Exploring long-term economic well-being and child outcomes with the Supplemental Poverty Measure: evidence from the Panel Study of Income Dynamics

ABSTRACT This study is the first to use the Supplemental Poverty Measure (SPM) to reexamine the relationships between long-term economic well-being and child outcomes. We decompose the differences between the Official Poverty Measure (OPM) and the SPM and examine such relationships with 15 cognitive, physical, and social–emotional outcomes for 754 ten- to nineteen-year-olds as reported in the Panel Study of Income Dynamics (PSID) 2007 Child Development Supplement. Using PSID data from 1998 to 2006, we measure long-term economic well-being using the average natural logarithm of the ratio of family resources to the poverty threshold with a series of models, beginning with the OPM and converting it step-by-step into the SPM. We find that some steps in constructing the SPM, especially including in-kind benefits and using the SPM thresholds, weaken the relationships between our economic well-being measure and the cognitive outcomes, although including in-kind benefits strengthens the relationships with many of the physical and social–emotional outcomes. Better understanding the relationships between different poverty measures and outcomes of interest can open new avenues for research on mitigating the adverse effects of poverty and could perhaps allow us to better target interventions to individuals who are at greatest risk for adverse outcomes.