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The Supplemental Poverty Measure should use a method to estimate the value of housing subsidies that (1) uses the statistical match to HUD administrative data to estimate the market rent of subsidized units, (2) uses adjusted rather than total household income to estimate the household’s contribution towards housing costs, and (3) caps the value of these subsidies at the housing portion of the thresholds minus this estimated household contribution. The new method has the advantage that it eliminates the need to use Fair Market Rents in the estimate of the “market rent” of units occupied by subsidized renters. Since HUD actually pays the market rents to landlords it is the best source of data on these levels. The size of the administrative data base from HUD is large enough to ensure a very robust statistical match to the CPS ASEC. Using adjusted rather than total household income in the calculation brings this estimate closer to the way that these amounts are set in the administration of the program. Finally, correcting the cap ensures that the amount “added” to resources to account for housing subsidies does not categorize a family as not in poverty if that family does not have sufficient resources to purchase the non-shelter portion of the threshold.
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