Overstating poverty, Criticisms

Public and private charitable gifts are not counted when calculating a poverty threshold. For example, if a parent pays the rent on an apartment for an adult daughter, that money does not count as income to the daughter.


If a church or non-profit organization gives food to an elderly person, that also does not count as income. Rea Hederman, a senior policy analyst in the Center for Data Analysis at the Heritage Foundation, said the official poverty measure counts only monetary income. It considers antipoverty programs such as food stamps, housing assistance, the Earned Income Tax Credit, Medicaid and school lunches, among others, "in-kind benefits" -- and hence not income. So, despite everything these programs do to relieve poverty, they aren't counted as income when Washington measures the poverty rate.


Studies measuring the difference between income before and after taxes and government transfers, however, have found that without these programs poverty would be roughly 30% to 40% higher than the official poverty line indicates - despite many of their benefits not being counted as income.

Criticisms
Using a poverty threshold is problematic because having an income marginally above it is not substantially different from having an income marginally below it: the negative effects of poverty tend to be continuous rather than discrete, and the same low income affects different people in different ways. To overcome this problem, poverty indices are sometimes used instead; see income inequality metrics.
A poverty threshold relies on a quantitative, or purely numbers-based measure of income. If other human development-indicators like health and education are used, they must be quantified, which is not a simple (if even achievable) task.