TY - JOUR AU - Meyer, Bruce D AU - Wu, Derek AU - Mooers, Victoria R AU - Medalia, Carla TI - The Use and Misuse of Income Data and Extreme Poverty in the United States JF - National Bureau of Economic Research Working Paper Series VL - No. 25907 PY - 2019 Y2 - May 2019 DO - 10.3386/w25907 UR - http://www.nber.org/papers/w25907 L1 - http://www.nber.org/papers/w25907.pdf N1 - Author contact info: Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 773/702-2712 E-Mail: bdmeyer@uchicago.edu Derek Wu Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 E-Mail: derekwu@uchicago.edu Victoria R. Mooers Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 E-Mail: v.mooers@columbia.edu Carla Medalia U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: carla.medalia@census.gov M3 - presented at "SI 2019 Conference on Research in Income and Wealth", July 15-16, 2019 AB - Recent research suggests that rates of extreme poverty, commonly defined as living on less than $2/person/day, are high and rising in the United States. We re-examine the rate of extreme poverty by linking 2011 data from the Survey of Income and Program Participation and Current Population Survey, the sources of recent extreme poverty estimates, to administrative tax and program data. Of the 3.6 million non-homeless households with survey-reported cash income below $2/person/day, we find that more than 90% are not in extreme poverty once we include in-kind transfers, replace survey reports of earnings and transfer receipt with administrative records, and account for the ownership of substantial assets. More than half of all misclassified households have incomes from the administrative data above the poverty line, and several of the largest misclassified groups appear to be at least middle class based on measures of material well-being. In contrast, the households kept from extreme poverty by in-kind transfers appear to be among the most materially deprived Americans. Nearly 80% of all misclassified households are initially categorized as extreme poor due to errors or omissions in reports of cash income. Of the households remaining in extreme poverty, 90% consist of a single individual. An implication of the low recent extreme poverty rate is that it cannot be substantially higher now due to welfare reform, as many commentators have claimed. ER -