Material Deprivation
Luke Sibieta
What’s coming up?
• Introduction to Material Deprivation Indicator
• Falling levels of material deprivation since 2004-05
• Reflects growth in living standards, but not “catching
up”
• What else can it teach us about living standards of
families with children?
• Relationship between income and material
deprivation
• How severe is “severe poverty?”
Rationale for Material Deprivation Indicator
•
HBAI statistics based on “snapshot” of household income
•
Unlikely to accurately represent living standards of those with
volatile incomes, e.g. self-employed
•
Government has chosen to use three indicators of child
poverty for 2010 target
1.
2.
3.
Relative low Income
Absolute low Income
Combined Indicator of material deprivation and relative low
income
• Defined as being “materially deprived” and household
income below 70% of contemporary median (BHC)
Construction of Material Deprivation Indicator
• Based on 21 questions about level of deprivation experienced
by adults and children
• e.g. Two pairs of all weather shoes for each adult, keep house
warm, have a birthday party, go on school trips
• Families lack items if they say they “wanted, but could not afford
them”
• Said to identify “enforced hardship”
• Scores range between zero (lack nothing) and 100 (lack
everything)
• Materially deprived if they have a score greater than 25
Distribution of Material Deprivation Scores
4.8m have score of zero 3.1m have score above 25
Number of Children (millions)
1
0.9
2.0m also have incomes below 70% of
contemporary median
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
Material Deprivation Score
12.8m children in the UK in 2006-07
Source: HBAI data
95
100
Reflecting on the indicator (1)
• Indicator of the number of “necessities” that a family can’t afford
• BUT…
• Can conflate living standards with family preferences
• e.g. Mckay (2004) shows that families who said they
could not afford “necessities” chose to buy “luxuries.”
• Sensitive to exact threshold
• Absolute Measure
• Does NOT say whether the living standards of poor
families with children are keeping up with average
living standards
• Potentially better indicators available
• e.g. expenditure
Summing up trends since 2004-05
• Fall in official indicator of material deprivation
• 100,000 per year
• Sensitive to exact choice of threshold
• No fall in “relative” material deprivation
• Living standards of poor families with children
are rising year-on-year
• But not faster than average living
standards
• They are NOT catching up
UK Trends since 2004-05
Relative
Absolute
Child Poverty Child Poverty
1998–99 (Baseline)
Material
Deprivation
3.4m
3.4m
2.6m
1.7m
1.7m
1.3m
2004-05
2005-06
2006-07
Target for 2010
Source: HBAI data
UK Trends since 2004-05
Relative
Absolute
Child Poverty Child Poverty
1998–99 (Baseline)
3.4m
3.4m
2004-05
2.7m
1.7m
2005-06
2.8m
1.6m
2006-07
2.9m
1.7m
Target for 2010
1.7m
1.7m
Material
Deprivation
2.6m
1.3m
Source: HBAI data
UK Trends since 2004-05
Relative
Absolute
Child Poverty Child Poverty
Material
Deprivation
1998–99 (Baseline)
3.4m
3.4m
2.6m
2004-05
2.7m
1.7m
2.2m
2005-06
2.8m
1.6m
2.1m
2006-07
2.9m
1.7m
2.0m
Target for 2010
1.7m
1.7m
1.3m
Source: HBAI data
Sensitive to choice of threshold
Low
Threshold
(15)
Current
Threshold
(25)
High
Threshold
(35)
2004-05
3.4m
2.2m
1.5m
2005-06
3.4m
2.1m
1.4m
2006-07
3.4m
2.0m
1.3m
Source: HBAI data
No fall in “relative” material deprivation
Constant
Threshold
(25)
Relative
Threshold
(mean)
2004-05
2.2m
2.8m
2005-06
2.1m
2.8m
2006-07
2.0m
2.8m
Source: HBAI data
What else can material deprivation
teach us?
• What is the relationship between income and
material deprivation?
• Do those said to live “severe poverty” have
very low living standards?
• Are the risk factors for income poverty and
material deprivation different?
60
50
40
30
20
10
50
45
40
35
30
25
20
15
10
5
0
1
Material Deprivation Score
Fuzzy relationship between income
and material deprivation
Income Percentile
Median
25th percentile
75th percentile
Source: HBAI data
How severe is “severe poverty?”
Incomes below 40% of contemporary
median (BHC)
Incomes between 40% and 60% of
contemporary median (BHC)
22%
24%
6.2% of
55%children in
2006-07
47%
21%
Very deprived (more than 35)
16.1% of
children in
2006-07
31%
Just Deprived (between 25 and 35)
Not Deprived (less than 25)
Source: HBAI data
Different risk factors?
• Disagreement over who is poor between
indicators
• Disagreement over risk factors?
• Analyse which factors are associated with
income poverty and material deprivation
• Hold constant all other observable factors
• Factors:
• Region, Number of Children, Family Type,
Economic Status, Ethnicity, Housing,
Disability
Regional Results
Difference in likelihood compared with London
-10%
-5%
0%
5%
10%
15%
London
South East
Eastern
South West
Scotland
North West
West Midlands
Northern Ireland
Yorks and Humberside
East Midlands
North East
Wales
Income Poverty
Material Deprivation
Source: HBAI data
20%
Disability and Family Type
• Disability (adult)
• Less likely to be in income poverty (-2.3 ppts)
• More likely to be in material deprivation (+9.4 ppts)
• Extra state benefits for higher needs
• Family Type/Economic Status
• Working lone parents are LESS likely to be income
poverty than couples with one worker (-9.1 ppts)
• But are MORE likely to be in material deprivation
(+15.1 ppts)
• Do equivalence scales give enough weight to
needs of lone parents?
• Might undermine one of the arguments for higher
WTC for couples
Conclusions
• Falling levels of material deprivation since 2004-05
• Reflects growth in living standards, not catch up
• Those in “severe poverty” are less deprived than
others in income poverty
• “severe” is probably the wrong term
• Different risk factors
• Reversal of regional rankings, case for regional
prices?
• Disabled adults more likely to experience material
deprivation