Thursday, October 30, 2014

The ambiguity of measuring 'poverty' relatively

The release of UNICEF's Children of the Recession report has once again triggered a discussion about the shortcomings of measuring poverty relatively.

We all understand how this method can throw up ambiguous outcomes but it's not always easy to explain.

The following is straight from the Household Incomes Report, the official poverty statistics source:

o    when all incomes at and below the median rise, but the median rises more quickly than lower incomes, then poverty is reported as increasing despite low incomes increasing
o    when all incomes at and below the median fall at similar rates, poverty is reported as not changing even though low-income households are in much more difficult circumstances after the reduction in their incomes. 

Clearly, nobody is a winner when a country gets poorer even if fewer people are described as 'in poverty'.

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