Introduction

The poverty line studies described in the previous chapter represent a first step in the process of identifying who is at risk of experiencing poverty. However, they need to be accompanied by other evidence demonstrating that this risk cannot be avoided and translates into an unacceptable standard of living to confirm that poverty exists. This will involve drawing on data that tap more directly into the circumstances of those at risk and interpreting these data in ways that overcome the limitations of income-based studies. Applying this approach will introduce new controversies and potential areas of disagreement over the precise form that these methods should take.

This chapter explores one approach that uses data on household spending patterns, wealth holdings and the incidence of financial hardship to refine incomebased poverty estimates. The use of broader measures of economic resources than just income and the idea that the existence of poverty must be demonstrated using evidence on living standard outcomes are features of the deprivation approach discussed in the next chapter. Their use in this chapter illustrates the potential of the underlying ideas to extend and improve poverty line studies, but the precise methods adopted are indicative and the estimates presented are best regarded as experimental.

It is more than a century since Seebohm Rowntree undertook the first poverty line study in York, England (see Rowntree, 1901; Bradshaw and Sainsbury, 1999). Since that pioneering study, two main approaches have been developed to improve the methods used to identify poverty. The first draws on information on economic resources other than income to establish whether those identified as poor have the capacity to satisfy their needs by drawing on these resources. Those with access to such resources can (if they are adequate) be regarded as having the option not to be poor, and can thus be removed from the poverty counts. The second approach draws on outcome data to validate the implicit assumption that low income translates into an unacceptable standard of living. Those whose living standards do not appear to be unacceptable can also be regarded as not poor and removed from the numbers in poverty. These two refinements will be referred to as the resource exclusions approach and the validation approach, respectively.