128 Pages Posted: 29 Jan 2011
Date Written: January 20, 2011
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.
Keywords: Poverty, , Relative Poverty, Measurement, Kristian Niemietz, Supply-Side Reform
JEL Classification: I00, I30, I31, I32, I38
Suggested Citation: Suggested Citation
Niemietz, Kristian Peter, A New Understanding of Poverty (January 20, 2011). Institute of Economic Affairs Monographs, No. 65, 2011. Available at SSRN: https://ssrn.com/abstract=1750203
By Angus Deaton