Poverty should be measured by more than income: Study

Economist Shatakshee Dhongde from Georgia Institute of Technology in the US showed that there are multiple components of poverty that can more accurately describe a household's economic condition.

By: PTI | Washington | Published:November 21, 2016 7:03 pm
study on economy, poverty, socio-economic factors, Economist Shatakshee Dhongde, Georgia Institute of Technology Photo for representational purpose.

Health, education, standard of living and other socio-economic factors may help make a more accurate assessment of a person’s financial condition than income alone, according to an Indian researcher in the US. Economist Shatakshee Dhongde from Georgia Institute of Technology in the US showed that there are multiple components of poverty that can more accurately describe a household’s economic condition. She looked at “deprivation” more than simply low income, and found that almost 15 per cent of Americans are deprived in multiple dimensions.

“This study approaches poverty in a new way. We tried to identify what is missing in the literature on poverty, and measure deprivation in six dimensions: health, education, standard of living, security, social connections, and housing quality,” Dhongde said. “When you look at deprivation in these dimensions, you have a better picture of what is really going on with households, especially in developed countries like the US,” she added.

The study looks at deprivation in the US since the onset of the Great Recession, roughly 2008 to 2013. Researcher’s analysis showed that while the official income-based poverty rate averaged 13.2 per cent from 2008 to 2013, the multi-dimensional deprivation index averaged 14.9 per cent. “Lack of education, severe housing burden and lack of health insurance were some of the dimensions in which Americans were most deprived in,” Dhongde said.

“Even though deprivation did increase during the recession, it began to improve between 2010 and 2013,” she said. When placed side-by-side, the multi-dimensional deprivation index was a better reflection of the people’s economic state than income alone and the index was able to detect a more nuanced view of what might be driving people’s dissatisfaction. The study showed that there was not much overlap between individuals who were income poor and those who were multi-dimensionally deprived.

Only 6.6 per cent of the income poor were also deprived in multiple dimensions. “Almost 30 per cent of individuals with incomes slightly above the poverty threshold experienced multiple deprivations,” Dhongde said. “Our analysis underscores the need to look beyond income based poverty statistics in order to fully realise the impact of the recession on individual’s well-being,” she said.

In order for a respondent to qualify as having multi-dimensional deprivation, he or she had to have more than one indicator of deprivation, such as lack of education and severe housing burden. The study was published in the journal Social Indicators Research.