The Poverty Reduction of Social Security and Means-Tested Transfers

Abstract

This article is the fourth in a series to celebrate the 70th anniversary of the ILR Review. The series features articles that analyze the state of research and future directions for important themes this journal has featured over many years of publication.Starting with Survey of Income and Program Participation (SIPP) data from 2008 to 2013, the authors link administrative data from Social Security and five large means-tested transfers—Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), public assistance (PA), the Earned Income Tax Credit (EITC), and housing assistance—to minimize errors within the SIPP data. Social Security cuts the poverty rate by a third—more than twice the combined effect of the five means-tested transfers. Among means-tested transfers, the EITC and SNAP have the largest effects. All programs except for the EITC sharply reduce deep poverty. The relative importance of these programs differs by family subgroup. SSI, PA, and housing assistance have the highest share of benefits going to the pre-transfer poor, whereas the EITC has the lowest. Finally, the SIPP survey data alone provide fairly accurate estimates for the overall population at the poverty line, though they understate the effects of Social Security, SNAP, and PA. Differences in effects are striking, however, at other income cutoffs and for specific family types.