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A New Understanding of Poverty


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Economic Theory

The seventeenth edition of the Heritage Foundation's popular survey of economic liberty

Economic Theory

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A ground-breaking study on the measurement of poverty

https://iea.org.uk/wp-content/uploads/2016/07/IEA New Understanding of Poverty.pdf
This ground-breaking study on the measurement of poverty shows how policy in this field has taken a wrong turn with disastrous results.

In recent years, poverty has generally been understood in ‘relative’ terms. That is, people are regarded as poor if they earn less than some benchmark relative to average earnings. One perverse result of such relative poverty measures amongst many is that poverty often declines in a serious recession when the better paid lose their jobs. The policy response of income transfers, which are used to address the perceived problem of relative poverty, has often led to serious problems that actually reduce long-term opportunities for poorer people.

The author proposes an entirely new way of measuring poverty. If this measure were applied, public policy would orientate itself towards creating the conditions that allowed the poor to become better off. Such a strategy would focus not only on ensuring economic growth and more labour market participation, but also on supply-side reforms that would reduce the cost of living for the poor.

This monograph is essential reading for all involved in the poverty debate. Its approach to the measurement of poverty and its policy conclusion are original and soundly based on evidence.

2011, Research Monograph 65, ISBN 978 0 255 36638 0, 247pp, PB

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Head of Political Economy

Dr Kristian Niemietz is the IEA's Editorial Director, and 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).




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