Why anchor the thresholds?

Why anchor the thresholds?

It is important to note that the setting of poverty thresholds is inherently arbitrary, and the level of poverty at a point in time is very sensitive to where the poverty line is drawn. We anchor our alternative poverty measures to the official poverty measure in a specified year (the anchor year). This facilitates comparisons of trends across measures of poverty, allowing us to examine the same point of the distribution at a point in time so that measures do not diverge simply because of differential changes at different points in the distribution.

We do not use the official thresholds when calculating our alternative poverty rates because this approach could lead to vastly different poverty rates at a point in time depending on how resources are defined. For example, the official poverty rate is based on pre-tax money income. If one constructs an alternative measure by adding to this measure other resources, such as tax credits and in-kind transfers like SNAP and housing subsidies, but uses the official thresholds, the resulting poverty rate would be lower. If we then compare changes over time across these two measures, it would be difficult to determine whether any differences in trends was due to the different resources or the fact that we were looking at two very different points in the distribution.