Michael Wolfson says it is time that Canada gets an official poverty indicator. He, and many others, make proposals for better low-income indicators. I agree on both accounts but this is not good enough.
Because low-income is not always poverty, we miss crucial information to understanding poverty by relying on low-income indicators. We need to complement such indicators with non-money indicators of poverty.
Poverty and low-income
A household in Canada is poor if it cannot afford a very modest but still acceptable standard of living. Poverty in Canada means you cannot afford such things as fresh fruits and vegetables every day; or a warm winter coat; or giving your child an inexpensive birthday gift; or the other goods and services considered minimally necessary for an acceptable standard of living in our wealthy country.
Almost all poverty measures commonly used in Canada work by setting a dollar amount – a poverty line – below which a household is said to be in poverty, above which a household is not considered poor. When we measure poverty only according to income, we may incorrectly assess whether or not many Canadians are actually experiencing a ‘poverty level’ standard of living.
Some households with incomes above an income-defined poverty line may have many debts, special needs or face especially high living costs – or hundreds of other factors that can arise in real life. On the other hand, some households below the poverty line may have usable assets, may get help from other family members or otherwise have access to alternative resources. Some may own a home or have access to inexpensive living accommodation; while others may be searching for an affordable place to live.
If we only use poverty lines defined as an amount of income, we are measuring the extent of poverty and the effects of poverty reduction policies with a very crude yardstick. We could be misdiagnosing the scope of poverty – both in the number of Canadians who are poor, who they are and the depth of their poverty.1
Material deprivation in Canada
Rather than measuring dollars, non-money indicators such as material deprivation measure outcomes. “Are you and your family able to get regular dental care if needed?” This is one of 17 so-called deprivation questions in the 2013 Canadian Survey of Economic Well-being (CSEW). If the respondent answered “no” and further indicated that this is because of “financial reasons” in a follow-up question, the respondent’s family is considered deprived in that item.
While data for Canada are not available, Ontarians including Ontarians with lived experience, agree that fifteen of those items in the CSEW data are necessities of life in Canada. For instance, more than ninety percent of Ontarians agree that getting regular dental care is a necessity.2
A recent study presents the first material deprivation indicators for Canada.3 It finds that 29 percent of Canadians cannot afford one or more of the 17 deprivation items; 18.6 percent miss two or more items and nearly 13 percent miss three or more items. When a respondent’s family cannot afford two or more items, it is considered materially deprived.
Low income and material deprivation indicators often disagree on who is poor or not. Only 8 percent of Canadians are both having a low income and are materially deprived.4 Another 8 percent is materially deprived but does not have a low income; 11 percent are not materially deprived but have a low income. This disagreement involves 6.5 million Canadians.
Disagreement gets much larger for vulnerable groups. For lone parent families, for example, low income and material deprivation indicators disagree on 27 percent. Those are 1.8 million Canadians.
Low-income and non-money indicators of poverty sometimes even disagree about which groups are vulnerable. For instance, Canadians aged 18 to 64 have a lower than average risk of low income but an on average risk of material deprivation. Conversely, Canadians aged 65 and above have a high risk of low income but a low risk in terms of material deprivation. Residents of Nova Scotia have an average risk of low-income but a high risk of deprivation while Albertans have the lowest risk of low-income of all provinces but an close to average risk of material deprivation.
At the root of these differences lies the relationship between a family’s resources and its needs. Canadians aged 18 to 64 may have relatively more income, but they may also have relatively more costly needs (think of costs of daycare, mortgage payments or paying down student loans). Likewise, for Albertans, who may have relatively high average incomes but who may also face higher costs of living.
Proposed improvements to low-income indicators, such as adjusting income for local purchasing power and owner occupied housing, will narrow this big disagreement between low-income and material deprivation indicators. But, a mountain of international evidence predicts that the difference for Canada will very likely remain substantive because many reasons remain for why income may not line up with a person’s living standard. Reasons, for which no quick or easy fix exists with low-income indicators.
Because material deprivation indicators focus on outcomes as opposed to one source of money, they are better equipped to measure poverty level living conditions. They are also inherently more democratic by letting Canadians decide what a necessity is.
Of course non-money indicators are not perfect either. For example, one reason why Canadians aged 65 may experience, on average, fewer deprivations is because elderly may be more likely to answer they do not have an item “for other reasons” than “for financial reasons”. Or, alternatively, items that may become a necessity at higher age (think of care) are not included in the material deprivation indicator (though they could be included in an elderly specific indicator).
That is why scholars around the world recommend measuring poverty using both money and non-money indicators of poverty; and, that is why many governments across the world use both indicators to monitor progress on poverty.
Shovel ready
It is easy to find many low-income indicators for Canada but it is nearly impossible to find poverty numbers based on information other than money. This is because Canada’s national statistics agency, unlike their counterparts in many other countries, does not routinely collect data for non-money indicators of poverty.
Technically speaking, Statistics Canada can start collecting non-money poverty information such as material deprivation through the Canadian Income Survey within one year or so. However, only “once governments establish a definition, Statistics Canada will endeavour to estimate the number of people who are poor according to that definition” said Chief Statistician Ivan Felligi.5 That was September 1997. Will it finally happen as part of Canada’s first federal poverty reduction strategy?
Geranda Notten is Professor in Comparative Public Policy at the Graduate School of Public and International Affairs at the University of Ottawa.6
Notes
1 Together with M. Mendelson (2016), I detail this argument further in “Using low-income and material deprivation to monitor poverty reduction”. Caledon Institute of Social Policy, 28 July 2016, 1-7.
2 No data available for Canada. For more details on Ontario findings, see Matern, R., M. Mendelson and M. Oliphant. (2009A). Developing a Deprivation Index: The Research Process. Toronto: Daily Bread Food Bank and Ottawa: Caledon Institute of Social Policy.
3 Notten, G., J. Charest and A. Heisz (2017), Material deprivation in Canada, Faculty of Social Sciences, University of Ottawa, 1-59.
4 15.9 percent of Canadians are poor according to the Low-income Measure (LIM-BT, using income before taxes).
5 Felligi, I. (September 1997), On Poverty and low-income. Statistics Canada Website.
6 The views represented here are mine only.
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