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8 ways to measure poverty

The Maxim Institute has a very thoughtful discussion paper on poverty. They pose a number of questions, and also outline eight different ways you can measure poverty. (See report below) 

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 shoes for kids, transport to school etc etc. This is relatively objective, and measures actual deprivation rather than merely equality of income.

Political commentator David Farrar posts at Kiwiblog.

RAW DATA: Maxim Institute Poverty Issues Paper (PDF)1.14 MB

Comments and questions

Measure is even simpler. Go to the ghettos of the Philippines, Ethiopia etc and learn first hand what REAL poverty is then come back to NZ and see if there is anything that comes close. There isn't.

So because we don't compare with the Philippines therefore there is no poverty? Pop into a school being fed by the Hare Krishna sometime and see the gratitude on the faces of the children being fed there. Pathetic that so many can see the need and this government (and blinkered bigots) can't.