Study: Everything You Thought You Knew About US Poverty Could Be Wrong

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Guy Bentley Research Associate, Reason Foundation
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What we think we know about poverty in America could be entirely wrong thanks to faulty data and misreporting, according to the American Enterprise Institute (AEI).

The AEI study argues the statistics on poverty are “dramatically overstated” because of flawed survey data. It’s written by Brucey Meyer and Nikolas Mittag of the University of Chicago.

According to the study, those classified as being in deep poverty reported only 52 percent of the government assistance they received from the government. Deep poverty is defined as less than 50 percent of the official Federal Poverty Level. A family of four in deep poverty makes $12,000 or less per year.

Looking at all those deemed to be in poverty,  the survey data only recorded 46 percent of government assistance. The poverty threshold for a family of four is $22,000.

The study’s authors reached their conclusions by looking at what individuals in New York state told the Census’s Current Population Survey and data from state agencies on what benefits in terms of cash, food and housing people actually received.

When these two sets of data were compared and taken into account, the poverty rate for single mother dropped from 30.2 percent to 19.2 percent. Before underreporting was taken into account it had been estimated that around 20 percent of single mothers have no income from welfare. But according to the AEI study this figure is overstated by around a third.

Meyer and Mittag believe their research is also applicable outside of New York state and that it is likely that poverty data across the country is riddled with similar errors.

“Using the combined data rather than survey data alone, the poverty reducing effect of all programs together is nearly doubled while the effect of housing assistance is tripled,” said Meyer and Mittag.

Angela Rachidi, a scholar at AEI, points out that the U.S. federal government spends $236 billion per year to help low-income Americans, excluding health insurance – equal to $2,000 for every household in the country. Rachidi argues the study should give pause for thought to those saying the American safety net is inadequate.

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