Today, many federal assistance programs, like Food Stamps and housing subsidies, and block grants, like the Community Development Block Grants, are tied to the government’s official poverty line. Because of this, the official poverty line has real-world impact on people’s lives, especially the poor and near-poor.
The official poverty line, however, has become a less accurate indicator of economic need than when it was developed more than 50 years ago. In fact, the poverty line was actually flawed when it was first introduced. Yet, despite its growing inadequacy, the poverty line has remained largely unchanged even as the gap between poverty statistics and the realities of poor Americans has widened.
The poverty line’s primary flaw is that it only measures the capacity to consume. Does a household have enough money to pay for a basket of standard goods?
During the last half-century, however, many ideas have emerged about what it means to live a “good life.” These include things like good health, a person’s education level, their social relationships, and how safely and securely they live. The poverty line misses these critical elements of wellbeing. A new measurement is needed.
What You Need To Know
European and international organizations are leading the way in research on the multidimensional study of social wellbeing. Several influential proposals take measurements across a group of categories that includes things like access to education, ability to enter the labor market, health and social connection. A shortcoming of these models is that they only rate nations across these categories, not communities or individuals. Therefore, they focus on topics like labor market trends and public policy programs while ignoring local factors that exist closer to communities and individuals.
A model developed at the University of Pennsylvania, in collaboration with Reinvestment Fund, a community development financial institution, combines elements of the European approach with more fine-grained data to create a neighborhood-based measure of wellbeing. The approach is currently being used to analyze wellbeing in Philadelphia and New York City. The model analyzes:
- Economic wellbeing
- Economic and ethnic diversity
- School effectiveness
- Housing burden
- Social connection
- Political voice
Many of these categories are aspects of wellbeing that are missed by the traditional approach to poverty. With this more comprehensive, neighborhood-based model, national and local leaders can develop more effective strategies for alleviating poverty and improving wellbeing locally.