits, the Census Bureau uses the amount of the cost per lunch from the Department of Agriculture's Food and Nutrition Service.</li>
<li><span class="h4">Supplemental Nutrition Assistance Program (<abbr>SNAP</abbr>).</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on amounts received.</li>
<li><span class="h4">Special Supplemental Nutrition Program for Women, Infants, and Children (<abbr>WIC</abbr>).</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on recipiency, but not on amounts received. To value the benefits, the Census Bureau uses program information from the Department of Agriculture.</li>
<li><span class="h4">Taxes and refundable tax credits.</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> does not collect information on taxes and refundable tax credits, but relies on a tax calculator to simulate those data. The calculator is a computer program that incorporates the main features of federal and state tax laws. These simulations also use a statistical match of the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> to the Internal Revenue Service's Statistics of Income microdata file of tax returns.</li>
</ul>
<p>We conclude by discussing other necessary expenses that are subtracted from resources.</p>
<ul>
<li><span class="h4">Child support paid.</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on amounts paid.</li>
<li><span class="h4">Medical out-of-pocket (<abbr>MOOP</abbr>) expenses.</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on amounts paid for (1)&nbsp;health insurance premiums; (2)&nbsp;over-the-counter health-related products; and (3)&nbsp;medical care (hospital visits, medical providers, dental services, prescription medicine, vision aids, and medical supplies). Caswell and O'Hara&nbsp;(2010) conclude that <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> estimates of <abbr>MOOP</abbr> expenses compare favorably to estimates from the Medical Expenditure Panel Survey (<abbr>MEPS</abbr>) and the Survey of Income and Program Participation (<abbr>SIPP</abbr>). The <abbr>MEPS</abbr>, in particular, devotes considerably more effort to collecting <abbr>MOOP</abbr> expenses than does the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</li>
<li><span class="h4">Work-related expenses other than childcare expenses.</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> does not collect information on these work-related expenses (travel to work, tools, uniforms, and so forth). Information on amounts of such work expenses from the most recent <abbr>SIPP</abbr> is used to estimate those expenses for workers in the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</li>
<li><span class="h4">Childcare expenses.</span> The <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> collects information on amounts of such expenses (any type of childcare while parents are at work).</li>
</ul>
<div id="notes">
<h2>Notes</h2>
<p>&ensp;<a href="#mt1" id="mn1">1</a> There are two slightly different versions of the official poverty measure: (1)&nbsp;poverty thresholds, which are more detailed and primarily used for statistical purposes; and (2)&nbsp;poverty guidelines, which are a simplified version of the thresholds and primarily used for administrative purposes. In this article, we use the term &ldquo;official poverty measure&rdquo; to denote the poverty threshold measure. For a discussion of the two measures, see Institute for Research on Poverty&nbsp;(2013).</p>
<p>&ensp;<a href="#mt2" id="mn2">2</a> See note&nbsp;1. The poverty guideline measure is sometimes identified in legislation regarding program eligibility. The <abbr class="spell">SPM</abbr> is not intended to be used in this way.</p>
<p>&ensp;<a href="#mt3" id="mn3">3</a> The poverty rate is the percentage of people in a group who are classified as poor.</p>
<p>&ensp;<a href="#mt4" id="mn4">4</a> In its 1964 report, the President's Council of Economic Advisors (<abbr class="spell">CEA</abbr>) set forth a poverty threshold of $3,000 (in 1962&nbsp;dollars) for all families of two or more people and a threshold of $1,500 for unrelated individuals. The Orshansky set of thresholds, which increase with family size, was clearly superior to the <abbr class="spell">CEA</abbr> alternative.</p>
<p>&ensp;<a href="#mt5" id="mn5">5</a> <abbr class="spell">ITWG</abbr>&nbsp;(2010).</p>
<p>&ensp;<a href="#mt6" id="mn6">6</a> This section draws heavily on Short&nbsp;(2012); refer to the report for further details.</p>
<p>&ensp;<a href="#mt7" id="mn7">7</a> The 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> is a household survey, which uses a sample of about 100,000 households. The sample universe is the <abbr class="spell">US</abbr> civilian noninstitutionalized population; it also includes military personnel who live in a household with at least one civilian adult.</p>
<p>&ensp;<a href="#mt8" id="mn8">8</a> Money income in the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> consists of (1)&nbsp;earnings; (2)&nbsp;unemployment compensation; (3)&nbsp;workers' compensation; (4)&nbsp;Social Security; (5)&nbsp;Supplemental Security Income; (6)&nbsp;public assistance; (7)&nbsp;veterans' payments; (8)&nbsp;survivor benefits; (9)&nbsp;disability benefits; (10)&nbsp;pension or retirement income; (11)&nbsp;interest; (12)&nbsp;dividends; (13)&nbsp;rents, royalties, and estates and trusts; (14)&nbsp;educational assistance; (15)&nbsp;alimony; (16)&nbsp;child support; (17)&nbsp;financial assistance from outside of the household; and (18)&nbsp;other income.</p>
<p>&ensp;<a href="#mt9" id="mn9">9</a> For a critique of the resource-based <abbr class="spell">SPM</abbr>, see Meyer and Sullivan&nbsp;(2012). The authors favor a consumption-based poverty measure.</p>
<p><a href="#mt10" id="mn10">10</a> Federal outlays for Supplemental Security Income (<abbr class="spell">SSI</abbr>) and Temporary Assistance for Needy Families (<abbr title="TAN F">TANF</abbr>) were about $56&nbsp;billion and $17&nbsp;billion. Both of these <i>cash</i> benefit programs are also designed to assist the low-income population.</p>
<p><a href="#mt11" id="mn11">11</a> The sources of the dollar values for the various <span class="nobr">in-kind</span> benefit, tax, and other nondiscretionary expense items given in the <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr> data file are discussed in the <a href="#appendix">Appendix</a>. For more details, see Short&nbsp;(2012) and references cited therein.</p>
<p><a href="#mt12" id="mn12">12</a> See note&nbsp;11.</p>
<p><a href="#mt13" id="mn13">13</a> Respondents reported amounts of premium and nonpremium <abbr>MOOP</abbr> expenses in the 2012 <abbr class="spell">CPS</abbr>/<abbr class="spell">ASEC</abbr>.</p>
<p><a href="#mt14" id="mn14">14</a> For families of three or more persons, the multiplier is 3. However, for families of two, the multiplier is 3.7. Without using a food plan and a multiplier, the thresholds for unrelated individuals were set at 80&nbsp;percent of the corresponding thresholds for <span class="nobr">two-person</span> families.</p>
<p><a href="#mt15" id="mn15">15</a> To be more precise, the expenditure around the 33<sup>rd</sup> percentile is the average of expenditures within the 30<sup>th</sup> to 36<sup>th</sup>&nbsp;percentile portion of the expenditure distribution.</p>
<p><a href="#mt16" id="mn16">16</a> The three-parameter scale value is calculated as follows:</p>
<ol>
<li><abbr class="spell">SPM</abbr> unit with one or two adults and no children: unadjusted scale value&nbsp;= [number of adults]<sup>0.5</sup></li>
<li><abbr class="spell">SPM</abbr> unit with one adult and one child or more (mostly single-parent units): unadjusted scale value&nbsp;= [1 + 0.8 + 0.5(number of children&nbsp;&minus;&nbsp;1)]<sup>0.7</sup></li>
<li>All other <abbr class="spell">SPM</abbr> units: unadjusted scale value&nbsp;= [number of adults + 0.5(number of children)]<sup>0.7</sup></li>
</ol>
<p class="secondpara">In computing equivalence scale values, all people aged&nbsp;18 or older and nondependent people aged&nbsp;<span class="nobr">15&ndash;17</span> are counted as adults; all people younger than age&nbsp;15 and dependent people aged&nbsp;<span class="nobr">15&ndash;17</span> are counted as children.</p>
<p class="secondpara">In equation&nbsp;(2), the first child is treated as 80&nbsp;percent of an adult; each additional child is treated as 50&nbsp;percent of an adult. In equation&nbsp;(3), each child is treated as 50&nbsp;percent of an adult. The numbers of adult equivalents are given by the expressions inside the brackets. For example, for a <span class="nobr">two-adult</span> <span class="nobr">two-child</span> unit, equation (3)&nbsp;shows that the number of adult equivalents is three.</p>
<p class="secondpara">Economies of scale means that whenever an additional equivalent adult is added to an <abbr class="spell">SPM</abbr> unit, the unit's equivalence scale value divided by the number of adult equivalents decreases. The exponents outside the brackets are the economy-of-scale factors. The smaller exponent (0.5) exhibits greater economies of scale than does the larger exponent&nbsp;(0.7).</p>
<p class="secondpara">The Census Bureau then adjusts all unadjusted scale values proportionally so that the adjusted scale value for the <span class="nobr">two-adult</span> <span class="nobr">two-child</span> unit equals&nbsp;1. The base threshold level for the <span class="nobr">two-adult</span> <span class="nobr">two-child</span> unit is then multiplied by the adjusted scale values in deriving threshold values for the other unit types.</p>
<p><a href="#mt17" id="mn17">17</a> For a detailed discussion of the <abbr class="spell">SPM</abbr> and official unit measures, see Provencher&nbsp;(2011).</p>
<p><a href="#mt18" id="mn18">18</a> The Census Bureau's report on official poverty shows a poverty rate of 15.0&nbsp;percent for 2011 (DeNavas-Walt, Proctor, and Smith&nbsp;2012). That report excludes from the universe of official poverty calculations all unrelated individuals younger than age&nbsp;15.</p>
<p class="secondpara">In the Census Bureau's report on the <abbr class="spell">SPM</abbr> (Short&nbsp;2012) and in this study, those unrelated individuals are included in the universe for official and <abbr class="spell">SPM</abbr> poverty calculations. In these official poverty calculations, all of those unrelated individuals are counted as poor. In the <abbr class="spell">SPM</abbr> calculations, those individuals are assumed to share the resources of their <abbr class="spell">SPM</abbr> unit.</p>
<p><a href="#mt19" id="mn19">19</a> The <abbr class="spell">SPM</abbr> thresholds incorporate adjustments for geographic differences in housing costs. Because of confidentiality restrictions, the geographic information available for use in calculating <abbr class="spell">SPM</abbr> thresholds on the public-use data file is slightly more limited than that available for use in calculating the <abbr class="spell">SPM</abbr> thresholds on the Census Bureau's internal data file. Thus, this study's <abbr class="spell">SPM</abbr> estimates differ slightly from those in Short&nbsp;(2012).</p>
<p><a href="#mt20" id="mn20">20</a> For the group aged&nbsp;65 or older, the percentage distribution among four age classes <span class="nobr">(65&ndash;69,</span> <span class="nobr">70&ndash;74,</span> <span class="nobr">75&ndash;79,</span> and 80 or older) of the poor under the <abbr class="spell">SPM</abbr> is similar to that for the poor under the official measure. For the <span class="nobr">65&ndash;79</span> group, the mean ages of the <abbr class="spell">SPM</abbr> poor and the official measure poor are 72 and&nbsp;71.</p>
<p><a href="#mt21" id="mn21">21</a> Refundable tax credits are very important for children.</p>
<p><a href="#mt22" id="mn22">22</a> For official deep poverty, gross before-tax cash income is the resource measure.</p>
<p><a href="#mt23" id="mn23">23</a> For the official welfare ratio, gross before-tax cash income is the resource measure.</p>
<p><a href="#mt24" id="mn24">24</a> To be more precise, &ldquo;<span class="nobr">1.00&ndash;1.49</span>&rdquo; means equal to or greater than 1.00 but less than 1.50. Correspondingly, &ldquo;<span class="nobr">0.50&ndash;0.99</span>&rdquo; means equal to or greater than 0.50 but less than 1.00.</p>
<p><a href="#mt25" id="mn25">25</a> Eighty-one percent of them move to the <span class="nobr">1.00&ndash;1.24</span> class.</p>
<p><a href="#mt26" id="mn26">26</a> The official poverty rates of people residing inside and outside metropolitan statistical areas (<abbr class="spell">MSA</abbr>s) are similar.</p>
<p><a href="#mt27" id="mn27">27</a> For example, we compute the effect on the <abbr class="spell">SPM</abbr> rate of adding housing subsidies to the <abbr class="spell">SPM</abbr> resource estimate in the following way: (1)&nbsp;We subtract the value of each <abbr class="spell">SPM</abbr> unit's housing subsidies from its <abbr class="spell">SPM</abbr> resource estimate. (2)&nbsp;For each unit, we then compare that modified resource estimate to the unit's <abbr class="spell">SPM</abbr> threshold to determine the modified poverty status of its members. (3)&nbsp;We then calculate the percentage of aged adults whose modified poverty status is poor, that is, we calculate the modified poverty rate. For this case, the modified poverty rate is 16.3&nbsp;percent. (4)&nbsp;Finally, we compare the modified poverty rate with the <abbr class="spell">SPM</abbr> rate. For the aged, the <abbr class="spell">SPM</abbr> rate is 15.1&nbsp;percent. We find that the inclusion of housing subsidies in the resource measure reduces the poverty rate by 1.2&nbsp;percentage points (15.1 &ndash; 16.3).</p>
<p><a href="#mt28" id="mn28">28</a> These program benefit amounts usually incorporate behavioral and interprogram effects.</p>
<p><a href="#mt29" id="mn29">29</a> Government cash transfers are included as resources by both the <abbr class="spell">SPM</abbr> and the official poverty measure. Cash transfer programs included are (1)&nbsp;Social Security, (2)&nbsp;Supplemental Security Income (<abbr class="spell">SSI</abbr>), (3)&nbsp;unemployment insurance, (4)&nbsp;workers' compensation, and (5)&nbsp;Temporary Assistance for Needy Families (<abbr title="TAN F">TANF</abbr>) and general assistance. Including Social Security in <abbr class="spell">SPM</abbr> resources reduces the <abbr class="spell">SPM</abbr> poverty rate of the aged by 39.0&nbsp;percentage points, a huge reduction. The corresponding reductions that are due to <abbr class="spell">SSI</abbr> and unemployment insurance are 1.3&nbsp;percentage points and 0.4&nbsp;percentage points. The following is an example of an interprogram effect: As specified in <abbr class="spell">SSI</abbr> program rules, a person's <abbr class="spell">SSI</abbr> payment amount decreases as that person's Social Security benefit increases.</p>
<p><a href="#mt30" id="mn30">30</a> Federal earned income tax credit plus refundable portion of federal child tax credit plus other refundable federal credits.</p>
<p><a href="#mt31" id="mn31">31</a> Only 6&nbsp;percent of the aged are in <abbr class="spell">SPM</abbr> units that receive refundable federal tax credits.</p>
<p><a href="#mt32" id="mn32">32</a> Federal individual income tax after subtracting nonrefundable tax credits.</p>
<p><a href="#mt33" id="mn33">33</a> Contributions by employees and the self-employed to <span class="nobr">Old-Age,</span> Survivors, Disability, and Hospital Insurance (<abbr class="spell">OASDHI</abbr>) plus retirement contributions by federal employees.</p>
<p><a href="#mt34" id="mn34">34</a> State income tax after credits. Some amounts are negative.</p>
<p><a href="#mt35" id="mn35">35</a> For both people with private health insurance and those with only public insurance, this <abbr>MOOP</abbr>-expense subtraction increases the poverty rates by about <span class="nobr">7&ndash;8</span>&nbsp;percentage points.</p>
<p><a href="#mt36" id="mn36">36</a> Sixty-one percent of aged adults are in <abbr class="spell">SPM</abbr> units that do not have either payroll tax liability or work expenses.</p>
<p><a href="#mt37" id="mn37">37</a> Interaction effect is not the same as interprogram effect discussed earlier. See <a href="#mn29">note&nbsp;29</a>.</p>
<p><a href="#mt38" id="mn38">38</a> With no geographic adjustment, basic thresholds for <span class="nobr">two-adult</span> <span class="nobr">two-child</span> units are $25,703, $21,175, and $25,222 for units that have owners with mortgages, owners without mortgages, and renters, respectively. With no geographic adjustment and no housing-status adjustment, the threshold for the <span class="nobr">two-adult</span> <span class="nobr">two-child</span> unit would be 1.2($20,833) or $25,000: $25,703, $21,175, and $25,222 are 103&nbsp;percent, 85&nbsp;percent, and 101&nbsp;percent of $25,000. See the Bureau of Labor Statistics&nbsp;(2012).</p>
<p><a href="#mt39" id="mn39">39</a> Preliminary thresholds are multiplied by geographic adjustment factors to get final thresholds. Those factors depend on housing-status group and on area rent data. The inclusion of housing-status group in the calculation of geographic adjustment factors reduces the poverty rate for adults aged&nbsp;65 or older by 0.2&nbsp;percentage points. We include this effect as part of the effects of the geographic adjustment factors and not as part of the effects of the housing-status adjustment.</p>
<p><a href="#mt40" id="mn40">40</a> Not shown in this article's tables.</p>
<p><a href="#mt41" id="mn41">41</a> The adjustment factors are calculated using the following formula:</p>
<p class="secondpara">Factor<sub><i>ah</i></sub>&nbsp;= HousingShare<sub><i>h</i></sub> × (Rent<sub><i>a</i></sub>/Rent<sub><i>n</i></sub>) + (1&nbsp;&minus; HousingShare<sub><i>h</i></sub>),</p>
<p class="secondpara">where <i>a</i> denotes area, <i>h</i> denotes housing-status group, and <i>n</i> denotes national. See Renwick&nbsp;(2011).</p>
<p><a href="#mt42" id="mn42">42</a> Renwick&nbsp;(2011) made such estimates for an earlier year.</p>
<p><a href="#mt43" id="mn43">43</a> Not shown in the article's tables.</p>
<p><a href="#mt44" id="mn44">44</a> Derived from Bureau of Labor Statistics&nbsp;(2012).</p>
<p><a href="#mt45" id="mn45">45</a> Not shown in this article's tables.</p>
<p><a href="#mt46" id="mn46">46</a> Not shown in this article's tables.</p>
<p><a href="#mt47" id="mn47">47</a> Note that here we compare official poverty with the poverty that results when we change a specified feature of the official measure. In all our previous estimates of poverty effects, we compare <abbr class="spell">SPM</abbr> poverty with the poverty that results when we change a specified feature of the <abbr class="spell">SPM</abbr>. In the case of unit definition, the approach used here is considerably easier to implement than our usual approach.</p>
<p><a href="#mt48" id="mn48">48</a> Not shown in the article's tables.</p>
<p><a href="#mt49" id="mn49">49</a> For the remaining <span class="nobr">new-unit</span> adults, their <abbr class="spell">SPM</abbr> unit and their official unit are of the same size, but differ in composition.</p>
</div>
<div id="references">
<h2>References</h2>
<p>Bureau of Labor Statistics. 2012. <i>Supplemental Poverty Measure (<abbr class="spell">SPM</abbr>) Thresholds</i>. Washington, <abbr class="spell">DC</abbr>: Department of Labor. <a href="https://www.bls.gov/pir/spmhome.htm">http://www.bls.gov/pir/spmhome.htm</a>.</p>
<p>Caswell, Kyle&nbsp;J., and Brett O'Hara. 2010. &ldquo;Medical Out-of- Pocket Expenses, Poverty, and the Uninsured.&rdquo; <abbr class="spell">SEHSD</abbr> Working Paper <abbr title="Number">No.</abbr>&nbsp;<span class="nobr">2010-17.</span> Washington, <abbr class="spell">DC</abbr>: Census Bureau, Social, Economic, and Housing Statistics Division.</p>
<p>Citro, Constance&nbsp;F., and Robert&nbsp;T. Michael (<abbr title="editors">eds.</abbr>). 1995. <i>Measuring Poverty: A New Approach.</i> Washington, <abbr class="spell">DC</abbr>: National Academy Press.</p>
<p>DeNavas-Walt, Carmen, Bernadette&nbsp;D. Proctor, and Jessica&nbsp;C. Smith. 2012. <i>Income, Poverty, and Health Insurance Coverage in the United States: 2011.</i> Census Bureau, Current Population Reports, <span class="nobr">P60-243.</span> Washington, <abbr class="spell">DC</abbr>: Government Printing Office (September).</p>
<p>Falk, Gene. 2012. <i>Low-Income Assistance Programs: Trends in Federal Spending.</i> <abbr class="spell">CRS</abbr> Report for Congress, R41823. Washington, <abbr class="spell">DC</abbr>: Congressional Research Service (June&nbsp;13).</p>
<p>Fisher, Gordon&nbsp;M. 1992. &ldquo;<a href="/policy/docs/ssb/v55n4/v55n4p3.pdf">The Development and History of the Poverty Thresholds</a>.&rdquo; <i>Social Security Bulletin</i> 55(4): <span class="nobr">3&ndash;14</span>.</p>
<p>Institute for Research on Poverty. 2013. <i>What are Poverty Thresholds and Poverty Guidelines?</i> Madison, <abbr title="Wisconsin">WI</abbr>: University of Wisconsin-Madison. http://www.irp.wisc .edu/faqs/faq1.htm.</p>
<p>[<abbr class="spell">ITWG</abbr>] Interagency Technical Working Group on Developing a Supplemental Poverty Measure. 2010. <i>Observations From the Interagency Technical Working Group on Developing a Supplemental Poverty Measure</i>. Washington, <abbr class="spell">DC</abbr>: Census Bureau (March). <a href="https://www.census.gov/topics/income-poverty/supplemental-poverty-measure.html">http://www.census.gov/hhes/www/poverty/SPM_TWGObservations.pdf</a>.</p>
<p>Meyer, Bruce&nbsp;D., and James&nbsp;X. Sullivan. 2012. &ldquo;Identifying the Disadvantaged: Official Poverty, Consumption Poverty, and the New Supplemental Poverty Measure.&rdquo; <i>Journal of Economic Perspectives</i> 26(3): <span class="nobr">111&ndash;135.</span></p>
<p>Orshansky, Mollie. 1963. &ldquo;<a href="/policy/docs/ssb/v26n7/v26n7p3.pdf">Children of the Poor</a>.&rdquo; <i>Social Security Bulletin</i> 26(7): <span class="nobr">3&ndash;13.</span></p>
<p>&mdash;&mdash;&mdash;. 1965a. &ldquo;<a href="/policy/docs/ssb/v28n1/v28n1p3.pdf">Counting the Poor: Another Look at the Poverty Profile</a>.&rdquo; <i>Social Security Bulletin</i> 28(1): <span class="nobr">3&ndash;29.</span></p>
<p>&mdash;&mdash;&mdash;. 1965b. &ldquo;<a href="/policy/docs/ssb/v28n7/v28n7p3.pdf">Who's Who Among the Poor: A Demographic View of Poverty</a>.&rdquo; <i>Social Security Bulletin</i> 28(7): <span class="nobr">3&ndash;32.</span></p>
<p>Provencher, Ashley&nbsp;J. 2011. &ldquo;Unit of Analysis for Poverty Measurement: A Comparison of the Supplemental Poverty Measure and the Official Poverty Measure.&rdquo; <abbr class="spell">SEHSD</abbr> Working Paper <abbr title="Number">No.</abbr>&nbsp;<span class="nobr">2011-22.</span> Washington, <abbr class="spell">DC</abbr>: Census Bureau, Social, Economic, and Housing Statistics Division.</p>
<p>Renwick, Trudi. 2011. &ldquo;Geographic Adjustments of Supplemental Poverty Measure Thresholds: Using the American Community Survey <span class="nobr">Five-Year</span> Data on Housing Costs.&rdquo; <abbr class="spell">SEHSD</abbr> Working Paper <abbr title="Number">No.</abbr>&nbsp;<span class="nobr">2011-21.</span> Washington, <abbr class="spell">DC</abbr>: Census Bureau, Social, Economic, and Housing Statistics Division.</p>
<p>Short, Kathleen. 2001. <i>Experimental Poverty Measures: 1999</i>. Census Bureau, Current Population Reports<i>,</i> Consumer Income, <span class="nobr">P60-216.</span> Washington, <abbr class="spell">DC</abbr>: Government Printing Office (October). <a href="https://www.census.gov/library/publications/2001/demo/p60-216.html">http://www.census.gov /prod/2001pubs/p<span class="nobr">60-216.</span>pdf</a>.</p>
<p>&mdash;&mdash;&mdash;. 2011. <i>The Research Supplemental Poverty Measure: 2010</i>. Census Bureau, Current Population Reports, <span class="nobr">P60-241.</span> Washington, <abbr class="spell">DC</abbr>: Census Bureau (November). <a href="https://www.census.gov/library/publications/2011/demo/p60-241.html">http://www.census.gov/hhes/povmeas/methodology /supplemental/research/Short_ResearchSPM2010.pdf</a>.</p>
<p>&mdash;&mdash;&mdash;. 2012. <i>The Research Supplemental Poverty Measure: 2011</i>. Census Bureau, Current Population Reports, <span class="nobr">P60-244.</span> Washington, <abbr class="spell">DC</abbr>: Census Bureau (November). <a href="https://www.census.gov/library/publications/2012/demo/p60-244.html">http://www.census.gov/hhes/povmeas/methodology /supplemental/research/Short_ResearchSPM2011.pdf</a>.</p>
<p>Short, Kathleen, Thesia Garner, David Johnson, and Patricia Doyle. 1999. <i>Experimental Poverty Measures: 1990 to 1997</i>. Census Bureau, Current Population Reports, Consumer Income, <span class="nobr">P60-205.</span> Washington, <abbr class="spell">DC</abbr>: Government Printing Office (June). <a href="https://www.census.gov/library/publications/1999/demo/p60-205.html">http://www.census.gov /prod/99pubs/p<span class="nobr">60-205.</span>pdf</a>.</p>
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