2. Defining and measuring poverty
Chris Goulden, Policy & Research Department, JRF

3. Can we agree on what poverty is?
Poverty = resources not sufficient for minimum needs
Resources
What do people ‘deserve’ in/out of work, if disabled or parents?
Financial and non-financial resources
Direct (capabilities/capital) and indirect (services)
Sufficient
Income, costs and how resources are used
Minimum needs
Relationships, health, nutrition, housing, education, clothing, basic services but also… social participation, insurance, a holiday?
Do we have a right to have our minimum needs met?

4. Why care about poverty?
During a decade, over half of us will experience poverty at least once
Affects health, education & other outcomes
Child poverty costs UK £29 billion+ every year
Work is not a guaranteed route out of poverty
Poverty exists but is not inevitable

5. How do we measure poverty?
Relative income poverty
Below 60% median equivalised h/hold income
Severe poverty (40% below)
Fixed threshold poverty (“absolute”)
Relative expenditure poverty
Material deprivation
Deprived of certain items and below 70% median
The minimum income standard
Life chances and social mobility
Dynamic
Persistent
Recurrent
Transient
Multi-dimensional
‘Sustainable Livelihoods’
Global poverty indices

6. Income poverty rates 1961 to 2012/13
Absolute based on 98/99 level (so same % as relative poverty in that year); Severe = 40% below median
Before Housing Costs

7. Pros and cons Relative income poverty Fixed-threshold poverty
Has a history, already being used in policy across EU, broadly based on needs
Arbitrary, impossible to eradicate, data quality, inequality measure
Fixed-threshold poverty
Rhetorically stronger, perhaps easier to reduce (but not at present!)
Actually measures relative spending power – not really ‘absolute’
Spending poverty
Possibly a better guide to living conditions
No real interest in policy circles, some save rather than spend, data quality
Material deprivation
Directly measures living standards
But what items to choose and how to keep up with norms?
MIS
Not arbitrary, based on public consensus, based on needs and costs of living
Not really a ‘poverty’ measure, doesn’t cover every household type
Life chances
Longer term and dynamic, looking at drivers of poverty
Hard to measure, downplays structures, blames parents and individuals
Dynamic
Better representation of what’s really happening
Harder to interpret, data lag
Multi-dimensional
Incorporates more of the complexity of poverty
Can be hard to understand and often driven by single factors anyway

8. What’s best? It matters how we measure poverty But in many ways not
Broadly same kinds of people are at risk
No single measure is perfect
Having a single measure focuses effort…
But risks narrowing policy (Tax Credits?)
A range of measures better reflects a comprehensive strategy for all groups