Understanding what poverty means and how it is measured are the first steps toward a poverty reduction strategy

Poverty rates in Canada LICO and LIM
Two most commonly used Statistics Canada poverty rates show radically different patterns.

The two most commonly used poverty rates produced by Statistics Canada tell very different stories. The patterns are curious, and confusing. The two statistics—the poverty rate according to the Low Income Cut-off and that according to the Low Income Measure—track each other rather closely up to the early 1990s, then diverge quite markedly as the Low Income Cut-off falls steadily to an unprecedented low, while the Low Income Measure drifts upward. Which statistic should we believe?

The cyclical patterns also differ, with the Low Income Measure registering higher poverty during recessions only before the 1990s, and in a way that is more muted and lagging the movement in the Low Income Cut-off. It also signals a rise in poverty only well after the onset of the 1990/92 recession, and both measures show no upturn in poverty during the Great Recession, which began in 2008 and led to a significant fall in employment.

For something that is central to so many policy debates, the Canadian “poverty” rate is notoriously confusing, and it is easy to imagine that public policy may be misled. The first step in devising a poverty reduction strategy is understanding what these numbers mean, and whether they are useful. Is poverty at unprecedented lows, or has it been stuck at high levels for decades? Both views can’t be right, but they can both be wrong.

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An inclusive society seeks to eliminate child poverty

Wellington New Zealand

My meeting with senior Treasury officials began with the nonchalantly stated advice “In the event of an earthquake we like to get under the tables and hold on to the legs so that they don’t get away from us.”

As a Canadian, albeit one who has visited New Zealand three times in the past decade, I naively took this as a metaphor for the earth-shattering ideas the public service expects from its consultations with outside experts.

I assure you that the dozen or more participants gathered to discuss how the government might contribute to building “a more inclusive New Zealand” offered advice that was far from ground breaking.

How possibly could they?

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Building a more inclusive society requires a conversation about inequality

[ This post is based on the opening address I gave on the invitation of the New Zealand Treasury to the “A More Inclusive New Zealand Forum” held in Wellington, New Zealand on July 27th, 2015. ]

I would like to open this gathering with a statement of admiration for both its content, and its process. The organizers have asked us to deliberate on “inclusion”, and to do so through conversation.

As a part of my contribution to this conversation I would ask you to consider four major messages, all four of which revolve around the question: What does inclusion mean?

I use “mean” in the sense of how we define inclusion, and “mean” in the sense of its implications for policy.

What does “inclusion” mean, and how can we give it enough precision to inform public policy?

My four messages are:

  1. an inclusive society means that all children can become all that they can be;
  2. an inclusive society seeks to eliminate child poverty;
  3. income inequality has the potential to erode inclusion;
  4. public policy must address many dimensions of inequality.

 

A More Inclusive New Zealand Forum

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Two stories about inequality

In many rich countries the “hard” facts describing the income distribution are easily available. Yet, discussions about inequality are animated by two different stories with very different public policy implications.

You can listen to a caricature of these points of view in this pair of interviews on CBC radio: http://www.cbc.ca/radiowest/2015/01/21/two-different-takes-on-the-worlds-wealthiest-one-per-cent/

I offer more detail on the way Canadians have framed these stories as a part of a presentation to the School of Policy Studies at Queen’s university.

Here is Story 1 in pictures

(click on an image to start the slideshow and press Escape to return to this page).

Here is Story 2 in pictures

(click on an image to start the slideshow and press Escape to return to this page).

My presentation argued that context—rooted in economic theory and the appropriate use of statistics—is needed to understand the truth behind these stories, and to turn them into a conversation useful for public policy.

Here is the full set of slides I used.

Corak_Two_Stories_about_Inequality_and_Public_Policy_presentation_to_Queens_University_February_5_2015

UNICEF gives Canada a passing grade, child poverty actually fell during the recession … or did it?

UNICEF Children of the Recession Innocenti Report Card 12 CoverLet’s see if we can make sense of this.

UNICEF has just given Canada a passing grade, mind you barely a pass, when it comes to the fight against child poverty. In a report released today it claims that 21% of Canadian children live in poverty, nothing to brag about, but at least this is lower than the 23% who were poor just before the recession started in 2008.

Interestingly, Statistics Canada also says child poverty is down, but that only 8.5% of kids are poor. However, at the same time it says child poverty is up, reaching almost 14%. And finally, if this is not confusing enough, it says that, yes, 14% of kids are poor, but this is down since 2008.

Up or down? One-in-five kids poor, or one-in-seven, or maybe even as few as only one-in-eleven?

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