Accurate and meaningful measures of poverty are important for policymakers, academics, and laypersons. A variety of different techniques have been proposed and developed over the years, with no consensus in the literature on which is best. Resource-based poverty measures are a type of income-based measure that considers whether a family’s resources are enough to support a subsistence-level standard of living by satisfying basic needs. That critical income or resource level is referred to as the threshold and families below the threshold are classified as poor.

The official poverty measure of the United States is a resource-based measure. If a family’s pretax money income does not meet a certain threshold adjusted for family size and composition, and adjusted annually for inflation, the family is considered poor. Threshold ...