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92% of people previously believed to be in extreme poverty are actually better off, a new study shows reason.com/2019/06/05/stu… via @reason
New research published by the National Bureau of Economic Research (NBER) shows that more than 90% of people who had previously been classified as living in extreme poverty were actually misclassified.
The number of people deemed to be living in extreme poverty was significantly inflated due to a combination of misreporting on surveys as well as a lack of accurate administrative data.
Now, new data "allows us to re-examine rates of extreme poverty," which NBER defines as "living on less than $2/person/day." It turns out the actual percentage of U.S. households living in extreme poverty is 0.24%
"of 3.6M [non-homeless] households with...cash income below $2/person/day," 92% were "not in extreme poverty once we include in-kind transfers, replace survey reports of earnings / transfer receipt with administrative records, and account for the ownership of substantial assets."
In fact, new research shows "more than half of all misclassified households have incomes … above the poverty line" entirely.
Essentially, the new NBER working paper attempts to more accurately reflect the cash income and overall assets of U.S. households. "Nearly 80% of all misclassified households are initially categorized as extreme poor due to errors or omissions in reports of cash income,"
The new classifications also take into account whether households are receiving significant benefits from Supplemental Nutrition Assistance Program (SNAP), Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and other assistance programs.
The composition of extremely poor households also differs from common understandings of it: "Among the 285,000 households left in extreme poverty, 90% are made up of single individuals. Households with multiple childless individuals make up the other 10% of the extreme poor."
"Strikingly, after implementing all adjustments, [none of the SIPP surveyed] households with children have incomes below $2/person/day."
