Drawing on the recommendations of the report of National Academy of Sciences Panel on Poverty and Family Assistance and the subsequent extensive research on poverty measurement, an interagency technical working group (ITWG)  made a series of suggestions to the Census Bureau and the Bureau of Labor Statistics (BLS) on how to develop a new Supplemental Poverty Measure (SPM). The ITWG suggested that the poverty thresholds be adjusted for price differences across geographic areas using the best available data and statistical methodology (ITWG, 2010).

The SPM currently uses American Community Survey (ACS) data to adjust the housing portion of the poverty thresholds for differences in housing costs based on median outlays for rent and utilities for two-bedroom rental units. One concern with this approach is that it estimates market rents for units using reports of gross rents in the ACS. However, it is not clear whether housing assistance recipients report the market rent of their unit or their actual out-of-pocket expenditure on rent. This paper evaluates the impact of excluding these respondents from the estimation on the index and the subsequent SPM poverty rates.