Poverty and policy: A 45 year perspective

A B AtkinsonNuffield College, Oxford

Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

and London School of Economics

Rome ISFOL May 2012

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1. Forty-five years in the UK2. Conceptual advances3. Empirical evidence: transformation4. Political salience: ups & downs5. Implementation: nul points?6. Conclusions

Plan of talk

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1. Forty-five years in the UK

1965 1969

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Can learn from the historical record

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• 1960s: Policy-based definition of poverty: how many people live below the minimum embodied in social security legislation? Obvious shortcoming: depends on government choice of minimum.

• 1970s: Participation definition:

• Townsend

• EC Council of Ministers

• Sen and capabilities

• Recent decades: Multi-dimensional measures of poverty and social exclusion.

2. Conceptual advances

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Derived from P K Pattanaik, “The ethical bases of public policies”

History and Institutions and Behavioural rules

lead to

Outcomes

evaluated in terms of

Utility or Functionings and capabilities or Non-well-being

measures

Analytical framework

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• Subjective measures:

• Subjective evaluation of outcome;

• Identification of dimensions of well-being to be measured;

• Minimum rights rather than standard of living:

• Legitimate bases for differentiation;

• Non-consequential evaluations:

• Autonomy

• Importance of process (e.g. rejection of means-testing);

• Role of history:

• Different national traditions: poverty, level of living, exclusion sociale.

Different views

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Ballungen

The concept of “Ballungen (congestions)” was developed by Otto Neurath. As described by Nancy Cartwright and Norman Bradburn, with such concepts “there is a lot packed into it; there is often no central core … different features from the congestion (Ballung) can matter for different uses; whether a feature counts as in or outside the concept, and how far, is context and use dependent” (2010, page 4).

The resulting indicators are multi-layered, as with the Europe 2020 target. The assessment of progress towards the 2020 target may become more of an exercise in policy-based evaluation, taking as given the politically agreed target, than an absolute judgment about social progress.

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Member state

Source Years

Belgium Antwerp Centre for Social Policy Household Survey 1976 (Flanders only) and 1985

Denmark Central taxpayer register (based on tables) 1977

France Enquête Revenu 1975 and 1979

Germany Income and expenditure survey (EVS) (based on detailed tables)

1973 and 1978

Greece Household Budget Survey 1974 and 1981/2

Ireland Household Budget Survey (HBS) and ESRI Household Survey

1973, 1980 (HBS) and 1985 (ESRI)

Italy Istat Survey of Consumer Spending 1975 and 1980

Luxembourg

Socio-Economic Panel Study of Households 1985

Netherlands

Income Distribution of Households (ID) and Housing Demand Survey (HDS)

1977 (ID) and 1981 and 1985 (HDS)

Portugal Household Expenditure Survey (HES) and Household Income and Expenditure Survey (HIES)

1973/4 (HES) and 1980/1 (HIES)

Spain Encuesta de Presupuestos Familiares 1973 and 1981

UK Family Expenditure Survey 1975, 1980 and 1985

3. Empirical evidence: transformationDATA SITUATION in the 1980s: O’Higgins and Jenkins (1990).

Investment in data

“[The sciences have] moved from the private study into huge scientific laboratories where scores of experts are engaged … Should we expect less in economic research, if its results are to be the basis for economic policy upon which might depend billions of dollars of national income and the general economic welfare of millions of people” (Trygve Haavelmo, 1944).

ECHP EU-SILC LIS

BUT

•Surveys are expensive;•Surveys face growing problems of non-response;•Multi-dimensional measures impose particular demands;•Need to make greater use of alternative sources, especially administrative data.

4. Political salience: ups & downs in UK

Anthony Crosland, “primary poverty has been largely eliminated” (1956). The Beveridge Plan had been successful. “We have had no evidence to suggest that the present arrangements for national assistance are not fully capable of … preventing distress among the old by securing a basic minimum (Phillips Committee, 1954).

1965 publication of The Poor and the Poorest Founding of Child Poverty Action Group

“The word poor is one the government actually disputes” (evidence to the House of Commons Select Committee on Social Services, 1989). “No Government in the United Kingdom have ever accepted that it is possible to identify a single simple measure to define poverty in any meaningful way.” (Minister, 1994).

1999, Government sets target to eradicate child poverty by 2020.

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1958 1973 1982 1990 2000 2012

Timeline

Social policy means to restructuring

Ultimate goal of European Social Union

Social Action Programmes; First estimates of poverty in the EU

European agenda dominated by common internal market and euro

Lisbon Agenda and Social Inclusion Process

Europe 2020 targets

Kok

report

Social dimension of Europe

5. Implementation: nul points?

• Learn from periods when poverty has been reduced;

• Learn from countries (and sub-national areas?) where poverty performance better;

• Plan new policies at EU level that can work under subsidiarity.

Significant poverty reductions

Significant = > 2 percentage point fall in poverty rate.

Recession and policy changes

Recession Policy changes

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Percentage of people living in households at-risk-of-poverty (income year 2006) by regional groupings

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5

10

15

20

25

SE DK FI NL LU BE AT FR DE CZ SK SI HU PL CY IE UK LT EE LV PT ES IT GR

Nordic

Mediterranean

Benelux

ContinentalWestern Europe

Eastern Europe

BalticFormer British empire

Significant poverty differences

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Least interventionist form of coordination:• Sets only a minimum standard;

• Standard to be defined relative to the circumstances of the Member State;

• Member States to have latitude in the design of the policy.

 An EU guaranteed income for children.

• Defined as a percentage of the Member State median equivalised income for each child (and possibly age-related);

• Implementation would be left to Member States, who could employ different instruments (child benefit, benefits in kind, employer-mandated benefits).

New EU policy

6. Conclusions• Poverty is a congested concept, and assessment of progress towards Europe 2020 target may be best seen as a policy-based evaluation;

• Availability of empirical evidence about poverty has been transformed, but need continued investment and new approaches;

• Political concern ebbs and flows; need to embed in political mechanisms and structures; key role for civil society.

• Comparative studies very valuable but also need in-depth historical studies of individual countries;

• We can learn from periods when poverty has been significantly reduced as well as from significant differences across countries (and regions?);

• Need new thinking with regard to EU social policy; there are measures that could be introduced, under subsidiarity, such as the EU minimum income for children.