26 November 2019

The problem with how we measure poverty

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In an election campaign of extraordinary claims, perhaps the most extraordinary is that if the Tories get re-elected then child poverty will rise to the levels of the 1950s, something the Resolution Foundation have argued today. This is not just extraordinary, it’s nonsense.

Since the 1950s there has been a considerable change to the definition of child poverty, a change that has made it a rather less useful tool for analysing the state of society. This is why child poverty can have been near-solved the post-war years, and simultaneously so prevalent ever since.

This is not a controversial thing to say either, all of this is well known – it’s just not pointed out very often.

One of the Rowntree trusts went out and measured child poverty in the 1930s and then again in 1950. It had fallen from 18% to 1.5%, at which point the problem could be declared largely – not entirely, obviously – solved. The children of the poor were no longer living in deprivation, without shoes, food or proper shelter. Significant suffering had been dramatically reduced – an excellent, good-news story.

But this did not suit those who would blindly make us all more equal – for if poverty had actually been solved then what is the argument for ever more redistributive taxation? The answer was to redefine what poverty was. So it became a relative measure, not an absolute one. Over a few halts and starts it reached the current definition: living in a household with less than 60% of median income, adjusted for household size (sometimes before housing costs, sometimes after). This is no longer a measure of poverty; it is one of inequality. But that name “poverty” was kept because it’s such a useful pull on the emotional heartstrings.

Back in the 1950s only 4% of people owned a TV and only 3% went on foreign holidays. It may be true today that being unable to afford these things is a sign of poverty relative to the rest of the population but it’s still not the same as the shoeless, foodless poverty those in the 1950s would have recognised.

So let’s come back to that claim that the Tories will return the UK to 1950s levels of poverty. No one at all, even those making the claim, actually means what they say by that. What they mean is a return to 1950s levels of inequality. And yes, inequality has increased in recent decades, as the the Gini Index suggests. It is entirely possible to argue that this rise in inequality is a bad thing. But that one child has only one pair of plimsolls, another varied Air Jordans, is an observation about that inequality, not about poverty itself.

The UK is simply not going to return to 1950s levels of poverty, not unless the economy shrinks by 75%. And not even the Greens – yet – are suggesting that it should.

But poverty is on the political agenda, and has still not been completely eradicated, so what to do about it? John McDonnell has some ideas. He argues that Labour has a plan ‘to tackle the root causes of child poverty’ – this, as The Guardian points out, includes free school meals for all primary school children, expansion of free childcare, guaranteeing a right to food, improving pay and workers’ rights and tackling the housing crisis.

The problem though is that, other than the pay issue, none of those things would change child poverty. For the measurement today is incomes below median. Yes, free school meals, childcare, and a right to food will make poor people less poor. But according to the way child poverty is measured, they won’t change the number in that state by one single tot or anklebiter. The measures are rather hoisted by the petard of how we measure the poverty to be alleviated.

The truth about child poverty in the UK is that, thankfully, there is really very little. There are indeed those – perhaps many – who struggle to reach the average standard of living but that’s a measure of inequality, not poverty.  What is left now is that some have more than others, a rather different – and possibly less urgent – problem than some having next to nothing.

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Tim Worstall works for the Continental Telegraph and the Adam Smith Institute