Measuring Poverty

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60% of median income is widely accepted as the primary threshold of income poverty that should be used. 

The term "poverty" can be a controversial one for many reasons. It is a relative concept meaning different things to different people and societies.  For our purposes, we are using the term poverty to mean "relative poverty". In other words, we believe that in relatively rich and developed countries such as the UK and Ireland, there should be certain minimum standards below which no one should fall - as opposed to an absolute level of poverty measuring the very barest means necessary to survive which is sometimes refered to when discussing developing countries.

 

Living below the poverty line

Within the European Union, poverty is normally measured by using relative income poverty lines.  This involves working out average or median equivalised household incomes in a country.  A poverty line is then set which is a percentage of that average income.  Commonly these poverty lines range from 40-70% of household income.  This gives one an overall picture of the risk of poverty rate but the figures can also be broken down by age, gender, household type and employment status to give a more detailed picture of who is at greatest risk.   This means that one can examine the particular situation of specific groups such as children or older people or the unemployed.  In the EU, people falling below 60% of median income are said to be at-risk-of poverty.
 
One of the limitations of a relative income poverty line is that choosing a cut-off point is a rather arbitrary process.  It tells us what proportion of people are poor but does not sufficiently take into account other factors that affect people's situations such as how far below the poverty threshold they are or the length of time they have been poor.
 

Poverty is not just about income

Measuring relative income poverty captures just part of the picture and does not fully describe the complexity of poverty.  It is also important to measure other things that capture the multi-dimensional nature of poverty.  These include things such as the level of indebtedness, the level of unemployment and joblessness, the extent of poor health or educational disadvantage, the number of people living in inadequate housing and poor environmental conditions and the extent to which people have inadequate access to public services. 

Measuring deprivation

Deprivation indicators are another important approach to measuring relative poverty.  These are an attempt to move beyond just monetary indicators and to take better into account the actual standard of living that people enjoy.  Essentially the approach involves identifying goods or activities which are seen as basic necessities in the country someone is living.  These can be things such as having new and not second-hand clothes, adequate shoes, a meal with meat or fish once every two days, adequate heating, a television, being able to go to the pub or a social outing with friends once a week, having an annual holiday and so on. 

Fuel Poverty

The government defines a household as being in fuel poverty if, in order to maintain an acceptable level of temperature throughout the home, the occupants would have to spend more than 10% of their income on all household fuel use.  Fuel poverty is a result of a combination of three factors: poor home energy efficiency; low income; and expensive fuel costs. The relationship between fuel poverty and low income is strong, and recent increases in the costs of electricity, gas and home heating oil have placed additional pressure particularly on pensioners with low disposable incomes.

Recent research from the University of Ulster has focused on a local approach to fuel poverty saying that there are at least 33,000 households in Northern Ireland (13%) in “severe fuel poverty” paying more than 25% of their income on energy.  More work has been done recently in England around methods for measuring fuel poverty that indicate the problem is even more severe than is currently thought taking into account the effects on health, mental health and social isolation and the number of households pushed into poverty as a result of spending on fuel.

Although the debate continues on how to measure the problem, what we do know is that older people are dying unnecessarily during the winter months and the health impacts of income poverty are well documented. 

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Colin Flinn

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