Noncash Benefits

Methodological Review of Experimental Valuation Methods Indicates Many Problems Remain Gao ID: PEMD-87-23 September 30, 1987

In response to a congressional request, GAO: (1) developed a general approach for assessing future proposed methods to change poverty indicators; and (2) applied its approach to one method the Census Bureau used to place cash value on noncash benefits.

The GAO assessment approach: (1) identified specific concerns within each method; (2) examined these concerns using indicators, such as changes in the poverty rate; and (3) combined the results of these steps to form a final judgement. GAO applied this approach to the Bureau's market-value method and found that: (1) the Bureau's conceptual choices as to which benefits to include in the definition of income could affect the poverty rate by as much as 4.7 percent; (2) the Bureau's methodological choices in carrying out poverty calculations influenced the method's validity and the accuracy of its benefit values; and (3) overestimation of data quality problems caused flaws that resulted in fluctuations in the poverty rate.

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