Official government poverty figures "conceal a large number of hidden poor among the elderly," according to Mollie Orshansky, the woman who designed the poverty formula for the Social Security Administration 15 years ago.
Orshansky, still with the Social Security Administration and considered the leading authority on poverty statistics, has made new studies that indicate that the poverty rate among the elderly is really closer to 21 percent, rather than the official 14 percent figure for 1977.
The official figures, as compiled by the Census Bureau, are based on total family cash income and include situations in which older people live with younger relatives. The income of all is lumped together to determine whether the family as a whole is below the poverty line, which was $6,200 for a family of four last year but which has just been raised to $6,700.
Orshansky's figures show, however, that if only the cash income of the aged is counted and the income of others living in the same household is disregarded, then 21 percent of the aged are poor rather than 14 percent.
Orshansky said it is precisely because they are poor and can't make it alone that many older people must live with their children.
The higher an elderly person's income, the more likely they are to choose living alone, she said, for example, among elderly widowed and unmarried women, less than half of those with incomes under $2,000 in 1976 lived alone, but 77 percent of those with incomes over $5,000 lived alone.
"One of the reasons they live with someone else is because they themselves don't have enough money," she said.
"Given the chance, old people would prefer to live by themselves, and I suspect their children would like that too, in many cases."
Orshansky rejects the contention that the existing official povery index exaggerates the number of poor because it counts only cash income, not in-kind income, such as food stamps.
"If you're including in-kind income, then you should include it for every-body, not just the elderly," she said. "For example, employers pay health insurance premiums for many young workers, and taxpayers get deductions for interest on housing loans."
Orshansky's figures were made available recently to the National Commission on Social Security, which is studying income adequacy of the aged.