NCPA - National Center for Policy Analysis

WHAT IS POVERTY?

May 19, 2008

Efforts to accurately measure and define poverty in Canada have been hindered by inconsistent and poor quality data, resulting in a confusing picture that is often further distorted by politicians and activists, according to a report from the Fraser Institute.

For example:

  • Poverty, whether measured by income or consumption, has remained in the 4 to 6 percent range since 1996, says Chris Sarlo, author of the report.
  • Overall poverty fell sharply from about 12 percent in 1969 to approximately 3 percent in 1974 and then drifted slowly upwards to about 4.5 per cent in 2005.
  • Consumption poverty for all people and for children fell sharply between 1969 and 1974 and has drifted up slowly after that

These numbers stand in stark contrast to media reports that claim census data showed increased levels of poverty and a growing gap between rich and poor.  The reports, Sarlo points out, were describing relative poverty, which is largely a function of the degree of inequality in a nation:

  • Unless a nation becomes more or less unequal over time, there will be no change in relative poverty.
  • A rising living standard, by itself, will do nothing to reduce relative poverty.

Media commentators and politicians then take the estimations and describe poverty in absolute terms, using graphic images and over-the-top language that brings to mind hunger and misery usually associated with third-world countries.  This problem of definition switching confuses people and impedes intelligent public discussion of this important issue.

The most realistic and credible measurement of poverty is one based on the necessities of life, says Sarlo.  We need to know how many of our fellow citizens cannot afford all of their basic needs.  This measurement of genuine deprivation is based on the absence of these basic needs.

Source: Press Release, "Absolute Poverty In Canada Remains Low; Measure Of "Relative Poverty" Blurs Issue And Focuses On Inequality," Fraser Institute, May 7, 2008; based upon: Chris Sarlo, "What is Poverty? Providing Clarity for Canada," Fraser Institute, May 2008.

 

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