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Measuring poverty, a more accurate picture

December 9, 2014

By Miriam Wasserman

Jordan Matsudaira, PhD alum, stays second year to work as chief staff economist for President Obama’s Council of Economic Advisers

Only a very small number of economists get to work for the Council of Economic Advisers. Only one serves as chief economist: Jordan Matsudaira (PhD ’05), a member of the Ford School’s first joint-PhD graduating class.

As chief economist, Matsudaira works with staff to provide the council and President with data on timely policy issues. The goal: to act as a conduit between the research community and the policymaking process— in real time.

“Our staff economists have noted ruefully that they’re expected to conduct research at the council that a few decades ago would have easily earned them their dissertation, and now they’re expected to do it in a few short weeks—a month or two if they’re lucky,” said Betsey Stevenson, currently on leave from the Ford School faculty while she serves as a member of the Council of Economic Advisers (CEA), at a conference in May.

While academics have been warring for years about the best way to measure poverty, for example (the only agreement is that the current poverty measure is inadequate), Matsudaira had to find a reliable way to assess poverty trends for the 50th anniversary of the War on Poverty. That was no easy task. The official poverty measure does a poor job of capturing the impact of food stamps and the Earned Income Tax Credit, says Matsudaira, but those are some of the most important programs in place to combat U.S. poverty.

Matsudaira canvassed the academic community and was able to leverage the power of his office to bring together researchers from different factions of the debate. He worked with them to produce comparable estimates that took into account the contributions of major poverty fighting programs.

What did they find? A significant drop in the percentage of the population living in poverty since the 1970s, (by one measure, a reduction of over one-third between 1967 and 2012), that stood in stark contrast with the picture of relative stagnation painted by the official poverty measure for the same period. Moreover, without the safety net, poverty would have been much higher: antipoverty programs were responsible for lifting 45 million people above the poverty line in 2012, he says.

Because the official measure hasn’t changed much over time, people have characterized efforts to combat poverty as a failure and a waste of money, says Matsudaira. “That narrative is dangerous because it erodes public support for the social safety net. Having a more accurate picture… lets us see that there really has been progress.”

Given the nature of the work, the pace is hectic, the hours are long, and the burnout rate is high. But the work feels consequential and important to Matsudaira—especially since the Obama administration has begun to make greater use of executive orders, translating CEA findings on minimum wage and pay transparency into policy. “Being excited about the work that we are doing is the thing that keeps me coming back and staying late,” he says.

Below is a formatted version of this article from State & Hill, the magazine of the Ford School. View the entire Fall 2014 State & Hill here.