The Supplemental Poverty Measure (SPM) and the Aged: How and Why the SPM and Official Poverty Estimates Differ

Abstract

In 2011, the Census Bureau released its first report on the Supplemental Poverty Measure (SPM). The SPM addresses many criticisms of the official poverty measure and is intended to provide an improved statistical picture of poverty. This article examines the extent of poverty identified by the two measures. First, we look at how the SPM and official estimates differ for various age groups. One finding is that the SPM poverty rate exceeds the official rate for each subgroup of the aged (65–69, 70–74, 75–79, and 80 or older) by 4.3 to 8.3 percentage points. Then, we look at why the SPM poverty rate for the aged is higher than the official rate. The most important factor here is the difference in the treatment of medical-out-of-pocket expenses.

Keywords: Poverty of elderly, Measurement of poverty, Supplemental poverty measure

JEL Classification: I32, J14, D31, H5, H2