On Poverty and Low Income
Ivan P. Fellegi
Chief Statistician of Canada
Recently the news media have provided increasing coverage of Statistics
Canada’s low income cutoffs and their relationship to the measurement
of poverty. At the heart of the debate is the use of the low income cutoffs
as poverty lines, even though Statistics Canada has clearly stated, since
their publication began over 25 years ago, that they are not. The high
profile recently given to this issue has presented Statistics Canada
with a welcome opportunity to restate its position on these issues.
Many individuals and organizations both in Canada and abroad understandably
want to know how many people and families live in “poverty”,
and how these levels change. Reflecting this need, different groups have
at different times developed various measures which purported to divide
the population into those who were poor and those who were not.
In spite of these efforts, there is still no internationally-accepted
definition of poverty unlike measures such as employment, unemployment,
gross domestic product, consumer prices, international trade and so on.
This is not surprising, perhaps, given the absence of an international
consensus on what poverty is and how it should be measured. Such consensus
preceded the development of all other international standards.
The lack of an internationally-accepted definition has also reflected
indecision as to whether an international standard definition should
allow comparisons of well-being across countries compared to some international
norm, or whether poverty lines should be established according to the
norms within each country.
The proposed poverty lines have included, among others, relative measures
(you are poor if your means are small compared to others in your population)
and absolute measures (you are poor if you lack the means to buy a specified
basket of goods and services designated as essential). Both approaches
involve judgmental and, hence, ultimately arbitrary choices.
In the case of the relative approach, the fundamental decision is what
fraction of the overall average or median income constitutes poverty.
Is it one-half, one-third, or some other proportion? In the case of the
absolute approach, the number of individual judgements required to arrive
at a poverty line is far larger. Before anyone can calculate the minimum
income needed to purchase the “necessities” of life, they
must decide what constitutes a “necessity” in food, clothing,
shelter and a multitude of other purchases, from transportation to reading
material.
The underlying difficulty is due to the fact that poverty is intrinsically
a question of social consensus, at a given point in time and in the context
of a given country. Someone acceptably well off in terms of the standards
in a developing country might well be considered desperately poor in
Canada. And even within the same country, the outlook changes over time.
A standard of living considered as acceptable in the previous century
might well be viewed with abhorrence today.
It is through the political process that democratic societies achieve
social consensus in domains that are intrinsically judgmental. The exercise
of such value judgements is certainly not the proper role of Canada’s
national statistical agency which prides itself on its objectivity, and
whose credibility depends on the exercise of that objectivity.
In Canada, the Federal/Provincial/Territorial Working Group on Social
Development Research and Information was established to create a method
of defining and measuring poverty. This group, created by Human Resources
Development Canada and social services ministers in the various jurisdictions,
has proposed a preliminary market basket measure of poverty – a
basket of market-priced goods and services. The poverty line would be
based on the income needed to purchase the items in the basket.
Once governments establish a definition, Statistics Canada will endeavour
to estimate the number of people who are poor according to that definition.
Certainly that is a task in line with its mandate and its objective approach.
In the meantime, Statistics Canada does not and cannot measure the “level
of poverty” in Canada.
For many years, Statistics Canada has published a set of measures called
the low income cutoffs. We regularly and consistently emphasize that
these are quite different from measures of poverty. They reflect a well-defined
methodology which identifies those who are substantially worse off than
the average. Of course, being significantly worse off than the average
does not necessarily mean that one is poor.
Nevertheless, in the absence of an accepted definition of poverty, these
statistics have been used by many analysts to study the characteristics
of the relatively worst off families in Canada. These measures have enabled
us to report important trends, such as the changing composition of this
group over time. For example, 20 to 30 years ago the elderly were by
far the largest group within the “low income” category, while
more recently lone-parent families headed by women have grown in significance.
Many people both inside and outside government have found these and
other insights to be useful. As a result, when Statistics Canada carried
out a wide-ranging public consultation a decade ago, we were almost unanimously
urged to continue to publish our low income analyses. Furthermore, in
the absence of a generally accepted alternative methodology, the majority
of those consulted urged us to continue to use our present definitions.
In the absence of politically sanctioned social consensus on who should
be regarded as “poor”, some people and groups have been using
the Statistics Canada low income lines as a de facto definition of poverty.
As long as that represents their own considered opinion of how poverty
should be defined in Canada, we have no quarrel with them: all of us
are free to have our own views. But they certainly do not represent Statistics
Canada’s views about how poverty should be defined.
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