CE in the SPM CE in the SPM

Kathleen S. Short, Ph. D.

U.S. Census Bureau

Consumer Expenditure Survey Data Users’ 

Needs Forum

June 21- 22, 2010
Commerce Department New

FOR IMMEDIATE RELEASE FOR IMMEDIATE RELEASE

CONTACT OFFICE OF PUBLIC AFFAIRS

Tuesday, , March 2, 2010

Census Bureau to Develop Supplemental Pove

Measure (SPM), with assistance from the BureLabor Statistics and in consultation with other appropriate agencies and outside experts will appropriate agencies and outside experts, will 

responsible for the measure’s technical design
SPM

• An Interagency Technical Working Group 

– Provided a roadmap Provided a roadmap– 1995 National Academy of Science Measuring Pov– Extensive research on poverty measurement past 1

• Additional details can be found at 

http://www census gov/hhes/www/povmeas/SPM TWGhttp://www.census.gov/hhes/www/povmeas/SPM_TWGtions.pdf. 
Ob ti f th I t Observations 

from the In

terage

Technical Working Group on Developin

Supplemental Poverty Measure Supplemental Poverty Measure

• The SPM would not replace the official poverty m• Will be updated every year• Improved as new data, new methods, and furthe

research b il bl h

become avail

able 
BLS Role

• Conducted research on the poverty thresholds• Provided expenditure-based thresholds to the 

Census Bureau

• Will continue to play this role with the SPM
Basis for SPM

• Broadly based on the recommendations of the 

National Academies of Science (NAS) in their National Academies of Science (NAS) in their 

report, Measuring Poverty

• Informed by the research of the past 15 years• Specifies a series of initial choices in the 

development of the SPM
National Academy of Science

National Academy of Science

Recommendations

• Consumer Expenditure Survey [CE] Interview • Reference family of two adults and two childre• Basic bundle –food, clothing, shelter, utilities (•

Percentage of di di f median expenditures

• Multiplier for other needs of 15% - 25%

• Three years of quarterly data Three years of quarterly data
SPM

What are the differences?
Data

• U.S. Consumer Expenditure Interview Survey• Each threshold, 5 years of data

– 1995: 1990 Q2 1995: 1990 Q2 – 1995 Q1 1995 Q1– 2009: 2004 Q2 - 2009 Q1

• Assume quarters are independent
Whose spending?

• Poverty thresholds -- Consumer Unit• Income side -- All related individuals who live a

same address, any co-resident unrelated childwho are cared f f( f or by the 

family 

(such as 

foster 

children), and any cohabitors and their children

• Equivalized expenditures for the reference sam
Equivalized?

• Estimation sample - all units with exactly two 

children. 

• Adjusted to represent 2 adult and 2 child unit 

equivalence scale

• Published thresholds p pg resented as spending

thresholds for a 2 adult and 2 child unit
Three-p q arameter Equivalence S

(A + pk + qK)F

• A = number of adults A = number of adults• p and q = adult equivalent needs

– p = 0.8– q = 0 5.

• k = first child with single parent• K = number of other children• F is the economy of scale factor

– F = .7 implies relatively low economies of sc
FCSU Spending FCSU Spending

• CE-Defined Food (includes Food Stamps value)• Clothing• Utilities (includes telephone)• For renters shelter expenditures For renters, shelter expenditures• For homeowners, non-vacation shelter expenditures that 

– Mort

gg py a

ge interest 

p

a

yments

– Prepayment penalties– Property taxes– Mit a

n

tenance, repai i d th l t d 

rs, insurance an

d other rela

t

e

d exp

• Out-of-pocket = CE-defined + mortgage principal repa
What level of spending? What level of spending?

• 120% of 33rd percentile of annual FCSU expen• From the distribution of equivalized FSCU 

expenditures within the estimation sample, seldollar amount at the 33rd percentile of the distdollar amount at the 33rd percentile of the dist

• Threshold based on a level of spending on FC

that two-thirds of American families are able to achieve or exceed
Annual Updates?

• Five year moving average• Reduce the risk that they might change signific

from 

yea

r-toyea

r

• Update by changes in 33rd percentile of FCSU 

expenditures each year
Main Goals of SPM

• More comprehensive poverty measure than cu

offi i l ffi

cial measure

• Evaluate effect of taxes and transfers on pove

statistics

– Include value of in-kind benefits that are counted on 

resource side for food, shelter, clothing and utilities

– Consistency of the threshold and resource definition
Resource side

• B

e o e ta o ey a ua co e f

o

r

e tax m

o

ney

annual inco

m

e

• Plus noncash transfers• Minus necessary expenses
For consistency CE needs

• Food expenses do not include subsidies for W

free and reduced price school meals

• Shelter expenses do not take account of the va

public or subsidized housing public or subsidized housing

• Utilit

y p ex

penses do not include 

p ya

yments subs

such as LIHEAP
Important CE needs

• Expenditures on food, clothing, housing, and u

must be collected together

– C l ti i t t Correlations are impor

tan

t

– Distributions at micro-level

• Resource measure is collected for previous ca

Resource measure is collected for previous ca

year

– CE quarterly data is annualized 

– Quarters are assumed to be independent

– Longitudinal weights
Special problem: housing

• A significant number of low-income families own 

without a mortgage and therefore have quite low expenditures

•

Separate thresholds

– Renters– Owners with a mortgage Owners with

a mortgage

– Owners without a mortgage
Further research

• Adjust the thresholds for price differences acro

g gp eo

gra

phic areas usin

g the best available data 

statistical methodology

• Estimates of correlations among FCSU and M

child care, work expenses

• Characterize properties of distributions at the m

level changes over time level, changes over time

• Monthly vs. annual measures
References

• Citro, Constance F and R T Michael eds Constance F. and R.T. Michael, eds., Measuring 

Measuring 

A New Approach. Washington, DC: National Academy P1995.

• Federal Register /Vol. 75, No. 101 /Wednesday, May 26

/Notices

• Poverty Measurement website and working papers Cen

Poverty Measurement website and working papers, Cen

Bureau http://www.census.gov/hhes/www/povmeas/nas

• Garner, Thesia I., Step pp y hanie Shipp, Geoffrey Paulin, Ka

Short, and Charles Nelson, “Poverty Measurement in thMonthly Labor Review, March 1998, pp. 39-61.