Though the Census does not account for as many variables as the CPS and SIPP, its sheer volume of observations make it the best source of data for a geographic index. The Panel acknowledges the need for more updating in years between Census reporting to account for variations in housing costs. Assuming that overall poverty rates are held constant, the Panel predicts that the poverty rates for the Northeast and West will increase by 2.0 and 1.7 percent respectively, while poverty rates for the Midwest and South will fall by 0.8 and 1.1 percent. Moreover, thresholds will tend to be higher as the metropolitan size of an area increases, corresponding with the costs of living. Thus, one may expect poverty rates in larger metro areas to rise while rates in rural and other non-metropolitan areas are expected to decline.
Several issues remain if the Panels proposal becomes the practice in poverty measurement.
First, the Panel suggests that more work should be done to understand how housing costs vary by region, as well as to construct more accurate indexes. The Panel suggests that the current HUD methodology for updating the decennial census housing costs in intercensal years can be improved through more use of hedonic regression. Thus, a commitment to geographic adjustment requires a commitment to further research into developing index methodologies. Second, the publics understanding of the poverty measure will be affected by making such adjustments. For instance, one advantage of the current measure is that it is reasonably easy to understand.