Dr Andrew Lilico is Managing Director of Europe Economics, a member of the IEA/Sunday Times Shadow Monetary Policy Committee, and author of more than forty articles, pamphlets and reports on political and economic questions.

This paper summarizes Measuring Child Poverty
and Targeting its Elimination

Child poverty is a significant
political issue. 
Tony Blair’s government
has set targets for its reduction and eventual elimination
, and the Conservatives now aspire to
this goal
, also.
The government currently defines child poverty using
a three-part definition
including an unchanging income poverty line, a relative income poverty
line, and a measure of access to material goods.

Characteristics of a Good Definition of Child Poverty

Let us consider four
key characteristics of a good definition of child poverty:

True to the concept of “poverty”

If those in “child
poverty” are not in “poverty” then something is awry.  In
particular, should poverty be thought of as absolute or relative? 
There are two parts to this.  First there is the question of whether
“poverty” is absolute through time and place, so that what it is
to be “poor” for a British child today is the same as for a British
child in the 13th century or for a Sudanese child today. 
Second, even if we reject the notion that poverty is absolute through
time, one might urge that it depends only on someone’s own circumstances
in a particular country at a particular time, rather than on how one’s
circumstances compare with those of other people.

Although a conception
of poverty that is absolute through time and place is still relevant
and still a challenge to policy — particularly on overseas aid —
nonetheless it seems reasonable to have a separate definition for domestic
purposes that advances through time.

The next question is
whether poverty is best understood as relative to others, or whether
a measure fixed, given the norms and expectations of our society, is
better.  There are three key points.

  • First, a fixed measure is truer to the concept of poverty.  “Inequality” may or may not be a social ill, but it is not the same thing as poverty.
  • Second, relative expenditure measures are markedly superior to relative income measures.  A 
    wealthy self-employed person who happens to be having a bad year (and so has no income), but who has too much savings to be entitled to receive benefits, is not “poor”.  Only half of those defined as “poor” on an income measure are also “poor” on an expenditure measure.  The
    spending of the poorest tenth of the population has hardly risen since 1997
    even though their income has risen strongly (contrast this to the 1980s, when the
    spending of the poorest tenth  rose sharply, even though their income did not).
  • Relative measures are particularly misguided when attached to a goal of literal equality of opportunity.  What the idea really amounts to is this: each of us should stand on his own biological merits, and succeed or fail on that basis alone.  If we are beautiful, intelligent, healthy, and elegant, we will be rich and have enjoyable lives.  If we are ugly, stupid, unhealthy, and
      awkward, we will fail — and no-one is allowed to help us.

    This vision of a
    Nietzschean dystopia should be rejected by any Conservative, for Conservatives
    value family, Church, philanthropy and community.  Our picture
    is one in which people are encouraged to help those they love, not forbidden
    from doing so.  Literal equality of opportunity cannot be a goal
    of a Conservative.

Concretely measurable

The great advantage of
income measures is that we can measure them.


One of the great disadvantages
of income measures is that they strongly imply particular policy remedies. 
Basing the definition on income will tend to encourage solutions based
on benefits, rather than state provision or the use of private charities.

Intuitively understandable

Income and expenditure are easy
concepts to understand.  “General wellbeing” is not.

We recommend
a definition based on a “backstop” income line, a relative expenditure
measure, and a material deprivation index, with the key priority given
to the third.

We urge
that the Conservative Party should accept a target of eliminating poverty
based on a material deprivation measure, but not on a relative income
measure, as a relative income measure will tend to imply particular
policy remedies that we wish to escape (particularly benefits) and will
encourage egalitarian thinking.

We should aim to help
poor children, or to find ways to encourage the wealthy to choose to
help poor children.  But we must not misdefine our goals or define
them so that only socialist policies can be used to reach them.