Measuring Poverty: A Preview

In preparation for Blog Action Day, and with a nudge from a piece I read by The Numbers Guy, I thought I'd talk about measuring poverty.

I think we know that how we measure poverty is flawed. This discussion of how world poverty started to be measured at a dollar a day is a backdrop to the real problem we have in the United States defining poverty. And while we anticipate the official poverty estimates to be released this month, we're still not sure we're measuring what we ought to be. Let me explain.

Here is the U.S. Census page on poverty, complete with definitions on how they measure poverty and poverty threshholds. Developed in 1963-64, they measure money income needed to sustain life, based on a presumed basket of required food. The Department of Health and Human Services uses its own poverty threshholds that they arrive at differently. While both have the same premise -- what is the bare dollar minimum needed to survive, based on assumptions made in the 1960's and adjusted for inflation since then -- HHS also recognizes geographical variability within the U.S., and has different threshholds for Alaska and Hawaii.

But we lack a common understanding of what poverty means. I've walked the favelas in Brazil and public housing in the States. I've worked one-on-one with the homeless and seen the difference between shelter and transitional housing. And what we mean by "poverty" is clearly context-specific -- see this effort in England to use lack of cell phones as a key indicator of child poverty. (Does this mean the entire world was poor in the early 1980s?)

The Joseph Rowntree foundation has just tried to create a new poverty standard for England. Their premise is that poverty is not being thought about properly -- we should instead be thinking about a minimum income needed to maintain a "socially acceptable standard of living." I'll let them explain:

This research aimed to find out what level of income people think is needed to afford a socially acceptable standard of living in Britain today, and to participate in society. The study compiled household budgets to calculate the first-ever minimum income standard (MIS) for Britain. Combining expert knowledge with in-depth consultation with members of the public, the MIS standard provides a new benchmark to inform future poverty debates and public policy decisions affecting the incomes of those worst off.

Tim Harford at Slate reacts to this study with a nice piece detailing some of the history of the Rowntree family, the history of poverty lines, and what the implications of this new approach might mean. It's a more amusing read than any discussion of poverty standards has a right to be, and I recommend taking a look.

But he noticed what the Rowntree folks found through focus groups -- a "socially acceptable standard of living" needed to participate in society means something different in every community. This suggests community-level income standards based on community needs. Is internet access necessary for community participation? Does your community require a personal automobile to successfully navigate the community and avoid being classified a second-classs citizen, or is your mass transit system a class-free service? The Rowntree Foundation set out to find a minimum income standard for England:

The groups recognised that people's needs vary. The MIS they constructed does not represent an acceptable living standard for every individual. Instead, it draws a line below which it is socially unacceptable for any individual to live.

And again:

A minimum standard of living in Britain today includes, but is more than just, food, clothes and shelter. It is about having what you need in order to have the opportunities and choices necessary to participate in society.

Tim Harford points out that the list of "what you need" is radically different than what we thought poor people needed in 1963:

The standard was set by focus groups working out what was and was not necessary "to participate in society." The results are frugal—there is a budget of £40 ($80) every two years to buy a suit, for instance—but they were always bound to be controversial. The list of essentials includes a self-catering vacation, a cell phone, and enough booze to get drunk twice a month.

So what would you need in your community to participate in society? What would your minimum income standards look like? Does this seem like a worthwhile exercise to try for your community? It might invigorate the debate over poverty and how to measure it, I suspect. What are your reactions?