Poverty in the U.S. is not as bad as official stats make it out to be, according to a recent report that has optimistic conclusions about prevention programs.
Economists Bruce Meyer of the University of Chicago and Nikolas Mittag of CEIRGE-EI in Prague released a working paper last month for the National Bureau of Economic Research that examines how people underreporting their government benefits in Census surveys skews data.
Meyer, the lead author on the paper, compiled records of payouts to recipients of four types of government assistance — housing benefits, food stamps and two cash benefit programs (welfare) — in New York between 2007 and 2012. Then he compared what the records said individuals received with what they said on their Census surveys.
The records are confidential, so Meyer spent a decade poring over the data in a windowless room that requires fingerprinting and passing three security checkpoints to enter. Those years resulted in findings that reveal a flawed picture of poverty and substantial errors in the way we measure it.
More than one-third of people receiving welfare didn’t report it to the Census, and underreporting rates were higher for SNAP and housing benefit recipients.
“[U]nderreporting in the [Census Community Population Survey] causes us to severely underestimate resources available to the poor and thereby makes poverty look more severe and inequality worse,” Meyer and Mettig conclude in their paper.
Misreporting is a natural part of surveying that researchers try to account for, and Meyer was expecting to see it. It was the frequency, and the degree that it affected the data that surprised him.
According to the Census survey, people in severe poverty receive about $1,400 in benefits, but that amount doubles under Meyer’s analysis. And those dollars have real impact: Correcting for misreporting nearly doubles the poverty-reducing effect of government benefits and puts 2.5 percent more people above the poverty line.
The numbers are most striking for single mothers. Their poverty rate is reduced by 11 percent when reporting errors are corrected.
Though poverty is an ongoing problem in the U.S., Meyer worries that the standard figures don’t reflect progress that has been made or the role government assistance has had in addressing it.
“The growth in the economy over the last 35 years and the success of government programs really have meant that people at the bottom are much better off,” Meyer said. “But that’s not what the official statistics say.”
There are troubling implications for how we think about poverty and fund and legislate the programs that fight it. For example, Meyer and Mettig note that people in deep poverty report food stamp benefits accurately at a much higher rate than they do welfare or housing vouchers, so in official data, food stamps appear to be a much more valuable program. Instead, housing assistance was actually the most-used program among the four they looked at.
Meyer said that if this research was duplicated in other states, the results would reflect differences in demographics and use of benefits — housing assistance is particularly prevalent in New York — but would have a similar trend.
While there is a push to measure poverty differently, there’s no easy way to solve underreporting or to get researchers, let alone the public, to look at the poverty rate figures with a more nuanced view — especially as the expansive Census data is essential.
“Until we make a bigger effort to do the kind of thing that Mittag and I did in this paper on a more routine basis, I think people just aren’t going to have good data to work with,” Meyer said. “So people will probably use the bad data that we have.”
Kate Abbey-Lambertz covers sustainable cities, as well as land use, housing and inequality. Tips? Email:.
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