Poverty

Measuring Poverty

Economists have seen that from 1967 to 2012, poverty has fallen about 16% overall (26% to 16%). Poverty is calculated by taking a minimum food cost budget and multiplying this number by three. This number was set because the statistician believed a typical family spent about a third of total income on groceries. Even though the poverty rate has seemingly fell in recent years, some people question its credibility. This is partially because poverty is not the same as it what in 1964. If our measurement of poverty was more sophisticated, then we would be able to see that times have changed significantly and so as everything we spend our income on.

Since the poverty measurement was first based off of the amount of money a household spends on food, it should make a person consider how much food plays in our life, especially in 2014. This is where are measurement falls short. Although food is essential and most families splurge on food, there are bigger costs that income gets spent on. A household's grocery bill can be significantly smaller than what it cost for things like childcare. In 1964, childcare costs were more affordable and a lot of people did not worry about enrolling their child in a daycare. Nowadays, costs like childcare and especially housing are a larger part of a family's typical budget (these are not taken in consideration in the threshold). Also, forms of government assistance like food stamps are not even included in the poverty rate.

Another problem with our poverty measurement, is that it doesn't include those extra expenses like out-of-pocket medical costs or transportation expenses. This is significant because a family who is constantly paying money out of their pocket for a sick child's medicine should definitely be considered when creating thresholds. Also, consider the people who have to travel to another city for a job. This is not uncommon in 2014, and these type of expenses should be included. It was not much of a...