Why is it so hard for people to agree on poverty?
Despite a wealth of evidence, statistics and measurements of social indicators, there is still widespread disagreement about what poverty means in New Zealand. Let alone how to measure it.
Intelligent and well-meaning people from across the political spectrum are as intent on arguing the numbers as they are on arguing the most effective solutions.
So what gives? Is contending the statistics a necessary part of public debate? Or is it a distraction from actually helping those most in need?
The New Zealand Initiative has released Poorly Understood: The state of poverty in New Zealand, written by Bryce Wilkinson and me.
Our report highlights the complexity of the issue, the subjectivities that exist and the difficulties in balancing policy that alleviates poverty, while still discouraging moral hazards and adverse selection.
Too often, the public conversation on poverty is over-simplified, hyperbolic and recommends action before understanding the problem. Setting an official poverty definition or measurement, or an official target for reducing poverty, will not solve that problem.
The report argues that in developed countries like New Zealand, poverty is a subjective term. It is evocative, too.
Often, it is a call to compassionate action. There are some who would argue that people who think there is poverty in New Zealand need to visit the Third World and appreciate what real struggle looks like.
There are others whose conception of poverty is more about social exclusion, where people lack the resources to fully participate in social life.
Definitions can even imply who is to blame. Words like “deprived” or “denied” suggest there is some external force or agent that causes poverty.
Subjective definition
Besides, who gets to decide who should be defined as being in poverty? There are some people on low incomes who may not view themselves as in poverty. Meanwhile, there may be some households on higher incomes who are nevertheless struggling.
Even definitions of basic needs take on a subjective or relative nature in developed countries such as New Zealand.
Even if a significant majority of New Zealanders were to agree on how poverty is to be defined (which is no small feat in itself), it is unclear what an official definition for poverty would achieve, unless it were paired with a way of measuring it and a call for action.
And that’s when things get tricky.
The government already collects data on a range of social indicators, has set Better Public Services targets, is beginning to test the effectiveness of policy programmes and tracks the outcomes of at-risk groups. It is not as if setting an official measurement will improve the collection of data.
The Ministry of Social Development also collects evidence on a range of income and non-income based indicators related to poverty, inequality and hardship.
As the Salvation Army has recently pointed out, setting targets is not an apolitical task. A target for relative income poverty may not reflect true changes in a household’s living standards. The poverty rate could decrease if the median income decreases and vice versa. The income poverty rate could increase even if the poorest household’s circumstances improve in real terms.
‘Do not have enough’
Meanwhile, targets for relative material hardship pose problems as not everyone may agree on the criteria that constitutes hardship. As a self-reported measure, it shows the degree to which households “do not have enough” to afford goods or services society would deem important. Measures such as the EU-13 (one of the most prominent measures) include absolute hardship indicators such as being able to keep the home adequately warm or having access to a car/van for personal use. But it cannot give insight into why people are in that position.
The more detailed and narrow the target, the more likely it is that other relevant considerations could be left out. Targets for household income poverty may overlook the value and variety of support households can receive from friends, family and charities.
Targets for material hardship that ignore income may miss out on the insight into why people cannot afford the things on the list of indicators. Is it simply due to lack of money or because people are spending the money on other things of value?
Which brings me to my last point. An official measurement target is almost inevitably a call to arms. But whose responsibility is it to address poverty? Should it be a sole government target? Or is addressing poverty a social responsibility?
If it is a government target, then a careful balance must be made between poverty alleviation and incentivising moral hazards or adverse selection. For example, a generous unemployment benefit could disincentivise fit and able people to seek work.
Then again, if it is a target for society to meet, would that be enough to spur action? And who is to blame if the target is not met?
The New Zealand Initiative’s report on poverty was not written to debate mere semantics, or to keep the conversation on poverty purely in the realm of academia. But for effective, long-lasting and evidence-based poverty alleviation, being clear about what the problem is in the first place is a good start.
Poverty is indeed complex but embracing the complexity may just be part of the solution.