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- Research shows a 27 percentage point reduction in poverty since 1980.
- Consumption-based measurements of poverty provide a more accurate picture of economic well-being than income-based measurements.
- The period 2020-2022 shows a steady decline in poverty despite the pandemic.
A new perspective on poverty measurement
A new report from the University of Notre Dame, University of Chicago, and Baylor University has shown a dramatic reduction in poverty in the USA, which stands in stark contrast to the official figures from the USA's Census Bureau. The researchers use consumption-based measurements instead of income-based to get a more accurate picture of poverty.
Between 1980 and 2022, consumption poverty fell from 33.8 percent to 6.0 percent, a decrease of 27 percentage points. This differs significantly from the official poverty rate, which only shows a decrease of 1.5 percentage points over the same period.
Reasons for differences in poverty measurement
Three main factors contribute to the difference between consumption and official poverty measures: incorrect adjustments of the federal poverty threshold for inflation, a limited definition of income, and biased measures of family resources. The researchers emphasize that consumption, which measures what families can buy in terms of food, housing, transport, and other goods and services, provides a better indication of economic well-being than income, which can vary for reasons unrelated to well-being.
During the current period, especially during the pandemic, consumption-based poverty did not show the same fluctuations as income-based poverty. This indicates that consumption-based measures provide a more stable and reliable picture of economic well-being.
Source: University of Notre Dame