RALEIGH – Nicholas Eberstadt of the American Enterprise Institute has persuaded me that the federal government isn’t spending enough.

Well, I suppose I should be more specific about the topic. It’s not that the federal government is too small, or that incoming Obama administration’s economically-tremulous package should be even more gargantuan than it already is. Rather, Eberstadt is talking about the federal government’s longtime efforts to measure poverty in America. Constructed decades ago, woefully inadequate and misleading, and misused incessantly in debates about economic policy, the official poverty rate (OPR) is one of Washington’s most absurd and destructive creations. We desperately need a new one, even though it would likely require more costly household surveys by federal contractors.

In his new book The Poverty of “The Poverty Rate”: Measure and Mismeasure of Want in Modern America, Eberstadt provides a comprehensive explanation of why the OPR has become increasingly out of touch with reality. A few key points:

• The official measure fails to measure large swaths of household income, including government benefits and off-the-books earnings.

• The official poverty trend is completely out of alignment with many other measures of living standards, including nutrition, housing, asset ownership, transportation access, age-adjusted mortality rates, health status, and consumer expenditures by low-income Americans. Simply put, data on specific areas of material want show dramatic improvements over the past four decades, while the OPR does not. In the case of food and nutrition, for example, Eberstadt writes that “anthropometric data demonstrate that our poor are incontestably better off today than in 1965.” As for housing, “the poor today live in decidedly less crowded, more spacious, and better-furnished dwellings than they did four decades ago … by a number of benchmarks, indeed, the officially poor today enjoy better housing conditions than the average nonpoor in 1970, or the American population as a whole as recently as 1980.”

• Changes in the OPR do not exhibit a consistent relationship with measures of economic progress such as unemployment and income growth, or with measures of intermediate goods that would seem likely to be correlated with poverty reduction, such as educational attainment.

The case against the current federal measure, Eberstadt writes, is now overwhelming. “Today,” he writes, “the contradiction between the numbers generated by the OPR, on the one hand, and an enormous mass of data from other U.S. statistical sources bearing upon domestic poverty and material well-being, on the other, is glaring – and all but impossible to ignore.”

Unfortunately, while current measures of food, shelter, health, and consumer spending can be useful at the national level for long-term analysis, they aren’t available at the frequency and specificity that would allow for the immediate construction of a new poverty index. Because politicians will never settle for getting the government entirely out of the economic-measurement business, the next-best policy would be to ensure that the federal government does not continue to misinform politicians, journalists, activists, scholars, and the general public about the extent and causes of true poverty in America.

Such a measure would cost millions of dollars in data collection, analysis, and distribution. “Compared to our public outlays for antipoverty programs – or other costs we bear for poverty in America – the price of better information will be a pittance,” he concludes. After all, if accurate poverty measures help make the case for sound public policies, the annual savings to taxpayers could be in the tens of billions.

Even here in Bailout Nation, that’s still real money.

Hood is president of the John Locke Foundation