A focus on poverty [updated]

09/05/2012 § 1 Comment

Just through my inbox is an announcement from Treasury about poverty research at the University of Otago (also picked up by Scoop):

The Treasury welcomes the release of research published today from Otago University that looks at income mobility and deprivation in New Zealand. The work provides evidence on the degree to which New Zealanders’ income levels have changed over time, assists a better understanding of persistent low income and deprivation in New Zealand and helps policy-makers to better understand income mobility and persistent deprivation.

I’ve had a look through the first pages of the report (pdf). Overall, it’s good to have someone analysing this data and telling us about longitudinal rates of poverty versus cross-section snapshots. I notice, though, that they are focused on the poverty, rather than on the lack thereof. Let me explain by discussing their Key Messages.

There is much mobility in income, both upwards and downwards over seven years

Well, that seems like good news. The income is organised by quintiles, which means it’s a zero-sum game. For every person who moves up, someone has to move down. The presence of substantial mobility suggests that people aren’t stuck — they have opportunities. Note, however, my earlier post that mobility may not be a great measure.

Where cross-sectional low income (<60% of median household equivalised income) rates were around 24% (low income estimate) the longitudinal estimate of low income prevalence over seven years is approximately double this (50%) . i.e. half of the sample experienced one or more years of low income.

On the one hand, this is troubling. Half the sample had at least one year in which the household earned less than 60% of the median. It would be great if the left tail of the income distribution were shorter and thicker. On the other hand, this suggests that half the people with a bad year of income aren’t there permanently, and that’s a good thing. The same can be said about the deprivation findings — about half are only temporarily deprived.

Approximately two thirds of people who were in low income at any one point in time were chronically in low income over a longer period of time (higher for Maori and children).

In a sense, this cuts across the longitudinal-versus-cross-sectional argument. If we take a snapshot (which is easier than doing longitudinal work), about two-thirds of those people will have chronically low incomes. So, this suggests that focusing on the currently low income is a reasonable proxy for focusing on the long-term.

Approximately 5% of people who are not in low income at one point in time were in chronic low income over a longer period of time (higher for Maori and children).

This is back to mobility — people move in and out of low incomes. What really interests me in this finding is, some low-income households are able to get out of poverty for a time. For this group, the question may be ‘how do we keep them in higher income quintiles?’, rather than ‘how do we get them out of poverty?’

Increasing duration of low income is correlated with increasing levels of deprivation.

The longer you are poor, the harder it is.

There is good news and bad news sprinkled through the findings. The overwhelming focus (at least in the summary and Key Messages) is negative — let’s focus on the ‘figure’ of poverty. They should have been a bit more positive and talked about the ‘ground’ — the transience of some poverty, the success of some households. As always, poverty and deprivation are complex.

UPDATE: The Dominion Post reported on the research on 10 May 2012. I’m not sure they got the specifics right, and may have understated the extent of poverty. I’ve submitted my comments to StatsChat Stat of the Week competition.

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