What do we mean by being ‘poor’? 

Being poor means different things to different people in different parts of the world. 

Not having enough money to take part in activities most people enjoy or buy the things you need (e.g. food, clothing) is a common association.

In fact, the international poverty line for measuring the poorest used to be one US dollar a day. In other words, this measure suggests that a person is considered poor if they consume less than an American spending $1 per day. However, this was set some time ago and it’s now reckoned to be nearly double that in line with rising prices.

However, when you measure poverty by money alone, you miss out on some of the other factors that make and keep people poor. For this reason, the Oxford Poverty and Human Development Initiative (OPHI) was set up to take other factors into account in the hope of eventually eliminating poverty. OPHI is an economic research and policy centre based within the Department of International Development at the University of Oxford

More than money

Dr Ana Vaz, a Senior Research Officer at OPHI, says ‘poverty is not just about money. It includes a whole range of things such as lack of choices and opportunities.’ For example, the choice to send your children to school or to gain the employment you want. 

‘Poor people themselves consider their experience of poverty much more broadly than not having enough money or enough to eat. A person who is poor can suffer from multiple disadvantages at the same time. They may have poor health or malnutrition, a lack of clean water or electricity, poor quality of work and little or no schooling. Focusing on one factor alone is not enough to capture the true reality of poverty.’ 

Plus, the inability to satisfy basic needs such as eating and sleeping can have a powerful knock-on effect. Dr Vaz explains that ‘If you don’t get enough to eat you’re much less likely to be healthy. So you can’t take part in activities that need a healthy body such as walking to school, finding paid work or looking for food.' And these problems can be made worse when there is a lack of proper sanitation (flushing toilets) and safe drinking water at home, and there’s limited access to basic health care.

On top of hygiene problems, there are greater security risks with cheap housing. Dr Vaz points out that ‘Often there can be a lack of security in very cheap housing - it may be impossible to secure doors and windows making people a target for crime. So the few possessions you may have are at risk of theft. And poorer areas may have little or no policing. All of this feeds into a sense of powerlessness that poverty can bring. You cannot do the things you want to and join in with the rest of society. It’s isolating.'

So while we might assume that what poor people need most is simply more money, this doesn’t take into account what their money can buy depending upon where they live. So for example, if you live somewhere that has low-quality transport routes, schools, health care or water supplies then more money alone isn’t going to help you overcome these massive disadvantages. 

And so if you’re poor in a rich country there is, in theory, more opportunity to improve your life. If you’re born into a country without those things you can be trapped in poverty without a practical way to move out of your situation. 

Measuring poverty

Through the work of its researchers, OPHI tries to find a way to measure poverty in a more comprehensive way to try to find out who is poor, why they are poor, how they are poor and the diverse range of different disadvantages they experience. 

The Global Multidimensional Poverty Index (MPI) was launched by the OPHI team and United Nations Development Programme in 2010. It is an international measure of severe poverty covering over 100 developing countries. This measure captures the deprivations that people face at the same time with respect to education, health and living standards. The same methodology - the Alkire-Foster method - has been adapted by several countries to measure what poverty means to them, as being poor can mean slightly different things depending upon where you live.

What else is important to consider? 

Although not having enough to eat is a clear indication of being poor there are other things that the MPI looks at. One of them is whether any child in the family has died. Since most child deaths are preventable (e.g. diarrhoea and contagious diseases), this generally indicates poor health conditions and nutrition. 

Recognising the importance of education, the MPI takes into consideration the years of schooling of people in the household, and whether children are still attending school. 

The MPI takes into account the assets owned by the household, such as a car, a bicycle, a motorbike, TV, fridge, radio and phone. 

The index also looks at whether a home has flooring, access to clean water, sanitation, electricity and what type of cooking fuel is used. In some parts of the world, the only way of cooking food is to use wood and charcoal. But this can reduce living standards since breathing in toxic fumes is bad for your health. 

‘We use all of these household indicators to show the deprivations of people. We add them up and get a score for each individual. If a person is deprived in at least one third of the indicators - if their score is a third or more - the person is considered poor,’ says Dr Vaz.

As mentioned above, the structure of the MPI has been adapted by several countries to create measures that better reflect their national contexts and priorities. Some countries have added indicators on employment, while others have added indicators related to safety, environment, and social networks, among others. 

Could we ever end poverty?

So being poor isn’t just about not having enough money but could it ever be possible to end poverty? 

Dr Vaz is hopeful. ‘Personally, I think poverty could be ended if there’s the will. All of us have to want it.’ 

‘And we are moving in that direction with better policies aimed at lifting people out of poverty. Progress has already been made and I believe eventually it will be possible for everyone in the world to live above a minimum. That’s why we have created the index for measuring poverty: to make sure everyone lives above a minimum standard and to aid agreement on what this really means.’
 

There are many theories on how to reduce poverty. One idea which has been around for a long time but is gaining appeal is to pay everyone a basic income so that no one is really poor and everyone has something. But there is a lot of debate about the value of such a scheme. Let’s delve deeper…

What do we mean by universal basic income? 

A universal basic income is an amount of money paid to everyone by the government with no restrictions, no questions asked and no forms to fill. You get it as a right. Children would get it too as it’s an individual payment made to everyone, not just to a household. However, parents or guardians would probably be in charge of their children’s income until they reached a certain age.

What are the key arguments for a universal basic income?

The arguments in favour of a basic income aren’t just about money. It’s a way to give people greater freedom, explains Professor Stuart White from the University of Oxford’s Politics and International Relations Department. 'If you have an income that’s your own this gives you the freedom to decide whether to work or not and what kind of work to do. So you are less at risk of being forced to do things you don’t want to by other people such as an employer, a family member or the government. If you have enough money to meet your basic needs you wouldn’t have to do work you hated just so you can eat,' he says. 

Those in favour of a basic income say it’s also about fairness. Certain things such as land could be seen as owned by everyone. We all inherit nature and a basic income is one way to ensure everyone gets a fair share. 'Basic income gives you the kind of cash equivalent of this claim,' adds Prof. White.

Furthermore, it’s seen by some as an effective anti-poverty device, far more effective than benefits for which you have to meet certain conditions. It’s simple to understand and cheaper to distribute than benefits which are complicated and require a lot of form-filling. This can put some people off applying for benefits they’re entitled to. 

What are the arguments against a universal basic income?

There are three main counter-arguments against a basic income.

Firstly, there are concerns that implementing a universal basic income will cause the economy to crash as no one will work if they don’t have to. Nothing would get made, nothing would get done and nothing would be bought and sold. However, this is assuming that the basic income is set at a rate you can live on.

Secondly, some argue that it will be impossibly expensive and taxes will have to be very high to pay for it. It could also affect the government’s ability to fund other vital services such as health care.  

The third objection is that it’s unfair. 'The argument is that if you’re able to work you should do your bit. Otherwise, some people will be living off the labour of others. So while some work hard, others get a free ride. Again this assumes that no one would work unless they had to,' explains Prof. White.

Has a basic income for all ever been tried out? 

A limited experiment is currently being carried out in Finland. It began in January 2017 and will last for two years. In the experiment, 2,000 randomly-selected people are given the equivalent of £490 a month. This isn’t a universal basic income scheme as it was originally designed though as it doesn’t go to everyone. It’s only paid to people who are unemployed as a way to test if people will still try to find work if they get a basic income. The original idea is that you don’t lose the basic income if you have a job. You get it whether you’re working or not. It’s seen as an income top-up or subsidy rather than a replacement for wages. It aims to make sure that everyone has enough to live on. 

Other trials are taking place in Canada, India, Kenya and Uganda, all at different stages. But we won’t get any results for a while. Scotland may be launching a scheme in 2020. 

The American state of Alaska comes closest to handing out a universal basic income. It has an investment fund owned by the state government set up in the 1970s after selling its oil rights. A fraction of the annual return on that investment is paid every year to all Alaskan citizens, including children. The amount varies from $1,000 to $2,000 per person (around £750 to £1500). And so a family of four can get up to $8,000 (around £6,000). 'And interestingly, Alaska has a relatively low level of income inequality. Some say that’s due to this fund as it helps to reduce income inequality but there isn’t hard evidence for that,' adds Prof. White. 

Could a universal basic income end poverty? 

Prof. White thinks a universal basic income could go some way to ending poverty. 

'The argument against this goes, "don’t give it to rich people, only give it to the poor who need it the most". But the problem with targeting benefits at the poorest is that many don’t want to be labelled poor or a charity case. Applying for money from the state still carries a stigma (a sense of disgrace or shame) for some people. A basic income avoids this, and ensures that everyone gets some money and no one is left with absolutely nothing to live on,' he says.

In the UK, we already have some forms of basic income. The NHS is universal and everyone benefits no matter how much money they have. 'The fairness argument doesn’t seem to apply to the NHS,' Prof. White points out.

Also, people in the UK over the age of 67 are provided with money to live on, such as the state pension, regardless of whether they need it or not. This isn’t generally regarded as unfair. While it’s true that many pensioners will have worked all their lives and paid taxes, not all of them have. There are other similar schemes such as the Winter Fuel Allowance, free bus passes, rail discounts, and child benefit (which, although no longer universal, still goes to most parents). 

There is also discussion around giving a basic income just to young people from the ages of 18 to 25 to make up for the high cost of living for them compared to how much cheaper starting adult life was for previous generations. 

The debate about this continues to be a hot topic. What do you think?

Prof. Dorling suggests that, when it comes to defining poverty, the explanation by the late sociologist Peter Townsend is a good place to start. For Townsend (1979), someone can be said to be poor when they lack the resources to have the types of diet, participate in the activities and have the living conditions and home comforts, which are expected (or at least widely encouraged) in the societies that they belong to. 

In other words, to be poor is when you can’t afford to have and to take part in the things that most people in your society enjoy and/or take for granted. This way of thinking is similar to that used by researchers at the Oxford Poverty and Human Development Initiative to develop the Global Multidimensional Poverty Index (MPI) as discussed earlier in this Big Question. 

Yet, determining what these expected living conditions, activities and material items are for a particular society at a particular time can be a difficult business. But each year a team of researchers at Loughborough University take on this very challenge. 

For example, they have identified that, since 2008, a computer with an internet connection has become a standard household requirement within a family home. 

In more recent years, parents and guardians have placed an increasing emphasis on choice of childcare - expecting to have options rather than having to settle for the cheapest one. This may have been influenced by the release of research that early years education can have a powerful impact on a child’s ongoing development. 

The cost of living 

The same team at Loughborough University also work out the Minimum Income Standards (MIS) each year. This is a calculation of ‘how much income households [in the UK] need to afford an acceptable standard of living’. 

In 2017, the team calculated that a single person needs to earn £17,900 a year before tax to reach MIS; a dual-earner couple with two children requiring childcare need to earn £20,400 each, and a lone parent with a preschool child must earn £25,900. 

These are not easy figures to reach when the same research showed that the costs of key services needed for travelling to work are rapidly increasing. The cost of bus and coach travel went up by a whopping 17% in 2017 and of car use and ownership by 8%! 

In fact, in 2018, the team discovered that the financial pressures placed on people were even greater than they originally thought. This is largely because in the last ten years living costs (food, housing, utility bills etc.) have risen at such a fast speed (known as inflation), and peoples’ wages have not been able to keep up. This has left families struggling to afford the essentials needed for a ‘good’ standard of living.    

What’s the reality? 

The series of graphics below show the reality for families living in the UK and how the population can be broadly said to be made up of five economic groups: 

What does the future hold? 

Prof. Dorling explains that ‘the UK is now the most economically unequal large country within Europe.' And this is largely about distribution i.e. how income is shared among different groups in society. The UK had a wider distribution of incomes by 2015 than any other country in Europe - apart from one or two of the small Baltic states.

Wealth inequalities within the UK have also grown greatly in recent decades and that has not happened by accident.

Prof. Dorling suggests that ‘We have an ever-growing population of super-rich in the UK that try to influence policy to both maintain their power and limit the extent to which poorer groups in society can improve their situation. And so current trends show that the rich are getting richer and the poor are getting poorer.’

‘By 2014 the combined wealth of the 1000 richest people in the UK had risen to 519 billion pounds - a 55% rise in just four years. These were the same four years in which most other people in the UK became poorer, in which food banks became normal, and the number of housing evictions rose. Just spreading that rise over every family living in the UK would have made each, more than £6000 better off’. 

‘A year later in 2015, the wealth of the 1000 richest families had grown again by 28 billion in little more than a year. In 2016, 2017 and 2018 their wealth continued to grow but not quite so quickly if measured in dollars as the pound fell in value.' (The international super-rich count their wealth in dollars as they travel so much and so often own property in many different countries.)

‘If these trends continue, the UK will become a place where the majority of people will pay most of their future income in rent to the rich for all of their lives. But clearly things can’t continue like this and they don’t have to…’ 

‘Falls in the value of property will narrow the wealth gap, and after June 2016 property prices in London began to fall and are still falling in 2018.' 

‘Many countries have significant wealth taxes and the UK may in future introduce one of these to help pay the costs of having a fairer society.' 

‘There are also a growing number of very wealthy people who argue that these inequalities have now grown far too wide. And a hugely larger number of less well-off people are found to agree when surveyed. Inequalities never continue to grow larger forever.'