How do you define poverty?
This has been a focus of debate today, sparked on the one hand by new data showing that the number of children living in poverty in the UK last year fell by 300,000, or by 2% to 18% of children living below the poverty line. This is based on the government’s Households Below Average Income statistics which define child poverty as children living in homes taking in less than 60% of the median UK income.
On the other hand, that fall could be considered a mere glitch of the statistics. It is based on a percentage of median income. Therefore if the median income falls - say from £432 to £419 a week, as it did last year - then it follows that the level of household income at which families will classify as being in relative poverty will also fall, from £259, in 2009-2010, to £251 a week, last year. Provided that the incomes of those in the lowest socio-economic groups has not fallen by that much, the number of households who qualify as being ‘in relative poverty’ will reduce. But that doesn’t mean that their circumstances or lifestyle have necessarily improved.
Work and Pensions Secretary Ian Duncan Smith said that he would look at new ways of measuring child poverty, taking into account problems like unemployment, family breakdown and addiction as well as household income: “Unless we find a way of properly measuring changes to children’s life chances, rather than the present measurement of income alone, we risk repeating the failures of the past”. He is tying this to the government’s universal credit - which will replace a series of benefits and tax credits - which he says will pull the “vast majority” of young people out of poverty if at least one parent worked 35 hours a week at the minimum wage. The figure would be 24 hours for a lone parent. He had a great discussion with John Humphreys about this on the Today programme this morning - link to it here.
Is this realistic? For those who want to explore the issue there are a wealth of resources. The Child Poverty Action Group estimate that by 16, children receiving free school meals achieve 1.7 grades lower at GCSE than their wealthier peers.6 Leaving school with fewer qualifications translates into lower earnings over the course of a working life. They say that professionals live, on average, eight years longer than unskilled workers, and that the opportunity cost of relative poverty for society is around £25billion a year. The Joseph Rowntree Foundation has reports and links covering Education and poverty,the future of the UK labour market, flexible and part time working and how ethnicity affects poverty.
this is an area with many different opinions and judgements to be made about equity and about the policies which may provide the best solution - which will depend upon what is seen as the most important problem. Students can really explore the principle of questioning data and assumptions about value judgements here. Meanwhile the Case Study given in this BBC article, which compares relative poverty in the UK with relative poverty in South Africa, may give a different perspective.
This exam coaching and revision workshop is designed to support A2 Economics students in the final phase of their preparation for exams in June 2015. The workshop combines exam technique advice with coverage of our selection of core business economics (micro) and macroeconomics topics.