1 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Building a Consumption Poverty Measure: Initial Results Following 

Recommendations of a Federal Interagency Working Group

Thesia I. Garner, Brett Matsumoto, Jake Schild, 

Grayson Armstrong, Caleb Cho, and Juan Munoz

Bureau of Labor Statistics

Session: New Approaches for Measuring Poverty and Income

Paper Session: Saturday, January 8, 2022. 3:45 PM - 5:45 PM (EST)

Hosted By: American Economic Association and Committee on Economic Statistics

Chair: David Johnson, University of Michigan

Discussant: Rich Burkhauser, Cornell University

Virtual presentation

Revised: March 10, 2022
2 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Motivation and Goal

 Motivation

Bureau of Labor Statistics long term interest in producing a consumption 

measure

Interagency Working Group (ITWG) on Evaluating Alternative Poverty 

Measures Recommendations 

– Production of a consumption measure of poverty

–Not to replace OPM or SPM but to serve as an additional measure

 Goal

To go through the process of producing a consumption measure with what is 

currently available to us at BLS

Provide initial results of poverty analysis based on various measures of 

spending and consumption using both relative and absolute thresholds
3 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Consumption as a Well-being Outcome: A Function 

of Resources and Processes

For other outcomes: https://www.oecdbetterlifeindex.org/

Processes

Skills (e.g., education, 

financial management, 

efficiency in converting 

inputs to outcomes)

Degree of resource 

allocation (power)

Circumstances (CU 

composition, disability)

Preferences

Available Resources

Income, in-kind 

transfers

Asset (financial)

Asset (nonfinancial)

Debt (access and 

use)

Time

Outcomes (e.g.,)

1. Consumption

2. Health status

3. Material deprivation

4. Life satisfaction

5. Happiness
4 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

New BLS Initiative to Produce a 

Comprehensive Consumption Measure

 Designed to reflect how consumer units (CUs) use resources (e.g., 

income, wealth, time, in-kind benefits) to meet their 

consumption/material “needs”

 Key data sources: Consumer Expenditure Surveys and American Time 

Use Survey

 In-house research: imputation of government provided in-kind benefits 

and flow of services from stock of owned vehicles 

 Outside research: contract on valuing home production for own 

consumption
5 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

BLS Comprehensive Consumption Measure Target

 Expenditures

for own

consumption

 In-kind benefits

public and 

private

 Flow of services  Home 

production

This Photo by Unknown Author is licensed 

 Health

 Education

T
6 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

ITWG Recommendation: What to Include in Consumption

 Expenditures

for own

consumption

 In-kind benefits

public and 

private

 Flow of services  Health insurance

Measure with

Measure without
7 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Other ITWG Recommendations for 

Consumption Poverty Measure and BLS

 Engage with stakeholders and other experts throughout development

 Two measures

Without health insurance

With health insurance

 What source?

Consumer Expenditure Survey Interview

Use administrative data when available, modeling otherwise

 Who is to produce/ where to produce? Bureau of Labor Statistics (with funding)

 When? as soon as possible

 How often? annually

 At what level? State

 Additional charge for BLS: to conduct a study of price indexes appropriate for use in updating 
8 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

ITWG Discussions Related to Poverty Measurement 

but No Specific Recommendations

Determine how best to set the threshold based on research as 

well as input from stakeholders and experts 

Conduct a study of price index appropriate for use in updating 

thresholds

Consult experts on whether and, if so, how to implement 

geographic adjustment

Conduct a study that will provide a recommendation regarding 

which equivalence scales are most appropriate 
9 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

This Study: Data Sources

CE Data: 2015Q2-2021Q1

 Quarterly out-of-pocket spending (acquisitions 

value) with the exception of the following:

Owner-occupied housing

Purchase and financing of vehicles

Cash contributions, purchases of life and other personal 

insurance, allocations to retirement plans, pensions, 

annuities, Social Security

 Reported rental equivalence (owned housing)

 Cars and trucks: make, model, year & new or used

 Rental unit: public housing, govt assist, rent control 

 Consumer unit demographic variables

Other

 CPS-ASEC (reference: 2015-2020): household 

data regarding receipt of government 

provided in-kind benefits

Receipt of National School Lunch Program (NSLP) 

benefits

Receipt of Supplementary Nutrition Program for 

Women, Infants, and Children (WIC) benefits

Amount of Low-Income Home Energy Assistance 

Program (LIHEAP) benefits

 USDA: 

NSLP per meal rate

WIC benefit

– Average monetary benefit per person

NOTE: Data collected in each of 4 quarters representative – Average infant formula rebate per infant

of a year (e.g., data collected in 2015Q2-2016Q1 represents 2015)
10 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

This Study: Measures Considered

 Spending/Consumption (for previous 3 months, quarterly; details at end of slides)

Total expenditures as defined by CE (ZTOTAL, with miscellaneous from only last scheduled interview ZMISCEL2=0))

Subtract cash contributions, purchase of life insurance, allocations to pensions, annuities, Social Security, etc. 

(Spending_consump)

Subtract expenditures for primary dwelling and vacation homes; add rental equivalence of primary dwelling 

(Consumption_1)

Subtract expenditures for health and education; add rental equivalence of vacation home not available for rent

(Consumption_2)

Add model-based imputed flow of services from cars and trucks (Consumption_3)

Add model-based imputed in-kind benefits (Consumption_4)

– LIHEAP 

– NSLP

– WIC (assume WIC monetary benefit already in food expenditures for CUs in states with WIC Electronic Benefit Transfer(EBT) 

implementation; includes value of infant rebates)

– Rental assistance (if renter and GOVTCOST=1 or PUBLHOUS =1 or RENTCONT=1)

 NOTE: Poverty rates and gaps are based on nominal dollars while medians for 2A+2C consumer units are 

converted to 2015 dollars using the Chained CPI-U (C-CPI-U) 
11 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Consumption Measure Construction Comparison

Consumtion_4 Meyer and Sullivan (2012) Fisher, Johnson, and Smeeding (2015)

Base

Total Expenditures as measured by CE 

(ZTOTAL; does not include miscellaneous 

collected only in last scheduled interview)

Total Expenditures as defined in PUMD 

(TOTEXPCQ+TOTEXPCQ; does not include 

miscellaneous collected only in last scheduled 

interview)

Total Outlays (Total expenditures in CE plus: 

mortgage/home equity principal payments; 

adjustment for vehicles and entertainment to 

out-of-pocket; all miscellaneous)

Subtract

Cash contributions Cash contributions Cash contributions

Life, endowment, annuities, other personal 

insurance, Social Security contributions

Life, endowment, annuities, other personal 

insurance, Social Security contributions

Life, endowment, annuities, other personal 

insurance, Social Security contributions

Retirement, pensions, and social security Retirement, pensions, and social security Retirement, pensions, and social security 

Owner expenses for primary residence and 

vacation home Owner expenses for primary residence 

For owners, all shelter expenses for primary 

residence, vacation homes and other lodging, 

mortgage/home equity and finance charges and 

principal payment 

Purchases of stoves, refrigerator/freezer, 

dishwasher, clothing washer or dryer, AC 

window units

Healthcare expenditures Healthcare expenditures 

Education expenditures Education expenditures 

Housing while away at school

Daycare centers, nursery, pre-school

All vehicle purchases Car and truck purchases Car and truck purchases 

All vehicle finance charges All vehicle finance charges All vehicle finance charges 

Motorized vehicles for entertainment
12 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Comparison of Consumption Measure 

Construction

Consumtion_4 Meyer and Sullivan (2012) Fisher, Johnson, and Smeeding (2015)

Add

Rental equivalence of primary residence Rental equivalence of primary residence Rental equivalence of primary residence 

Rental equivalence of vacation home not 

available for rent to others (not time shares)

Imputed flow of services from cars and trucks 

(depreciation and opportunity cost)

Imputed flow of services from all vehicles 

(depreciation only) 

Imputed flow of services from cars and trucks 

(depreciation and opportunity cost)

Imputed In-kind transfers (LIHEAP, NSLP, WIC, 

government rental assistance for govtcost=1, 

publhous=1, rentcont=1)

Imputed rents for govtcost=1, publhous=1 government rental assistance for govtcost=1, 

publhous=1 
13 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

This Study: Income Comparison Measure

 CE defined after-tax income + study-based in-kind benefits

Converted annual incomes to quarterly values for comparison to other measures

In-kind benefits defined the same as for consumption measures for LIHEAP, NSLP, and rental 

assistance; WIC includes full WIC benefit (voucher and EBT) with infant formula rebate

 CE defined after-tax income*

Includes cash value of SNAP benefits

Includes the value of meals and rent as pay

 CE defined subtractions from before tax income to derive after-tax income

Imputed federal and state income taxes based on TAXSIM

Personal property taxes

*See CE webpage for definition of income https://stats.bls.gov/cex/csxgloss.htm#inc
14 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

This Study: Thresholds

 Thresholds defined in 3 different ways

1. Purely relative as 60% of median (i.e., threshold is a function of the same 

“resource”)

2. Absolute thresholds for all measures anchored to the threshold for 2015 based on 

consumption_4

3. Absolute thresholds for all measures set at values such that poverty rates for all 

measures anchored to be the same in 2015 as rate for consumption_4 poor (i.e., 

16.7% in 2015)

 Absolute thresholds adjusted by C-CPI-U for 2016-2020 

 Three-parameter equivalence scale

 No geographic adjustment
15 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Frequency Distribution of Quarterly Before Tax 

Income, After Tax Income, and Consumption_4 
16 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Distribution Statistics of Quarterly Before Tax 

Income, After Tax Income, and Consumption_4 

Before Tax Income After Tax Income Consumption_4

Mean 10,640.37 9,368.96 6,609.83

Median 7,801.06 7,434.40 5,616.23

SD 11,364.74 8,183.7 4,49.16

Skewness 5.27 4.27 4.98

Kurtosis 60.44 50.86 79.30
17 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Distribution Statistics of Quarterly Before Tax 

Income*, After Tax Income*, and Consumption_4* 

Before Tax Income After Tax Income Consumption_4

Mean 10,477.65 9,342.93 6,604.00

Median 7,801.06 7,434.40 5,616.23

SD 9,824.32 7,613.69 4,358.51

Skewness 2.61 2.90 3.55

Kurtosis 12.96 17.41 30.41

*Values are Winzorized to between 0 and 70,000. 
18 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Annualized Medians in Real 2015 Dollars for All Consumers Units 

Equivalized to CUs with 2 Adults+2 Children (2A+2C)

$45,000

$47,000

$49,000

$51,000

$53,000

$55,000

$57,000

$59,000

$61,000

$63,000

$65,000

2015 2016 2017 2018 2019 2020

After tax income with in-kind

benefits

Tot_exp

Spending_consump

Consumption_1

Consumption_2

Consumption_3

Consumption_4
19 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Poverty Rates 

Based on Purely Relative Thresholds: 2015-2020

Consumption_4: 16.8% to 14.2%

22.5% 22.5%

21.5%

19.3% 19.2%

16.8%

20.2%

17.2%

18.7%

15.9%

18.0%

15.3%

16.8%

14.2%

13.0%

15.0%

17.0%

19.0%

21.0%

23.0%

25.0%

2015 2016 2017 2018 2019 2020

After tax income

with in-kind benefits

Tot_exp

Spending_consump

Consumption_1

Consumption_2

Consumption_3

Consumption_4
20 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Change in Poverty Rates 

Based on Purely Relative Thresholds: 2015-2020

Consumption_4: -2.6% pp

0.0%

-2.3%

-2.4%

-2.9%

-2.7%

-2.6%

-2.6%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2015 2016 2017 2018 2019 2020

After tax income with

in-kind benefits

Tot_exp

Spending_consump

Consumption_1

Consumption_2

Consumption_3

Consumption_4
21 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Poverty Rates Based on Absolute Thresholds that Equal 2015 Threshold 

for Consumption_4 Updated by C-CPI-U: 2015-2020

Consumption_4: 16.8% to 11.5%

16.5%

13.5%

18.0%

13.4%

22.7%

18.4%

17.8%

12.3%

22.0%

16.1%

18.5%

12.9%

16.8%

11.5%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

2015 2016 2017 2018 2019 2020

After tax income with

in-kind benefits

Tot_exp

Spending_consump

Consumption_1

Consumption_2

Consumption_3

Consumption_4
22 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Change in Poverty Rates for Absolute Thresholds Anchored to 2015 

Threshold for Consumption_4 Updated by C-CPI-U: 2015-2020

Consumption_4: -5.3% pp

-3.0%

-4.6%

-4.3%

-5.5%

-5.9%

-5.6%

-5.3%

-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

2015 2016 2017 2018 2019 2020

After tax income

with in-kind benefits

Tot_exp

Spending_consump

Consumption_1

Consumption_2

Consumption_3

Consumption_4
23 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Poverty Rates Based on Absolute Thresholds for 2015 Set to 

Levels that Result in Same Poverty Rates as for 2015 

Consumption_4 Rate (16.8%): 2015-2020

Consumption_4: 16.8% to 11.5%

13.6%

12.4%

12.5%

11.5%

11.7%

11.6%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

2015 2016 2017 2018 2019 2020

After tax income

with in-kind benefits

Tot_exp

Spending_consump

Consumption_1

Consumption_2

Consumption_3

Consumption_4
24 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Change in Poverty Rates Based on Absolute Thresholds Set to Levels 

that Result in Same Rates as 2015 Consumption_4 

Poverty Rate (16.8%): 2015-2020

Consumption_4: -5.3% pp

-3.2%

-4.3%

-4.2%

-5.1%

-5.1%

-5.3%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

2015 2016 2017 2018 2019 2020

After tax income

with in-kind benefits

Tot_exp

Spending_consump

Consumption_1

Consumption_2

Consumption_3

Consumption_4
25 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Income Poor, Consumption Poor, or Both? 

Rates Based on Thresholds Set to Levels that Result in Same Rates 

as 2015 Consumption_4 Rate (16.8%)

2015

After Tax Income 

Poor

Yes No Consumption Poverty Rate 

Consumption_4 

Poor

Yes 7.9% 8.9% 16.8%

No 8.9% 74.3%

Income Poverty Rate 16.7%

2020

After Tax Income 

Poor

Yes No Consumption Poverty Rate 

Consumption_4 

Poor

Yes 4.7% 6.8% 11.5%

No 8.9% 79.6%

Income Poverty Rate 13.6%
26 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Demographic Characteristics of the U.S. Population 

Compared to Study-defined Poor: 2015

Characteristics U.S. Population Below Consumption_4 

Threshold

Below After-Tax Income 

with In-kind Benefits 

Threshold

Below Both Income and 

Consumption Thresholds

Race

White non-Hispanic 64.7% 47.7% 49.6% 45.9%

Black non-Hispanic 12.5% 20.9% 19.4% 21.7%

Hispanic 16.3% 25.5% 24.2% 26.8%

Other 6.5% 5.7% 6.9% 5.6%

Degree of Urbanization

Central City 34.4% 42.4% 41.2% 43.1%

Other Urban Areas 46.5% 33.7% 39.8% 35.3%

Rural Areas 19.2% 23.9% 19.1% 21.7%

Education

Less than High School Graduate 13.0% 31.6% 28.4% 37.2%

High School Graduate 23.4% 32.2% 29.3% 30.8%

Some College 21.6% 21.7% 23.2% 20.9%

Associates Degree or Higher 42.0% 14.5% 19.1% 11.0%
27 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Demographic Characteristics of the U.S. Population 

Compared to Poor: 2015

Characteristics U.S. Population Below Consumption_4 

Threshold

Below After-Tax Income 

with In-kind Benefits 

Threshold

Below Both Income and 

Consumption Thresholds

CU Member in Age Group

0-17 years old 51.2% 64.6% 53.5% 62.3%

Marital Status

Single Mother 5.8% 11.4% 13.4% 14.6%

Married Couple Only 17.8% 4.7% 8.8% 4.3%

Married Couple with Others 44.0% 42.4% 30.0% 32.5%

CU Earner Composition

Reference Person OR Spouse Only 27.9% 31.4% 37.0% 36.4%

Reference Person AND Spouse Only 26.2% 10.4% 5.7% 4.2%

No Earners 14.7% 20.6% 34.5% 33.3%
28 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Material Standards of Living for the U.S. Population 

Compared to Poor: 2015

Characteristics U.S. Population Below Consumption_4 

Threshold

Below After-Tax Income 

with In-kind Benefits 

Threshold

Below Both Income and 

Consumption Thresholds

Housing Tenure

Owner with Mortgage 41.5% 17.4% 17.3% 10.3%

Owner without Mortgage 23.9% 17.9% 23.5% 17.3%

Renter 34.7% 64.6% 59.3% 72.4%

Vehicle Ownership

Own Any Vehicle 89.3% 72.3% 71.5% 61.1%

Own a Car or Truck 87.5% 67.9% 69.6% 58.0%

Health Insurance 

Private Insurance Only 50.1% 23.6% 18.2% 14.3%

Medicare Only 3.5% 3.7% 4.7% 3.7%

Medicaid Only 8.5% 23.1% 22.7% 28.7%

Private and Public 26.5% 29.0% 30.1% 27.2%

Medicare and Medicaid Only 3.0% 7.5% 9.9% 10.9%

No Insurance 8.3% 13.1% 14.4% 15.1%
29 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

In-kind Transfer and Poverty Gap Characteristics of the 

U.S. Population Compared to Poor: 2015

Characteristics U.S. Population Below Consumption_4 

Threshold

Below After-Tax Income 

with In-kind Benefits 

Threshold

Below Both Income and 

Consumption Thresholds

Presence of In-kind Benefits

LIHEAP 3.5% 9.2% 13.0% 15.7%

NSLP 30.9% 49.1% 42.1% 50.5%

WIC 4.6% 11.1% 9.8% 12.1%

Rental Assistance 4.2% 10.2% 13.8% 16.3%

Poverty Gap (difference in 

Threshold and Resource)

Consumption NA $783 $441 $939 

Income NA $626 $1,305 $1,334 
30 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Summary and Conclusions

 Present broader consumption measure that is more in-line with the theoretical 

measurement objective than measures based on household expenditures or 

consumption spending alone

 Median total expenditures and consumption follow similar trends 

 Relative poverty, in general, decreases as the consumption measure becomes more 

comprehensive

 For anchored poverty rate thresholds, poverty rate for the income poor decreases by 

less than the poverty rate for the Consumption_4 poor

Surprising result, given that median income increased faster than median Consumption_4

Possibly explained by the relative size of the poverty gaps for each measure: poverty gap for income 

poor is larger than poverty gap for consumption_4 poor

Thus, a larger level change in median income may not lead to a larger reduction in income poverty 
31 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Future Work

 For consumption measure

Impute market rents for housing units that are occupied without payment of cash rent 

(cutenure=5)

Produce a consumption measure that includes health insurance

Expand back to 2009 (same year for which imputed in-kind benefits are being imputed for 

production of SPM thresholds)

Incorporate data from CE Diary Survey

 For income measure: expand back to at least 2014 when BLS fully implemented the use of 

TAXSIM to estimate federal and state income taxes imputed with TAXSIM

 Compare to the consumption measures created by others
32 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Contact

Thesia I. Garner, Ph.D.

Chief Researcher for Prices and Living Conditions

Bureau of Labor Statistics

Washington, DC 20212

Garner.Thesia@BLS.gov

Office telephone: (202) 691 6576
33 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

BLS Consumption Measure for Poverty: Details

Spending/Consumption Measure Variable Name Base Subtraction Addition

Total Expenditures tot_exp

Total Expenditures 

CE Publication 

Definition

Consumption Expenditures spending_consump tot_exp

Cash contributions; life, endowment, annuities, and 

other personal insurance; retirement, pensions, and 

Social Security.

Consumption with Rental Equivalence of 

Primary Residence consumption_1 spending_consum

p

Owner expenses for primary residence; Purchases of 

stoves, refrigerator/freezer, dishwasher, clothes 

washer/dryer AC windownunits for all; all expenses 

associated with vacation homes including utilities

Rental equivalence of 

primary residence

Consumption with All Rental Equivalences consumption_1V consumption_1

rental equivalence of 

vacation homes (but 

not time shares) and 

vacation home utilities

Consumption with All Rental Equivalence 

minus Health and Education consumption_2 consumption_1V Expenditures for: health; education; housing while 

away at school; daycare centers, nursery, pre-school

Consumption with Primary Residence and 

Vacation Home Rental Equivalence, Flow of 

Services from Cars and Trucks, minus Health, 

Education, Vehicle Purchases and Vehicle 

Finance Charges

consumption_3 consumption_2 All vehicle purchases; vehicle finance charges; 

motorized vehicles for entertainment

Flow of services from 

cars and trucks

Consumption with Primary Residence and 

Vacation Home Rental Equivalence, Flow of 

Services from Cars and Trucks, In-kind Benefits 

minus Health, Education, Vehicle Purchases 

and Vehicle Finance Charges

consumption_4 consumption_3

LIHEAP, NSLP, rental 

assistance, WIC In-kind 

transfers