ArticlePDF Available

The Living Standards of Families Reporting Low Incomes

Authors:

Abstract

The Government has high-profile child poverty targets which are assessed using a measure of income, as recorded in the Household Below Average Income series (HBAI). However, income is an imperfect measure of living standards. Previous analysis suggests that some children in households with low income do not have commensurately low living standards. This report aims to document the extent to which this is true, focusing on whether children in low-income households have different living standards depending on whether their parents are employed, self-employed, or workless.
A preview of the PDF is not available
... Analogous observations were made for children in Portugal (Bastos et al, 2004). With respect to child poverty in the UK, Brewer et al (2009) find that as household income rises, children's levels of deprivation first rise and then fall. ...
... It follows that attempts to combine or contrast findings using such flawed measures will result in compounded errors and inevitably lead to different groups being identified as poor. In seeking to explain differential findings of monetary and non-monetary child poverty in the UK, for example, Brewer et al (2009) question the reliability of the income measure with respect to its equivalence scale and indicator for disposable income. At the same time, they consider measures of living standards potentially practically or conceptually flawed. ...
... Yet they refute such error to be the sole explanation for limited association between poverty measures as only a small proportion of those having exited income-based poverty also fared better with respect to multidimensional aspects of poverty. Similarly, Brewer et al (2009) challenge the role of measurement error in explaining differential poverty outcomes in the UK for conceptual reasons, stating that they are "fundamentally different concepts". ...
Article
Full-text available
An expanding evidence base suggests that children experiencing monetary and multidimensional poverty are not the same. This article breaks new ground by providing a unique mixed methods investigation of drivers of child poverty mismatch in Ethiopia and Vietnam, considering the role of measurement error and individualistic and structural factors. The analysis capitalises on large-scale secondary quantitative panel data and combines this with purposively collected primary qualitative data in both countries. It finds that factors at the household and structural level can mediate the effects of monetary poverty in terms of multidimensional poverty and vice versa, but that the size and sign of these effects are specific to place and time. The policy mix aiming to reduce all forms of child poverty need to be targeted on the basis of a multidimensional assessment of poverty and reflect the complex and context-specific interactions between determinants of child poverty.
... The unexpectedly high level of participation in the lowest vigintile remains after the introduction of controls and many studies have pointed to possible under-reporting of income in surveys, especially at the bottom of the income distribution (Brewer et al., 2009). Certainly, the lowest vigintile is very heterogeneous in composition, including the highest proportion of students (and young people) across all vigintiles, over 6 per cent of the self-employed (a proportion only exceeded among the richest 15% of the population), and the highest proportion of unemployed in the overall sample. ...
... Certainly, many other studies tell a similar story (i.e. Menchik and Weisbrod, 1987;Auslander and Litwin, 1988;Brewer et al., 2009). As with the overall measure of participation, scores of social participation and trust recover slightly in the lowest vigintiles. ...
... As with the overall measure of participation, scores of social participation and trust recover slightly in the lowest vigintiles. While this might relate to income measurement (Brewer et al., 2009), this finding is consistent with the dense neighbouring networks found in some low income communities that are in turn associated with high levels of trust (Li et al., 2005). The patterning of the coefficients suggests that the floor occur at a similar level in all three dimensions (Figures 2b-d); however, the relationship between income and trust is less linear than that for social participation and deprivation. ...
Article
Peter Townsend argued that poverty could be scientifically measured as a ?breakpoint? within the income distribution below which participation collapses. This paper stands on Townsend's shoulders in measuring the level of poverty and participation by: (1) broadening his original measurement of participation; (2) using Structural Equation Modelling (SEM) in conjunction with a new dataset including 40,000 households (Understanding Society, 2011; 2013); and (3) taking into account the multi-cultural/ethnic nature of British society. We find that participation ? defined as lack of deprivation, social participation and trust ? reduces as income falls but stops doing so among the poorest 30 per cent of individuals. This may be indicating a minimum level of participation, a floor rather than a ?breakpoint? as suggested by Townsend, which has to be sustained irrespective of how low income is. Respondents with an ethnic minority background manifest lower levels of participation than white respondents but the relationship has a less linear pattern. Moreover, the floor detected for the overall population is also replicated when combining all respondents from ethnic groups.
... Non-capability-inspired analysis provides valuable evidence on this topic, too. Drawing on data from the UK, Brewer et al. (2009) show that across a majority of the income range, children in workless families experienced higher levels of material deprivation than children in families where someone is employed, with those in the families of where someone was self-employed experiencing the lowest average deprivation (2009: 92). Similarly, Berthoud et al. (2004: 66) find that after controlling for income, variables such as work status, income source, education and housing tenure all remained important in explaining between-group differences in material deprivation, using cross-sectional data from the UK. ...
... The bottom three per cent of households in both the current and five-year income distributions have been removed because of concerns regarding the quality of data in these percentiles. Specifically, previous studies have found that the living standards reported by those on the very lowest incomes seem considerably higher than one would expect from looking at their position on the income distribution alone (see below, and Brewer et al., 2009;Berthoud et al., 2004). ...
... Below about £90 per week, the probability of deprivation actually falls, contrary to what would normally be expected, but in line with previous analysis (e.g. Brewer et al., 2009). Respondents reporting the very lowest incomes have, on average, a considerably lower probability of deprivation than one would expect given the level of their current income alone, which has led to questions about whether the income data in these lowest percentiles are robust (ibid). ...
Article
Full-text available
The claim that there are “conversion factors” between people's resources and their capabilities is fundamental to motivating the capability approach, yet is empirically relatively under-examined. The few analyses which exist focus typically on one group—disabled people—and focus overwhelmingly on current income as the relevant measure of resources. This article extends existing analysis on both fronts, analysing conversion factors for a broader range of groups than are typically considered and estimating conversion factors using both a current and five-year average measure of income. It is found that conversion factors based on a five-year average of current income are 40–45% lower than those based on current income. However, a conversion-adjusted income measure, whether based on current or five-year average income, still does not reflect “command over capabilities” because conversion factors are estimated on the basis of group averages, while needs vary for different groups and different households. The article concludes that understanding more clearly the nature of the conversion between resources and functionings or refined functionings represents an important task for those working with the capability approach.
... Brzozowski and Crossley (2011) show that this balance edit substantially reduces apparent dissaving at the bottom of the reported income distribution; crucially, a comparison of responses before and after the additional 'balance-edit' questions show that it corrects under-reporting of income to a greater extent than under-reporting of expenditure. More tellingly, Brewer et al. (2009) show, when looking at households with children in four different household UK surveys, that the tick-shaped pattern between income and expenditure also exists when using many other measures of, or proxies for, living standards. This set of measures and proxies are collected in a variety of different ways and have different conceptual properties; this strongly suggests that over-recording of spending in the LCFS cannot be the sole explanation for the expenditure tick. ...
... If households have access to credit markets, they could, of course, be borrowing to cover excess of their expenditure over their income. Brewer et al. (2009) investigate the relationship between a number of proxies for living standards using two longitudinal surveys (the BHPS and the Families and Children Survey) and show that, even when income is measured using an average over three consecutive waves, those with the lowest reported income have living standards that are higher than might be expected. For the higher living standards to be supported by borrowing over the 8 These data in the US allows Aguiar and Bils (2011), for example, to construct a measure of spending from the Consumer Expenditure Survey equal to reported income less reported saving. ...
Article
Full-text available
We document that households in the UK with extremely low measured income tend to spend much more than those with merely moderately low income. This phenomenon is evident throughout three decades worth of microdata and across different employment states, levels of education and marital statuses. Of the likely explanations, we provide several arguments that discount over-reporting of expenditure and argue that under-reporting of income plays the major role. In particular, by using a dynamic model of consumption and saving, and paying special attention to poverty dynamics, we show that consumption smoothing cannot explain all the apparent dissaving.
... Main and Bradshaw (2014) draw similar conclusions for children in the United Kingdom. Brewer et al. (2009) point towards a 'hump-shaped' profile: as household income increases, children's levels of deprivation first rise and then fall. Bastos et al. (2004) find that children in Portugal suffering income poverty and non-monetary deprivations are not necessarily the same despite lack of income being a strong predictor of deprivation in other areas. ...
Article
Full-text available
Although the multidimensional nature of poverty is widely recognized, the extent to which monetary measures can serve as a proxy for non-monetary measures remains unresolved. This is of particular concern for children given their dependence on others for fulfilment of basic needs and assumptions about intra-household distribution that underpin monetary measures. This article adopts an innovative mixed-methods approach to investigate child poverty overlap and mismatch in the low- and middle-income countries of Ethiopia and Vietnam using secondary longitudinal survey data and primary qualitative data from adults and children. Findings indicate that monetary and multidimensional poverty are distinct constructs that are linked, but cannot serve as a proxy for one another. While the degree of dissonance depends on the types of indicators under consideration, poverty mismatch persists regardless of time, place and multidimensional measure under consideration. © 2017 The Authors. Development and Change published by John Wiley & Sons Ltd on behalf of Institute of Social Studies
... This spectrum ranges from the wealthy and those who are securely on middle incomes, through those with modest but adequate means, to those who are near or below the poverty line, to those in severe poverty and, at the bottom, those who are destitute. There is growing acceptance that the poverty line is best defined with reference to a combination of low relative income and lack of socially perceived material necessities (Townsend 1979; Mack and Lansley, 1985; Gordon and Pantazis, 1997; MacKay and Collard, 2004; Pantazis et al., 2006; Guio, 2010; PSE, 2011; Hick, 2013; Lansley and Mack, 2015), and severe poverty may also be defined on this basis (Brewer et al., 2009). JRF's Minimum Income Standards (MIS) research provides a similar framework (Bradshaw, 1993; Hirsch, 2011). ...
Book
Full-text available
reviews existing evidence about destitution in the UK;  analyses expert definitions of destitution;  provides new evidence on the general public's views on destitution;  summarises early results from a statistical analysis of households in severe poverty and potentially at risk of destitution. The Joseph Rowntree Foundation (JRF) commissioned this paper as part of its programme on destitution, which aims to help explain the causes of destitution and identify ways to reduce it. ISBN 978 1 90958 685 7
Book
Income is the most commonly used measure of material well-being. In a modern-day mixed economy, such as the UK, an individual’s money income is the preeminent measure of their command over resources. This chapter describes the UK income distribution and how it has evolved over the last 50 years. It also includes some comparisons with the income distributions of other rich countries. The chapter provides multiple perspectives on the distribution of income over time focus on both the top and the bottom of the distribution as well as the spread of incomes: there is evidence about real income levels and inequality, and the prevalence of affluence and of poverty
Book
Full-text available
This report defines destitution in the UK, looking at how many people are affected, who they are, and the main pathways in and out of destitution. It looks at the impact and experience of those people directly affected.
Article
This paper addresses the issue of parental employment and hours of work and their impact on children's educational outcomes at the age of 16. I contribute to existing research by applying more accurate measures of parental time spent outside the household—using direct measures of hours spent at work and commuting, and by examining the independent effect of mothers’ and fathers’ work involvement, as well as their joint effect. Additionally, I use longitudinal datasets that allow for the examination of the impact of parental hours of work in the preceding year on the child's exam results in the following year. In contrast to previous studies, which focus on the early development of the child, I examine the parental employment while the child is preparing for a final secondary school certificate. My results show that there is a statistically significant and positive association between parental engagement in the labour market and number of final secondary school exams taken by the child. In contrast, I found that children whose parents work very long hours perform worse at the GCSE (General Certificate of Secondary Education) level. This result holds even if unobservable family characteristics are taken into account in family-fixed effects’ and siblings’ estimations.
Article
Full-text available
Interim report of the Fuel Poverty Review
Article
Full-text available
Our aim is to analyse both the incidence and distribution of economic hardship in three countries - Finland, Britain and Sweden - using measures of relative deprivation. The study represents a unique endeavour as our comparisons are based not on income data but on direct observations of consumption of goods and services. The method applied has been developed from the consensual poverty approach pioneered by Mack and Lansley (1985). Hence, what we will observe is the inability to consume socially perceived necessities, both goods and activities, because of lack of income. The preliminary results contradict, to a large degree, findings derived from more traditional studies based solely on income data. They also reveal a detailed picture of the way relative deprivation is structured within countries and the differences that prevail between the three countries. The analysis represents a first step in an effort to develop alternative tools when comparing poverty and economic well-being between countries.
Article
Full-text available
This paper presents an analysis of the trends in inequality across income, earnings and consumption in the UK since 1978. It shows the episodic nature of inequality growth over this period largely dominated by the inequality 'boom' in earnings inequality of the 1980s. It presents a consistent picture across these key measures of inequality that can be used to provide a coherent link between the microeconomic and macroeconomic analysis of the evolution of inequality.
Article
Full-text available
A key finding of recent poverty research is that there is a significant mismatch between poverty measured using an income approach and poverty measured directly in terms of observed deprivation or other indicators of unacceptably low living standards. The mismatch is substantial and is typically in the range of 50% to 60%. This paper takes this mismatch as a springboard for discussion on the conceptualisation and measurement of poverty. A key purpose of the paper is to identify the relevant international literature and report on some of the findings, including some comparisons for New Zealand using data from the 2000 Living Standards Survey. The findings are set out in the context of a general framework for understanding the mismatch and lead to a discussion of the implications for the conceptualising and measurement of poverty, and for reporting on poverty trends. The paper advocates the use of a suite of measures rather than a single measure to better capture the multi-dimensional nature and complexity of poverty, and especially to assist with the understanding of the factors and processes that contribute to the exclusion of citizens from a minimum acceptable way of life in their own society because of inadequate resources.
Article
Introduction Poverty and social exclusion have recently been measured in a major British study -the Poverty and Social Exclusion Survey (PSE). This is one of the largest poverty surveys ever carried out in Britain. Many people were involved in this work and this paper describes the combined efforts of researchers at the University of Bristol, a team at the University of York and at the Universities of Loughborough and Heriot Watt. The survey itself was carried out by the Office for National Statistics -in particular, the Omnibus Team and staff involved in the General Household Survey (GHS). The survey is of a particularly high quality because it was carried out as a follow-up to the GHS which has the highest response rates of any government social survey. The PSE covered a lot of different aspects of poverty and social exclusion. It is the first time any attempt has been made to operationalise -to go out and directly measure -social exclusion. The survey also asked questions about 'absolute' and 'overall' poverty, the necessities of life, intra-household poverty, social networks and support, perceptions of poverty, local services, poverty and time, health, housing, crime and a whole range of other subjects. It is not possible, in a few thousand words, to discuss all the findings from the PSE so this paper will concentrate on theoretical and measurement issues, particularly whe re they concern the dynamics of poverty.
Article
Income and expenditure measures are commonly used to establish poverty lines representing, respectively, the availability of cash resources and the standard of living approaches to measuring the extent and composition of poverty. Using UK data we compare these two measures and show how they might be combined. Although overall poverty rates are similar whichever measure is used, the relativities they imply for different types of household differ considerably. There is little overlap between income and expenditure poverty and very few households are both income–and expenditure–poor. The concept of poverty as constraint on choice or constrained expenditure is then defined as the absence of spending on durable goods and luxury items. Using logistic regression, income thresh–olds associated with the observed levels of constrained expenditure are derived for different types of household. Assuming all income is spent, these thresholds define a poverty line below which expenditure is severely constrained. The extent to which social assistance rates limit or prevent household expenditure is also estimated. The method and the estimates illustrate the value of exploring the links between income and expenditure in the measurement of poverty, drawing attention to the limitations of the data, and identifying future research needs.