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Dr Andrew Lilico: Defining child poverty

Andrew_lilico Dr Andrew Lilico is Managing Director of Europe Economics, a member of the IEA/Sunday Times Shadow Monetary Policy Committee, and author of more than forty articles, pamphlets and reports on political and economic questions.

This paper summarizes Measuring Child Poverty and Targeting its Elimination.

Child poverty is a significant political issue.  Tony Blair’s government has set targets for its reduction and eventual elimination, and the Conservatives now aspire to this goal, also. The government currently defines child poverty using a three-part definition, including an unchanging income poverty line, a relative income poverty line, and a measure of access to material goods.

Characteristics of a Good Definition of Child Poverty

Let us consider four key characteristics of a good definition of child poverty:

1) True to the concept of “poverty”

If those in “child poverty” are not in “poverty” then something is awry.  In particular, should poverty be thought of as absolute or relative?  There are two parts to this.  First there is the question of whether “poverty” is absolute through time and place, so that what it is to be “poor” for a British child today is the same as for a British child in the 13th century or for a Sudanese child today.  Second, even if we reject the notion that poverty is absolute through time, one might urge that it depends only on someone’s own circumstances in a particular country at a particular time, rather than on how one’s circumstances compare with those of other people.

Although a conception of poverty that is absolute through time and place is still relevant and still a challenge to policy — particularly on overseas aid — nonetheless it seems reasonable to have a separate definition for domestic purposes that advances through time. The next question is whether poverty is best understood as relative to others, or whether a measure fixed, given the norms and expectations of our society, is better.  There are three key points.

  • First, a fixed measure is truer to the concept of poverty.  “Inequality” may or may not be a social ill, but it is not the same thing as poverty.
  • Second, relative expenditure measures are markedly superior to relative income measures.  A  wealthy self-employed person who happens to be having a bad year (and so has no income), but who has too much savings to be entitled to receive benefits, is not “poor”.  Only half of those defined as “poor” on an income measure are also “poor” on an expenditure measure.  The spending of the poorest tenth of the population has hardly risen since 1997,  even though their income has risen strongly (contrast this to the 1980s, when the spending of the poorest tenth  rose sharply, even though their income did not).
  • Relative measures are particularly misguided when attached to a goal of literal equality of opportunity.  What the idea really amounts to is this: each of us should stand on his own biological merits, and succeed or fail on that basis alone.  If we are beautiful, intelligent, healthy, and elegant, we will be rich and have enjoyable lives.  If we are ugly, stupid, unhealthy, and   awkward, we will fail — and no-one is allowed to help us.

    This vision of a Nietzschean dystopia should be rejected by any Conservative, for Conservatives value family, Church, philanthropy and community.  Our picture is one in which people are encouraged to help those they love, not forbidden from doing so.  Literal equality of opportunity cannot be a goal of a Conservative.

2) Concretely measurable

The great advantage of income measures is that we can measure them.

3) Policy-neutral

One of the great disadvantages of income measures is that they strongly imply particular policy remedies.  Basing the definition on income will tend to encourage solutions based on benefits, rather than state provision or the use of private charities.

4) Intuitively understandable

Income and expenditure are easy concepts to understand.  “General wellbeing” is not.

We recommend a definition based on a “backstop” income line, a relative expenditure measure, and a material deprivation index, with the key priority given to the third. We urge that the Conservative Party should accept a target of eliminating poverty based on a material deprivation measure, but not on a relative income measure, as a relative income measure will tend to imply particular policy remedies that we wish to escape (particularly benefits) and will encourage egalitarian thinking. We should aim to help poor children, or to find ways to encourage the wealthy to choose to help poor children.  But we must not misdefine our goals or define them so that only socialist policies can be used to reach them.


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