EVALUATING THE SUCCESS OF PRESIDENT JOHNSON’S WAR ON POVERTY: REVISITING THE HISTORICAL RECORD USING AN ABSOLUTE FULL-INCOME POVERTY MEASURE

NBER working paper by Richard V. Burkhauser, Kevin Corinth, James Elwell and Jeff Larrimore. Excerpts:

"Abstract

We evaluate progress in President Johnson's War on Poverty relative to the 20 percent baseline poverty rate he established for 1963. No existing poverty measure fully captures poverty reductions based on these standards. We fill this gap by developing an absolute Full-income Poverty Measure (FPM) whose thresholds are established to obtain this same 20 percent official poverty rate in 1963 while using a fuller measure of income and updating thresholds each year only for inflation. While the official poverty rate fell from 19.5 percent in 1963 to 10.5 percent in 2019, our absolute FPM rate fell from 19.5 to 1.6 percent. This reflects increases in full income throughout the distribution, with real median income more than doubling between 1963 and 2019, together with the expansion of government transfers and tax benefits not fully captured by the official measure. It is also broadly consistent with the expectations of President Johnson and his Council of Economic Advisers, including Robert Lampman who predicted in 1971 that poverty based on these absolute standards would be eliminated by 1980. However, we also show that reductions in relative poverty since 1963 have been far more modest, falling from 19.5 to 16.0 percent in 2019."

"we create a poverty measure, which we refer to as the absolute Full-income Poverty Measure (FPM). This measure maintains the same 1963 poverty rate as the Official Poverty Measure, matching Johnson’s baseline poverty rate (Johnson 1965). We hold poverty thresholds constant in inflation-adjusted terms using the Personal Consumption Expenditure (PCE) price index, which more accurately reflects price changes than the CPI-U inflation measure used for the Official Poverty Measure. Additionally, unlike the Official Poverty Measure, we include both cash and in-kind programs designed to fight poverty, including the market value of food stamps (now the Supplemental Nutrition Assistance Program, or SNAP), the school lunch program, housing assistance, and health insurance. Finally, we incorporate in a consistent way the technical improvements in how income is measured since the 1960s in both our measure of full income and in the new thresholds we create to anchor our new FPM poverty rate to the official poverty rate of 19.5 percent in 1963."