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Office of Survey Methods Research
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Published Year: 2010
Survey/Program(s): Office of Prices and Living Conditions
Catalog: Economic Working Paper
WP Number: WP-435
Publication Status / Disposition: Available from the Office of Prices and Living Conditions (March 2010).
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Setting and Updating Modern Poverty Thresholds
Abstract
This research compares median-based thresholds with ones based on the 33rd percentile using Consumer Expenditure Interview Survey (CE) data from 2004 quarter one through 2009 quarter one. Thresholds for reference families are produced using two different approaches: (1) calculating the thresholds based on the expenditure records of reference families composed of two adults with two children; and (2) calculating the thresholds using expenditures from all consumer units participating in the CE, but first converting their expenditures into adult equivalent value using the three-parameter equivalence scale before identifying the median and percentile values. Different updating mechanisms examined include: (1) an annual recalculation of the 33rd percentile of the reference family’s outlays on FCSU, and (2) changes in the reference family’s median spending or consumption based on needs. Thresholds, based on spending and consumption concepts to value needs for food, clothing, shelter, and utilities (FCSU), are produced.