Introduction

The previous two chapters have applied the deprivation approach using Australian survey data, identified the essentials of life, examined the deprivation profile, assessed the sensitivity of the findings to changes in the methods used to derive them and illustrated their relevance with an example. This chapter extends earlier work by Saunders and Naidoo (2009) to compare the deprivation estimates with poverty rates estimated from the same data, focusing on how they differ and where they overlap. It then combines information on deprivation and poverty to produce a new poverty measure to complement the existing income-based measures (poverty lines) that were shown earlier to contain important weaknesses.

The analysis begins by comparing differences in the profiles of deprivation and poverty and then examines the incidence of specific forms of deprivation among those who are identified as being deprived or poor. The results indicate that deprivation and poverty capture different aspects of social disadvantage, but this alone does not indicate which is the better indicator. In order to address this issue, the relationship between each of them and a series of indicators of subjective well-being is investigated. This analysis is predicated on the view that a good indicator of social disadvantage should be able to predict poor well-being outcomes among those it identifies as disadvantaged.

These results suggest that deprivation provides a sounder basis for identifying disadvantage than comparing incomes with a poverty line. This does not mean that poverty studies should be abandoned and replaced by deprivation studies, since it has already been argued (in Chapter Two) that poverty line studies have much to contribute to an understanding of the risk of experiencing social disadvantage. Such studies are best viewed as part of a broader attempt to identify how different dimensions of disadvantage translate into standards of living that fail to meet community standards of acceptability.

An examination of the overlap between poverty and deprivation provides the point of departure for the development of an approach that combines evidence on low income and poor outcomes in terms of living standards. The resulting notion of consistent poverty is then applied to produce new estimates of the extent and nature of poverty in contemporary Australia.