Poverty Study Finds Greater Gov’t Impact

[imgbelt img=impact_of_transfers-sm.jpg]Researchers looked at the impact of government programs that aren’t normally included in standard poverty measurements. They found that since the start of the War on Poverty, these programs (like SNAP, school lunches and housing assistance) had a greater poverty-reducing role than previously thought.


[imgcontainer][img: impact_of_transfers-sm.jpg][source]National Bureau of Economic Research Working Paper Series

The chart shows the impact of government programs in reducing the poverty rate from 1967 to 2012. The light blue column shows the percentage-point poverty reduction impact of government programs using the “cash-only” measurement of income and expenses. The dark blue column shows the poverty-reduction impact when researchers measured the impact of non-cash programs such as SNAP, school lunches and housing assistance. Click chart to enlarge it.

Academics and politicians are debating the long-term impact of the War on Poverty, launched 50 years ago this week in Lyndon Johnson’s 1964 State of the Union Address.

To this debate, let’s add one more study that indicates assistance programs have helped keep individuals out poverty.

Part of the challenge of studying the impact of government programs on poverty is, of course, how we define poverty in the first place. The standard measurement, called the “official poverty measure,” tracks only cash income to determine whether an individual falls below the poverty line. But that poverty-measurement system doesn’t account for programs that provide assistance other than cash. 

And the type of programs omitted from that measurement are substantial. They include things like Supplemental Nutrition Assistance Program (or Food Stamps), school lunches, Women Infants and Children, housing assistance and tax credits (which didn’t get measured in the standard poverty computations before 1980). In most cases, these kinds of programs don’t put cash directly into individuals’ hands, but they do have an effect on families’ bottom lines. 

The Census found a way around this poverty-measurement shortcoming in 2009, when it created the “supplemental poverty measure.” But the supplemental poverty measure data doesn’t go back far enough to allow us to look at the overall impact of War on Poverty programs, some of which, after all, are nearly 50 years old.

So researchers calculated the supplemental poverty measure back to 1967. That allowed them to look at a longer time span and better measure the impact anti-poverty efforts.

The study found that throughout the 45-year period that researchers considered, “government policies have significantly reduced the share of the population in poverty, and the share in deep poverty,” defined as living with an income less than half of the poverty threshold.

Without the government programs, the researchers say, the poverty rate would have climbed from 25% in 1967 to 31% in 2012. Instead, the poverty rate fell from 19% to 16% during the same period.

The net effect, according to the study, is that government programs resulted in a poverty rate 15 percentage points lower in 2012 than it would have been without the programs.

Other interesting findings in the study are: 

  • The impact of anti-poverty programs is especially great on people who would otherwise be living in “deep poverty.”
  • Anti-poverty programs helped “mute the effects of the business cycle, especially for deep poverty.” 
  • “Government programs play a substantial and growing role in alleviating child poverty, … particularly deep child poverty.”

The study, “Waging War on Poverty: Historical Trends in Poverty Using the Supplemental Poverty Measure,” was written by Liana Fox, Irwin Garfinkel, Neeraj Kaushal, Jane Waldfogel and Christopher Wimer. The research was supported by the Annie E. Casey Foundation and the National Institute of Child Health and Human Development through the Columbia Population Research Center. The study was released as part of the National Bureau of Economic Research working paper series.