Measuring poverty

Measuring poverty is not just a technical exercise. What we decide to measure is informed by our understanding of poverty. In turn, this determines what we think are the correct policy responses required to end poverty.

Income

Although poverty is about more than just money, the most widely used poverty measure in the UK is household income. It is reasonably easy to collect, and to compare across time and countries.

In addition, while there are legitimate criticisms one can make of certain income measures, they do capture the essential truth that, in the modern world, an adequate amount of money is needed to participate fully in society.

Consumption

Some view consumption as a better measure of poverty than income. A recent IFS study has shown, for example, that those on the reported lowest incomes do not always coincide with the group with the lowest spending habits, or those living in the severest forms of deprivation.1

Consumption data has its limitations however: it is harder to collect than information on income, and is more prone to error. In addition, while consumption measures map low levels of living, they are silent about the resources needed to avoid them.

Material deprivation

Other studies suggest that material deprivation can usefully complement other poverty measure.2 Material deprivation captures the consequences of long-term poverty on families rather than the immediate financial strain that they experience. It recognises that such families are not able to afford certain possessions most of us take for granted, or are unable to replace worn out items.

While such measures do provide valuable information, however, they risk restricting poverty to those already suffering its long term consequences.

Well-being

In recent years composite measures of well-being have been developed which aim to capture the multi-dimensionality of poverty. For example, in 2007 UNICEF issued a report card on child well-being in rich countries, which brought together information on material conditions with other indicators such as health, education, peer and family relationships, behaviours and risks, and young people’s own subjective sense of well-being.3

Such studies provide us with a rich picture of life experiences, but conflating wellbeing with poverty is misleading. Critically, multi-dimensional accounts of poverty marginalise financial resources, the lack of which is the essential feature of poverty.

  • 1. M Brewer et al, The living standards of families with children reporting low incomes, Institute for Fiscal Studies, 2009
  • 2. See, for example, M Willitts, Measuring child poverty using material deprivation: Possible approaches, DWP Working Paper 28, Department for Work and Pensions, 2006
  • 3. UNICEF, Child poverty in perspective: An overview of child wellbeing in rich countries, UNICEF, 2007