IDS and the CSJ on child poverty: a critique and a defence

With many ifs and buts, Iain Duncan Smith’s welfare reforms are broadly moving in the right direction. Rather than just increasing government handouts year after year, it now looks as if there is going to be a focus on increasing work levels. The previous government initially had a go at this, too, under the catchphrase ‘make work pay’. But it was all carrots and no sticks, and they eventually realised that they could achieve results more quickly and easily by just churning out more in tax credits.

With this in mind, I found it baffling why IDS had not challenged the relative child poverty target he inherited from the preceding government. A relative measure is inherently biased in favour of redistributionist strategies. You cannot win a debate if you let your opponents define the terms.

Apparently, this is about to change. IDS has now endorsed a report released by his former think tank, the Centre for Social Justice, which criticises the concept of relative child poverty. Their criticisms could be grouped into two categories:

  1. Relative income-based measures use an arbitrary cut-off point, and fail to capture many relevant dimensions of material living standards, like savings, assets, and household debt.

  2. Relative income-based measures focus exclusively on narrow material aspects, while poverty also involves issues like parental neglect, unstable families, alcohol and substance abuse, welfare dependency, lack of educational aspirations etc.

The first set of criticisms is fair. It shows that relative child poverty indicators do not properly measure what they are supposed to measure: material living standards. Unfortunately, the second set of criticisms is not helpful.

Measuring the prevalence of the social problems the CSJ mentions is all well and good, as long as they are measured in their own right. But the kind of poverty measure which the CSJ is advocating tries to compress far too many concepts into one single indicator. It raises too many questions to which there can be no satisfactory answer.

To mention just the most obvious point: what weights do you attach to each category, or rather, how do you trade them off against one another? Suppose there are two otherwise identical families, who differ only in income and alcohol consumption. The first family’s income is below the poverty line; say, it is 50% of median income. But it is an intact and aspirational family (as far as this is measurable). The second family’s income is above the poverty line; say, it is 70% of median income. But their level of alcohol consumption is fairly high. How many units of alcohol would this family have to consume in order to reach the same poverty score as the first one, on the CSJ measure?

The social problems which the CSJ mentions may be important correlates, and often causes, of poverty. But they do not in themselves constitute poverty. The amount of time I spent in the sun is undoubtedly very strongly, and causally, related to the severity of my sunburn, but we would nevertheless not define the severity of sunburn by the amount of time somebody spent in the sun. Flawed as the relative measure is, the CSJ’s proposal is not an alternative.

While their measure is a blind alley, the CSJ’s contribution is nevertheless valuable, because it rightly refocuses the debate towards the causes of poverty. This alone sets them light years ahead of the established poverty industry, for whom any mention of behavioural causes of poverty is streng verboten, because it means ‘blaming the victim’. Self-defeating behaviour, if its existence is acknowledged at all, is presented as a consequence of poverty, not a cause. Give them more money, and all the other problems will go away, too.

We’ve tried that for long enough now, and the CSJ is absolutely right to point that out.

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

1 thought on “IDS and the CSJ on child poverty: a critique and a defence”

  1. Posted 14/06/2012 at 16:56 | Permalink

    This bbc headline today is an excellent example of the problems with the government’s target measure: “Child poverty down as income dips”. If only incomes had risen, child poverty might have increased. And if only incomes had dropped further, child poverty might have fallen more.

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