Tuesday, January 26, 2010

Child Poverty again

I've done this in 2007 I've done this in 2009 and oh look it's barely 2010 and here I am again.

Orphi's mentioned the contradiction between Save the Children saying child poverty is up and the government saying it's down so what gives?
As before it's a matter of definition.The official definition of child poverty is 60% below the median income. The Save the Children Report in full uses 70% with additional material factors, but uses a 50% with additional factors to classify severe poverty.

In theory this should target less families, you have to have less than 50% of the median income while at the same time while being "deprived of both adult and child necessities, at least one of which shows some degree of severity – ie, two or more items" the items discussed match with the 2007 report in that it's things like going on holiday, having a bike, swimming etc.

This is better than just using material benefits and it's better than using pure income, but that's where the disparity seems to lie between the two organisations' figures.

Pure income comes with a problem, incomes rise and fall and although median is much less affected than mean (average) it will still go up and down. So if in 2008 the median wage was £20k a year than anyone with children earning less than £12k is in poverty; if in 2009 the median wage was £22k then that figure rises to £13,200 pulling everyone earning between £12k -£13k into the classification of poverty with possibly no real justification. Likewise if this year the median fell back to £12k then those people would vanish off the books without any change in their circumstances.

So simply by watching the median wage fall the physical numbers of those in poverty also fall and look see 'we're'  honouring our pledge to reduce those numbers. Of course on the flipside if median wage rises then so do the physical numbers and we get Save the Children et al issuing press releases about how no-one is doing anything about it.

As it stands this seems a good report (certainly better than others)and tries to deal with the subjective measures that are material needs, but it's still galling to me to use a measure that means a child in Britain with free health care, free education, running water and a roof over his head equates to, say, someone in the poorest parts of Africa.


Orphi said...

Saying that anybody who earns X% less than most of the populus is “poor” seems wrong to me. If everybody else suddenly starts earning radically less or more money, that has no direct effect on me.

The other thing of course is that in some parts of the country, money goes a lot further than others. In most parts of London, parking seems to be charged at £9/hour, whereas in some parts of MK it's £0.10/hour. Slight difference there.

A better measurement would seem to be comparing your income to the local cost of living.

Similarly, whether you can “afford” material items depends on more than just how much money your parents have coming in. (E.g., if you're dad's an alcoholic, most of the income is never going anywhere near the kids. Not that I wish to imply that most poor people are alcoholic, I'm just pointing out a flaw in the statical process.)

But hey, what the **** do I know about anything?

FlipC said...

Well you can compare it with housing costs or without; Save the Children use an after-housing cost. So if you live in a high-rent area you don't get booted out of the poverty bracket simply because you have more income than someone in a low-rent bracket when you both end-up with the same amount of money at the end of the day.

As you say though that doesn't take into account local prices. It may be that in London prices are actually cheaper due to the increase in competition than they would be out of London in say a village. So even taking rental income or even council tax into account won't see that disparity.

And no that's a good flaw to point out - gosh I've little money and I wish I could go on holiday shame I keep spending my money on booze and drugs then isn't it.

So take the gross income and use a regional RPI (and/or CPI) to weight it, then calculate a median and use a magic figure to define poverty. That should clear out differences in both house prices and food costs that would distort the figures.

So gross income of £20k and an RPI of 1 stays the same but in an RPI of 1.2, you have the equivalent of £16,666 income because things are more expensive in that area.

Orphi said...

Seems about right to me.

In a related note, today a government survey has apparently shows that the gap between rich and poor has got wider over the last 40 years. “And by the time they reach retirement age, the gap can be colossal.”

No quantification of how much wider. No indication of whether this is because the rich got richer or the poor got poorer or both.

So, all round, a pretty empty statement then. Still, it is only the news headlines…

FlipC said...

Yet and that's not even difficult to show, just line up the medians for the two years and using the same scale you can see if the left or right-hand side (or both) has spread away from it.

The newspapers get a pretty graphic that show how sciency and technical they are and everyone can see exactly what's happening at a glance.