Geographical Price Variation, Housing Assistance and Poverty

Two important shortcomings of the official measure of poverty are its failure to account for noncash benefits (including the benefits of low-income housing programs) when calculating resources and differences in the cost-of-living across geographic areas when setting poverty thresholds. Alternative estimates of poverty rates that account for the variation in the cost-of-living across areas when setting thresholds and the value of rental housing subsidies when measuring household resources have been produced. One purpose of this chapter is to better account for these factors in poverty measurement using a much improved consumer price index for each metropolitan area and the nonmetropolitan part of each state and better estimates of the value of existing rental housing subsidies based on data from the American Housing Survey. A second purpose is to estimate the effect on poverty rates of people of various types of replacing the current system of low-income housing assistance with an equally costly entitlement housing voucher program that would offer assistance to all of the poorest people in the United States. The current system fails to offer assistance to many of the poorest people while serving many people with much higher incomes