Drawing the line

One of the first concepts taught in introductory economics is the measure of poverty. How is it decided who will receive the label and who will not? For the final exam we memorized numbers like $20,000 (for a family of four) and $10,000 (individual), but with little thought to how the numbers were derived or what they meant. The standard from which these numbers come dates as far back as the Johnson Administration, based upon a formula stipulating that the average family would spend a third of its income on food. The measure has not changed except to be adjusted for inflation in the intervening time period since.

Many argue that the measure is not only inaccurate, but makes calculating the impact of anti-poverty measures (like food stamps, housing assistance, etc.) very difficult. Based upon data gathered in this census this year, the federal government will actually retool the metric upon which we draw the poverty line. What exactly this new formula will look like is still up in the air, though that has not stopped economists from trying to postulate what it may look like.

Statistics are a fickle tool and numbers can often be tweaked, pushed and prodded to generate the results one wants to hear. Under an administration against welfare, the poverty line might be edged a little lower, whereas an administration looking to implement welfare programs, the line will be placed such that a sizable enough population falls below it to merit action.

In an art-imitates-life moment, here's an excerpt from a "West Wing" episode that explains how the poverty model was derived and how it works. The fictional Democratic administration was obviously less than thrilled that more people had become classified as poor under their watch due to inflationary adjustments, but viewed the ability to pass greater welfare reform as "good news." The show always was heralded for sticking to realistic, relevant topics.