Poverty in Britain, past and present
2 September 2009
SUGGESTED
Economic Theory
29 August 2009
Tax and Fiscal Policy
3 September 2009
Tax and Fiscal Policy
19 November 2024
In A History of Modern Britain, Andrew Marr describes post-war Britain as a grim place in material terms. In 1950, only 4% of the adult population owned a television, and only 3% went on holidays abroad. Marr also notes: “Sponging with lukewarm water had replaced regular baths for millions of people. To put it bluntly, many British people in the forties would, by our sensitive standards, have smelt a little.”
By the early 1960s, the picture had changed a good deal. At that time, the leading poverty researcher Peter Townsend noted that “[t]he belief that poverty has been virtually eliminated in Britain is commonly held.”
But by the 1990s, poverty was again all over the place, or at least all over the news, political speeches, and NGO campaigns. A leading source speaks of “levels of poverty and inequality unprecedented in post-war history.”
How you view the evolution of poverty in Britain depends on how you measure it. The most frequently quoted measure of relative income poverty was stable over the 1960s and 1970s, suddenly exploded in the 1980s, and has remained on a high level since then. Real incomes at the 10th and 15th percentiles of the income distribution, in contrast, have increased continuously, apart from times of general economic contraction. Today, they stand at twice their level of the early 1960s.
But in fact neither measure tells the whole story. “Incomes” and “living standards” can be very different. If, for example, David Beckham decided to take a year off, he would appear in the poverty statistics, because in that year his income would be zero. In contrast, if your house burned down and your car was stolen, you would be no closer to the poverty line, because your income would be unchanged. Granted, these two examples are not particularly meaningful. But the correlation between income and spending has become fuzzier over time, making income a worse predictor of living standards than it used to be.
With most available measures riddled with shortcomings, we lack an exact picture of poverty. Nevertheless, it is safe to say that while material hardship in Britain has decreased much less than it could have over the last sixty years, it has decreased much more more than conventional measures suggest.
Today, even the least well-off spend sizeable portions of their budgets on items related to recreation, culture, restaurants and hotels, with clothing and footwear occupying only a small part. However, the income share which households at the 10th income percentile devote to housing costs has increased from 20% in the late 1970s to almost 30% today.
The crude, income-based aggregate measures which inform anti-poverty policies today encourage strategies based on transfer payments, notwithstanding their demonstrable side effects. A more detailed look at what people actually lack and why suggests we should rather tackle the root causes that make particular items, such as housing, unnecessarily expensive, and at the same time transform the benefit trap into a trampoline.
By the early 1960s, the picture had changed a good deal. At that time, the leading poverty researcher Peter Townsend noted that “[t]he belief that poverty has been virtually eliminated in Britain is commonly held.”
But by the 1990s, poverty was again all over the place, or at least all over the news, political speeches, and NGO campaigns. A leading source speaks of “levels of poverty and inequality unprecedented in post-war history.”
How you view the evolution of poverty in Britain depends on how you measure it. The most frequently quoted measure of relative income poverty was stable over the 1960s and 1970s, suddenly exploded in the 1980s, and has remained on a high level since then. Real incomes at the 10th and 15th percentiles of the income distribution, in contrast, have increased continuously, apart from times of general economic contraction. Today, they stand at twice their level of the early 1960s.
But in fact neither measure tells the whole story. “Incomes” and “living standards” can be very different. If, for example, David Beckham decided to take a year off, he would appear in the poverty statistics, because in that year his income would be zero. In contrast, if your house burned down and your car was stolen, you would be no closer to the poverty line, because your income would be unchanged. Granted, these two examples are not particularly meaningful. But the correlation between income and spending has become fuzzier over time, making income a worse predictor of living standards than it used to be.
With most available measures riddled with shortcomings, we lack an exact picture of poverty. Nevertheless, it is safe to say that while material hardship in Britain has decreased much less than it could have over the last sixty years, it has decreased much more more than conventional measures suggest.
Today, even the least well-off spend sizeable portions of their budgets on items related to recreation, culture, restaurants and hotels, with clothing and footwear occupying only a small part. However, the income share which households at the 10th income percentile devote to housing costs has increased from 20% in the late 1970s to almost 30% today.
The crude, income-based aggregate measures which inform anti-poverty policies today encourage strategies based on transfer payments, notwithstanding their demonstrable side effects. A more detailed look at what people actually lack and why suggests we should rather tackle the root causes that make particular items, such as housing, unnecessarily expensive, and at the same time transform the benefit trap into a trampoline.
4 thoughts on “Poverty in Britain, past and present”
Comments are closed.
SHARE
There seem to be three different kinds of ‘relative’ poverty:
a. compared with other people in the same country
b. compared with other people in different countries
c. compared with people in the past (’a foreign country’, according to L.P. Hartley).
Given that economic resources are scarce by definition, I wonder if it might be more productive to think about relative well-offness (I could say ‘wealth’, but that is perhaps too narrow a concept).
I like the definition of ‘marketing’ that says it tries to make people feel dissatisfied. I tend to resist this; though possibly other people with the same level of incomes are more amenable. Are they really ‘worse off’ than me?
There seem to be three different kinds of ‘relative’ poverty:
a. compared with other people in the same country
b. compared with other people in different countries
c. compared with people in the past (’a foreign country’, according to L.P. Hartley).
Given that economic resources are scarce by definition, I wonder if it might be more productive to think about relative well-offness (I could say ‘wealth’, but that is perhaps too narrow a concept).
I like the definition of ‘marketing’ that says it tries to make people feel dissatisfied. I tend to resist this; though possibly other people with the same level of incomes are more amenable. Are they really ‘worse off’ than me?
I suppose what I’m getting at is that the very concept of measuring different people’s subjective state of satisfaction is extremely tricky.
Pandering to envy doesn’t sound very attractive; and the assumption that people have ‘rights’ (’entitlements’) to charity (such as transfer payments from the general body of taxpayers) is not one I have much sympathy for. I prefer voluntary charity to ‘coercive’ charity!
I tend to detect ‘national socialism’ underlying many arguments for government interference. Perhaps Cowperthwaite in Hong Kong was right to resist the compilation of national income statistics in the first place.
I suppose what I’m getting at is that the very concept of measuring different people’s subjective state of satisfaction is extremely tricky.
Pandering to envy doesn’t sound very attractive; and the assumption that people have ‘rights’ (’entitlements’) to charity (such as transfer payments from the general body of taxpayers) is not one I have much sympathy for. I prefer voluntary charity to ‘coercive’ charity!
I tend to detect ‘national socialism’ underlying many arguments for government interference. Perhaps Cowperthwaite in Hong Kong was right to resist the compilation of national income statistics in the first place.