8 ways to measure poverty

July 11th, 2014 at 3:00 pm by David Farrar

The Institute has a very thoughtful discussion paper on poverty. They pose a number of questions, and also outline eight different ways you can measure . They eight ways are:

  1. Average income threshold – a percentage of mean or median income
  2. Consumption expenditure – a percentage of amount spent on consumption compared to average household
  3. Budget standards – based on a budget judged high enough to avoid deprivation
  4. Component and multiplier – based on amount needed for an essential such as food, and multiplied
  5. Subjective measures – based on self-assessment as poor
  6.  Benefit-based/statutory measures – based on government definition of minimum income
  7. Material deprivation indices – based on actually lacking essential necessities
  8. Multi-dimensional measurement of poverty, deprivation or social exclusion – a mixture of the above and more

No measure is prefect. I don’t like the income measures because they treat all households as identical in terms of needs, and they are more about income spread than actual poverty. They also avoid the effect of tax, as they tend to be on before tax incomes.

My preference is No 7.  Stats NZ already do this – an occasional survey asking if families can afford stuff such as more than two pairs of shes for kids, transport to school etc etc. This is relatively objective, and measures actual deprivation rather than merely equality of income.




10 Responses to “8 ways to measure poverty”

  1. kiwigunner (251 comments) says:

    The national way – spend a lot of time talking about poverty – do nothing about it – increase it and then blame the poor. There must be a report about it but the Salvation Army or the like will have to pay for it and then it will be ignored.

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  2. MT_Tinman (4,388 comments) says:

    Poverty – Do you have enough as a family (living group or whatever) to have shelter and necessary food?

    If yes, poverty is not the issue.

    No other measure is needed.

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  3. thor42 (971 comments) says:

    I think that any useful measure of poverty should include the amount that the household spends on booze/smokes/gambling each week. The more that they spend in that area, the less that they can be called “in poverty”.

    The number of children should also come into it (given that children are hugely expensive to raise, and that the decision to have more children when a family is already on a low income is a really bad decision).

    I’m convinced that the vast majority of so-called “poverty” in this country is self-inflicted. Poor spending decisions, having too many children, laziness.

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  4. igm (2,444 comments) says:

    thor42: That is it in nutshell, plus the wrong people are doing the majority of breeding, reason being: monetary gain.

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  5. alloytoo (1,037 comments) says:

    We must also not ignore the element of choice.

    Work life balance is typically used to describe middle of the row folks who sacrifice a little income for greater leisure or family time. In reality it encompasses the extremes of the 16 hour day workaholic and the 3 hour a week surfer.

    Is it correct to include people who choose not to work, or choose to work minimal hours in poverty stats?

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  6. Tarquin North (1,056 comments) says:

    The only poverty in this country is caused by poor choice. I had a bout of poverty the other night after spending four hours in the pub trying to make money on the TAB. That was my choice and I can afford it. The threats of domestic violence and terrible chill in the air when I finally rolled in were definitely not planned.

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  7. Colville (3,120 comments) says:

    I remember seeing a graphic somewhere (The Standard I think ! arrgh!) of people in “poverty” in USA and what stuff they “owned” (or rented I assume)
    From memory 99% had a house of sorts, 97% had a TV and 96% had a fridge, then it got down to 91% had air conditioning (I used to sell AC so I remember that stat) then it got down to around 70% had a computer and 60% had a gaming system playstation thingie.

    Only thing the chart proved to me is that they have no idea what real poverty actually is!

    So yeah if your broke and sucking on the tax payers teat you need a playstation to while away the hours because you might get really fucken bored otherwise and find yourself looking for a job out of desperation for something to do!

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  8. JC (1,102 comments) says:

    NZ has some good reports in amongst the dross on child poverty. This systematic approach from Govt officials is one and shows that about 6% of kids are in “persistent hardship”. There’s also clear evidence as to where poverty comes from in the indicators, eg Maori, DPB, sole parent family.

    Scroll down to about page 22 and Figures 9 and 10.. but there’s lots of interesting stuff throughout..


    Its interesting that self reported poverty is nothing like that reported by the Poverty Industry.


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  9. get a grip (10 comments) says:

    Why is it that most commenters on this subject on this blog are experts on poverty.?
    Especially when they seem to be speaking from a “comfortable” existence platform.

    Maybe they have seen movies of kids living on rubbish dumps and are using that as their measure of poverty.
    Have to laugh when one commenter seems to think that having a house to live in(rented) and a fridge should not qualify you for living in poverty in a first world country.

    What we are talking about are some of our FELLOW CITIZENS, who thru circumstances not of their choosing are poor in income.
    YES not of their choosing, go ask a poor person if they want to stay poor, see what their response is.
    Surprised? Yes they all want to be NOT POOR.

    There are many reasons people in New Zealand are poor, so none of the grandiose sweeping prognostications on blogs such as these are really relevant.
    Same as the bleating from the socialist left about spreading more money around.

    Organisations such as the Salvation Army do a terrific job as they treat the problems at the individuals level.
    How we measure poverty in NZ is really a political construct, so that those who wish to push a barrow have something to yelp about.

    Helping those who are poor is about giving a hand up, not a handout.
    The later usually based on some generalised gummint measure.

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  10. Johnboy (20,823 comments) says:

    Folks don’t have a wide screen to watch their videos/sky on are poor! 🙂

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