There Are Many Different Measurable Aspects of Poverty but Underlying These Different Aspects Is Almost Always Low Income. Consequently, Measuring Income Remains the Best Way of Measuring Poverty. Discuss the

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There are many different measurable aspects of poverty but underlying these different aspects is almost always low income. Consequently, measuring income remains the best way of measuring poverty.

Discuss the statistical issues raised by this statement and the empirical support for it.

This looks at the validity of income as a measure for poverty. Statistical and theoretical support is given for the certain measures. Critical analysis is made regarding the errors in using income as a single measure of poverty and with the measures used to generate income statistics. The study also looks at other one dimensional indices a swell as alternative multi-dimensional indices such as MPI. It is found that income is a good single measure if trying to define poverty using the traditional methods (absolute) but when trying to calculate well being and standard of living it lacks validity. It is shown how life expectancy may be one of the best single measures but overall a multi-dimensional measure such as the HDI or MPI is the best measure.

Poverty is one of the most talked about issues on the world stage. In the UK a charity called comic relief has already raised over £74 million during 2011 and this shows the determination people have to eliminate it. Defining poverty is somewhat difficult as individuals have their differing views about what it is and there is therefore no one single definition. There are many aspects of poverty but it generally refers to a lack of basic well-being such as not having a clean water source, poor health care, a lack of nutrition, poor education system and no shelter. It also includes having a low income preventing someone from acquiring basic goods and services to survive with dignity. The Scottish Poverty information unit once said "Poverty is defined relative to the standards of living in a society at a specific time. People live in poverty when they are denied an income sufficient for their material needs and when these circumstances exclude them from taking part in activities which are an accepted part of daily life in that society."1. (BBC Modern studies: 25/04/2011)

Poverty is often split between absolute poverty and relative poverty in order to differentiate between the social structure and level of development between different countries. Absolute poverty involves setting a standard poverty line which is consistent between countries and over time. Rowntree (1901) who conducted one of the major studies about poverty concluded that “poverty was having insufficient income to obtain the minimum means necessary for survival, namely basic food, housing and clothing.” 2 (Atkinson, 1983). Calculating the poverty threshold or poverty line involves calculating all the basic essentials an average adult consumes in a year. The World Bank has set this standard at anyone living below $1.25 defines absolute poverty and calculated that in 2005 over 1.37 billion people in the world were living below the poverty line.

Relative poverty is a conception which states that a person is in poverty if they are a lot worse off than other people in their society which therefore means that it differs between country and over time. Townsend (1973) in his studies of poverty, saw poverty as “the inability to participate in customary activities of society, which at this point might include taking an annual holiday, owning a refrigerator, having sole use of an indoor toilet and so on.” 3 (Atkinson p229). An income related example of this may be “when a person is living on less than x% of the average UK income.” 4 (Palmer, consulted 25/04/2011)

Measuring poverty is therefore a difficult and complex task as there are many measurable aspects but as seen in the examples above income is the most commonly used. The measurable aspects of poverty come under 3 main headings which are “standard of living, education and health.” 5(Griffiths and Wall 2007)....
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