PINR SPM Measuring Poverty: A New Approach, 1995 by the National Academy of Sciences (summary PDF)

The current official U.S. poverty measure has been not only an important statistical indicator; it has also had direct policy uses in government programs that are designed to help low-income families whose resources fall below a standard of need. Many programs have their own need standard for eligibility, but a significant number link their standard to the official poverty thresholds (or a multiple of them). In most cases, the link is actually to the poverty guidelines derived from the thresholds, and, consequently, we use the term guidelines in this chapter.1 Another program use of the poverty measure has been for allocation of federal funds to states and localities. For example, funds for educationally deprived children under the Elementary and Secondary Education Act are allocated to school districts on the basis of their share of children aged 5-17 who live in poor families. Head Start funds are also allocated to states by a formula that takes account of each state's share of children under age 18 in families receiving Aid to Families with Dependent Children (AFDC) and its share of children under age 6 in poor families. The share of poor people is also one factor in the formula for allocating Community Development Block Grant funds to cities and counties. In this chapter we consider the relationship of a poverty measure to eligibility and benefit standards for government means-tested programs that