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The Dynamics of Deprivation

The Dynamics of Deprivation. Richard Berthoud and Mark Bryan ESDS Conference on Social Inequality June 2005. Department for Work and Pensions Families and Children Strategic Analysis Programme. Four data sources. Families and Children Survey (FACS) British Household Panel Survey (BHPS)

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The Dynamics of Deprivation

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  1. The Dynamics of Deprivation Richard Berthoud and Mark Bryan ESDS Conference on Social Inequality June 2005 Department for Work and Pensions Families and Children Strategic Analysis Programme

  2. Four data sources • Families and Children Survey (FACS) • British Household Panel Survey (BHPS) • Poverty and Social Exclusion Survey (PSE) • Family Resources Survey (FRS)

  3. Topics • Research aims and sources • Some findings, and some puzzles • Defining and measuring ‘deprivation’ • Measuring income • ‘Cross-sectional’ relationships • ‘Underlying’ and ‘longitudinal’ relationships • Discussion and implications

  4. Topic 1. Research aims and sources

  5. Keep home warm Two pairs shoes Money to keep home in repair Holiday away from home Replace worn out furniture Money to spend on yourself Regular savings Insurance of contents of dwelling Friends or family for a drink or meal A hobby or leisure activity Replace or repair electrical goods New FRS questions about deprivation (adults) “We have this” “We do not want/need this at the moment” “We would like to have this, but cannot afford it at the moment”

  6. The EU definition of poverty The poor shall be taken to mean persons . . . whose resources . . . are so limited as to exclude them from the minimum way of life of the member states in which they live

  7. Two interpretations of the essence of poverty

  8. The role of a deprivation index • Weak assumptions: just an indicator of living standards, which can be used to calibrate income-poverty lines • Strong assumptions: an actual measure of living standards, which can replace income in defining poverty

  9. Specific research aims • Government has pledged to end child poverty. • Development of ‘official’ measures of child poverty • New deprivation questions in FRS from this year (repeated cross-section) • Families defined as poor if they have both low income and high deprivation score • ‘Cross-sectional’: Are the poor in hardship? • ‘Longitudinal’: Do people leave hardship when they exit poverty?

  10. Topic 2. Some findings, and some puzzles

  11. Proportion of poor, middle income and well-off families in hardship: FACS 2002

  12. Hardship in wave 4, by number of waves in poverty over waves 1-4

  13. Movements into and out of hardship between FACS Waves 3 and 4, in relation to movements into and out of poverty (column percentages)

  14. Trend in FACS hardship among poor families

  15. Topic 3. Defining and measuring ‘deprivation’

  16. Trend in durables index among non-working families: FACS and BHPS

  17. Trend in daily living index among non-working families: FACS and BHPS

  18. Trend in financial stress index among non-working families: FACS and BHPS

  19. Proportion of households scoring one or more on the Irish basic deprivation index, 1992-2001

  20. Absolute vs relative deprivation • A deprivation index needs to be recalibrated each year to take account of changing social norms

  21. Topic 4: Measuring income • Standard HBAI rules applied as closely as possible to FACS and BHPS • Total weekly net household/family income before housing costs • No equivalence scale • Beware measurement error, especially at low incomes

  22. Topic 5: ‘Cross-sectional’ relationships

  23. Shape of income-deprivation profile

  24. Effect of controls on income-deprivation relationship

  25. Topic 6: ‘Underlying’ and ‘longitudinal’ relationships • Use a 7 year run of data (BHPS waves 6-12) to measure: • “underlying” relationship. Uses individuals’ averages of income, deprivation etc over period. “Between cases” analysis. • “longitudinal” relationship. Uses variations in income, deprivation etc experienced by individuals over time, either side of their period average. “Within cases” analysis. • Use individuals with 5 or more observations.

  26. Between analysis: income

  27. Within analysis: income

  28. Increasing a family’s income will reduce its deprivation, but it will still be worse off than a family which had the higher income all along

  29. Between-within comparison: other factors

  30. Topic 7. Discussion and implications

  31. Policy conclusions • Increasing a family’s income will reduce its deprivation, but it will still be worse off than a family which had the higher income all along • So permanent improvements in poor people’s underlying economic positions are required, not short term fixes. • ‘Work is the best route out of poverty’ • But ‘security for those who cannot work’ is equally important

  32. Measurement conclusions Downward trends in deprivation indices • create a misleadingly over-optimistic impression of progress; • encourage weak, rather than strong, assumptions about the roles of indices in measuring poverty; • suggest that a relative, rather than an absolute, measure of deprivation is required; • but it will not be easy to propose a measure which is simple and understandable

  33. Reference Richard Berthoud, Mark Bryan and Elena Bardasi, The Dynamics of Deprivation: the relationship between income and material deprivation over time, DWP Research Report no 219, 2004 www.dwp.gov.uk/asd/asd5/rports2003-2004/rrep219.asp

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