Why income? Why a relative concept of poverty?

Why income?

• Why income?

• Why a relative concept of poverty?

• Why this particular relative income measure?

Income is a means to an end – why not simply measure the end itself? Children’s health, happiness and “well-becoming”.

• Income is a means to an end – why not simply measure the end itself? Children’s health, happiness and “well-becoming”.

• Because income is a key driver of these other outcomes

• Nearly all the outcomes we care about show a steep income gradient
• When income rises in low-income households with children, spending on children rises, and children’s self-esteem and mental health improve

• Because income gives people choices and opportunities in a market society

• Because income can be relatively easily influenced by policy

Poverty (like riches) is relative.

• Poverty (like riches) is relative.

• “By necessaries, I understand not only the commodities which are indispensably necessary for the support of life but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is strictly speaking not a necessity of life… But in the present time… a creditable day labourer would be ashamed to appear in public without a linen shirt.”
• Adam Smith (1776)
• Rowntree (1899) included tea and tobacco in his primary poverty line; by 1936 he’d added tobacco, newspapers and holidays.
• Budget standards approach – much more generous line in 2008 than in 1993
• So called absolute lines were defined in a relative manner at a given point – what justification for freezing necessary items at that point?

Budget standard approaches produce poverty lines which capture need more directly and are easier for the public to understand.

• Budget standard approaches produce poverty lines which capture need more directly and are easier for the public to understand.

• But they cannot provide consistency of measurement over time and this is crucial

• Thus they are better used as a periodic check on a poverty line linked to median income

Why 60%?

• Why 60%?

• Short-term quirks – “Irish paradox”

• Failure to capture the depth or the persistence of poverty

• But these weaknesses are outweighed by the measure’s strengths as the most consistent and relevant indicator of the number/share of children living without the things they need