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Poverty, preference or pensioners? Measuring material deprivation in the UK

Hick, Rod (2013) Poverty, preference or pensioners? Measuring material deprivation in the UK. Fiscal Studies, 34 (1). pp. 31-54. ISSN 0143-5671

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Identification Number: 10.1111/j.1475-5890.2013.00176.x

Abstract

Indicators of material deprivation are typically based on a two-part question, asking, first, whether respondents possess a series of deprivation items and, second – if they do not – whether this is because of a lack of resources or is by choice. This second subquestion, or ‘enforced lack’ criterion, is ubiquitous but its efficacy has been questioned by a number of authors. In an important critique published in Fiscal Studies, McKay (2004) claimed that older people were more likely than younger respondents to report that they did not want the items they lacked, despite their lower incomes, and also that the enforced lack criterion introduced a subjectivity which, in effect, required respondents to feel poor in order to be classified as such. This critique has potentially profound implications for poverty measurement. In this paper, we seek to address the question of whether, if we are to employ indicators of material deprivation for poverty measurement, we should include the enforced lack criterion or not. In seeking to answer this question, we draw on data from the British Household Panel Survey (BHPS) and present tests of reliability and validity on indices of material deprivation, with and without the enforced lack criterion. Using odds ratio and analysis of variance methods, we find that the inclusion of the enforced lack criterion provides a measure of material deprivation which is both more reliable, and more valid based on a subjective measure of deprivation as well as on a majority of more objective forms of deprivation. Amongst the remaining minority (ill health for both methods and income quintile for the analysis of variance method), the divergent results can be explained, at least in part, by the older age profile of respondents in poor health and on low incomes. Thus, while there are legitimate concerns about the performance of such deprivation indicators amongst certain subgroups – in particular, amongst older people – on aggregate the enforced lack criterion helps to distinguish between poverty and preference.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/
Additional Information: © 2013 The Author
Divisions: Centre for Analysis of Social Exclusion
Subjects: H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification: D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I32 - Measurement and Analysis of Poverty
Sets: Research centres and groups > Centre for Analysis of Social Exclusion (CASE)
Date Deposited: 14 Jul 2015 13:22
Last Modified: 20 May 2019 01:35
URI: http://eprints.lse.ac.uk/id/eprint/62720

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