Bridging the gap between the measurement of poverty and of deprivation

Abstract

One way of measuring the deprivation or poverty of persons is to use money based measures: a person is regarded as ‘poor’ if his/her income (or expenditure) falls below a poverty line value. Such an approach–usually termed ‘poverty analysis’–has spawned a large literature embodying several sophisticated measures of poverty. The downside to this is that low income or expenditure may not be very good indicators of deprivation. Another way, usually termed ‘deprivation analysis’, is to define an index whose value, for each person, is the number (or proportion) of items, from a prescribed list, that he/she possesses: persons are then regarded as ‘deprived’ if their index value is below some threshold value. This offers an alternative method of identifying deprived persons. The downside of deprivation analysis is that it measures deprivation exclusively in terms of the proportion of deprived persons in the total number of persons. The purpose of this paper is to bridge the gap between poverty and deprivation analysis by constructing a wider set of deprivation measures and showing, with data for Northern Ireland, how they might be applied.

Acknowledgements

The analysis contained in this paper is based on the Poverty and Social Exclusion in Northern Ireland (PSENI) Project's data set and I thank the Project leaders–Paddy Hillyard, Eithne McLaughlin and Mike Tomlinson–for permission to use these data though, needless to say, I am entirely responsible for the contents of this paper.

Notes

¹ The term person is used to indicate the unit being analysed: this could be a person, a family, or a household.

² Zheng (1997) provides a good review of this literature.

³ In order to account for differences in tastes, households which do not possess an item are distinguished by whether they did not want it or they wanted, but could not afford it. This meets Veit-Wilson's (1987) criticism of Townsend's (1979) work.

⁴ The Survey was based on a sample of 2000 addresses, with people living in institutions being excluded. The number of households resident at each address were then identified and one, or more, households from that address were selected. The interviewers then listed all the members of a household who were eligible for inclusion in the sample: currently aged 16 years or over and living at that address. From this listing of eligible persons the interviewer's computer randomly selected a person to complete the interview. For further details see Hillyard et al. (2003).

⁵ It is important to emphasize three aspects of Sen's measure: it takes account of the number of deprived persons, relative to the population, through H, the headcount ratio; it takes account of the depth of their deprivation through I, the deprivation gap ratio; it takes account of relative deprivation through G^P , the Gini coefficient calculated on the achievement.

⁶ FGT(y; 2) = H [R ²+(1 − R)²]Φ, where Φ is the (square of) the coefficient of variation, computed over the outcomes of deprived households.

⁷ For example, items which the largest number of respondents neither had nor desired were: second homes; boats; cars; dishwashers; home computers; cable television; a roast dinner every week; a decent pension; a dictionary; a daily newspaper; good clothes for an interview; a pet.