Poverty lines versus material deprivation indicators Pilar Martín-Guzmán Universidad Autónoma de Madrid

Measuring well-being with poverty lines Some drawbacks: Difficulties with measuring income and expenditure Discounting the effect of life cycle There is a certain lag between changes in income and changes in the standards of living

An alternative Deprivation indicators. They can be: Monetary deprivation indicators Material (non-monetary ) deprivation indicators

Example of a monetary deprivation indicator (from SILC) Has your household had to defer payments in the last 12 months on rent, mortgage, community costs or utility bills? Do you believe your household to be capable of assuming an unexpected expense of 550 euros (91,500 pts) using its own resources? In terms of your household's total monthly net income, how do you usually get to the end of the month?

Example of material deprivation indicators (from SILC) Does your household have suitable water supply and plumbing fitted? Is your dwelling warm enough during the winter months? Does your dwelling have air-conditioning fitted? Tell me whether the household or any of its members has a PC

In the case of material indicators, it is important to make sure that deprivation is due to lack of resources and not to other reasons , v.g. SILC: Tell me whether the household can afford: 1. To pay for holidays away from home for at least one week a year 2. To eat red meat, chicken or fish (or the equivalent for vegetarians) at least every other day

What can be done with deprivation indicators To take them as they are To build the Townsend deprivation index, and fix a threshold. Decisions : 1. How to choose the items 2. How to combine items (weightings) 3. How to fix the threshold

There is a certain degree of arbitrariness in the three choices. For the selection of items, two additional questions : 1 How meaningful they are across the country 2 How long should they be kept?

Indicators versus poverty lines. advantages A better follow-up of the changes in living conditions (consumption patterns are stable) A better insight on the real living standards Easier to understand for the public at large and the media.

Indicators versus poverty lines. Disadvantages More complicated to implement A greater amount of arbitrariness The Townsend deprivation index does not take into account how excluded people do feel for their deprivation

An alternative To assign to each indicator a weight proportional to the percentage of non-deprived in the country

Combination of deprivation indicators and poverty lines advisable Combination of deprivation indicators and poverty lines advisable. The overlapping sets of identified poor can provide a good insight into poverty. Also, deprivation indicators provide a useful information for deciding on cutt-offs in relative poverty lines.

International comparisons In general, deprivation indices better than poverty lines But special care should be taken in the selection of the indicators Changes are better than levels