Friday, December 17, 2010

A poverty boom? Wait for the real expert

The claims from the Institute for Fiscal Studies – that the government’s tax and spending plans will increase the number of people in poverty – are eye-catching and alarming. But as with all such superficially striking headlines, we should reserve judgement.

Within a day or two, we can expect an independent analysis of the merits of these claims to be issued by the non-partisan Office of the Deputy Prime Minister, headed by the independent academic Nick Clegg.

The ODPM proved at the time of the Budget and the Spending Review that it has the rigour, expertise and impartiality to provide reliable and honest assessments of the many politically motivated statements, produced by the IFS and other third-rate Marxist outfits, about the effects of government policy on poor people.


Liam Murray said...

I know this was tongue-in-cheek but help with something (because I know you'll be more sympathetic to the IFS analysis than I will).

"Absolute poverty, set at 60% of 2010's average income"

What am I missing here? How can that possibly be an absolute measure of any sort given that defintion? If everyone in the country had earned £1m more than they did you'd still have people in 'absolute poverty'?

p.s. This isn't one of those rhetorical questions in leui of a comment, I genuinely think I'm missing something because it seems like such a howler (particulary given the absurd reference to 'penury' in the tag line).

Tom Freeman said...

They've over the years tended to do a 'relative' measure, set at 60% median income for each year (so it rises as middle incomes rise), plus a rather badly named 'absolute' measure, set at 60% median in some fixed baseline year (but uprated for inflation I think). IFS reports in recent years have tended to use 97 as the baseline.

The latter line allows us to see how many households are earning below a given level of spending power, and how this changes, while the former looks more at how many people have fallen that far below the middle.

You're completely right that that calling either of these 'absolute' is daft.

Liam Murray said...

Cheers. I think the fact the 'absolute' version quoted suggested a 2010 baseline made it seem particularly ridiculous.

I guess this is really about inequality rather than poverty. Which is fair enough but there should be an acknowledgent that many people (like me) are quite relaxed about inequality and reject the more dramatic claims about its consequences (see the deabtes around the comically inept 'Spirit Level' book).

Tom Freeman said...

I have a big wodge of articles for and against the Spirit Level that I keep vaguely meaning to read. Maybe something cheery to do over Christmas!