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Notes

Relative poverty, absolute poverty and social exclusion

The three most common searches within this site are (in order) 'social exclusion', 'relative poverty' and 'absolute poverty'.  This page discusses what these terms mean and how they relate to each other.

Poverty versus social exclusion

Prior to the 1997 Labour Government, the term 'social exclusion' was rarely, if ever, used when discussing social policy in the UK.  Rather, the word 'poverty' was generally used as an all-encompassing term to describe situations where people lack many of the opportunities that are available to the average citizen.  Whilst low income was central to this notion, it also covered other factors relating to severe and chronic disadvantage.

However, some people used the word 'poverty' in the narrower sense of simply low income.  It was to ensure that the wider notion - that disadvantage can cover a wider range of factors than 'just' low income - was not lost, that the Government started using the term 'social exclusion'.

In other words: the wider notion of 'poverty' = the narrower notion + 'social exclusion'.

One of the advantages of the term 'social exclusion' is that it is reasonably self-explanatory, clearly relating to the alienation or disenfranchisement of certain people within society.  Its use therefore helpfully highlights the importance of such alienation and the need to understand the full complexities of its causes and effects.

However, one of the consequences of introducing the term 'social exclusion' was that it led some people to assume that low income and alienation were essentially unconnected and that each could (and should) be considered separately when developing policy.  This, in turn, led to the tendency in some circles to downgrade the importance of addressing issues of low income, on the grounds that its effect was simply to limit the material goods that a household could acquire rather than having any wider social impact.

In reaction to all this, this website generally uses the term 'poverty and social exclusion' throughout, without differentiating between them.  This usage has several advantages, namely:

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Relative versus absolute poverty

For the sake of simplicity, the discussion below relates to income poverty only (i.e. the narrow sense of the word 'poverty' above).  It would, however, equally apply to the wider notion.

Absolute poverty refers to a set standard which is the same in all countries and which does not change over time.  An income-related example would be living on less than $X per day.

Relative poverty refers to a standard which is defined in terms of the society in which an individual lives and which therefore differs between countries and over time.  An income-related example would be living on less than X% of average UK income.

Absolute poverty and relative poverty are both valid concepts.  The concept of absolute poverty is that there are minimum standards below which no one anywhere in the world should ever fall.  The concept of relative poverty is that, in a rich country such as the UK, there are higher minimum standards below which no one should fall, and that these standards should rise if and as the country becomes richer.

Absolute poverty

Clearly, where both absolute and relative poverty are prevalent, it is absolute poverty which is (by far) the more serious issue.  This is the case in much of the third world, where the focus is therefore on fixed income thresholds (typically $1 or $2 a day, on the grounds that this is the minimum needed for mere survival).  But in a UK setting, such thresholds have no import: no one in the UK lives on incomes anywhere near this low.

So, logically, either one concludes that there is no absolute poverty in the UK or that a much higher threshold of absolute poverty than $1 or $2 per day should be used. 

The view that there is no absolute poverty in the UK is a perfectly valid position to take.

The view that there should be an absolute poverty threshold but that it should be much higher than $1 or $2 per day begs the question about how such a threshold should be defined and on what basis.

To summarise: there is no obvious way of defining an absolute poverty threshold except the $1 or $2 a day thresholds defined on the grounds that this is the minimum needed for mere survival.  But in a UK setting, such thresholds have no import: no one in the UK lives on incomes anywhere near this low.

Relative poverty

The view that relative poverty is not important is a perfectly valid position to take - it is just not the view that the authors of this website, along with most other researchers, the EU, the UK government, and politicians of all hues across the political spectrum take.  So, for example, the government's target of halving child poverty by 2010 is defined in terms of relative poverty.

The reason that we believe that relative poverty is important is because we believe that no one should live with "resources that are so seriously below those commanded by the average individual or family that they are, in effect, excluded from ordinary living patterns, customs and activities." The definition of relative poverty as articulated by Professor Peter Townsend, the leading authority of the last fifty years on UK poverty.  In other words, we believe that, in a rich country such as the UK, there should be certain minimum standards below which no one should fall. Webster's dictionary definition of the word 'poverty' is "the state of one who lacks a usual or socially acceptable amount of money or material possessions".  And, as society becomes richer, so norms change and the levels of income and resources that are considered to be adequate rises.  Unless the poorest can keep up with growth in average incomes, they will progressively become more excluded from the opportunities that the rest of society enjoys.  If substantial numbers of people do fall below such minimum standards then, not only are they excluded from ordinary living patterns, but it demeans the rest of us and reduces overall social cohesion in our society.  It is also needless.

If one accepts that relative poverty is important in principle, then the obvious issue arises of what thresholds to use and on what basis.  This is discussed in detail on the page on choices of low-income threshold.  Our basic answer is that it does not matter, so long as the thresholds are defined in relation to contemporary average (median) income and are for households rather than individuals.  It is for this reason that the main indicators on this website use a variety of thresholds, so that a fuller picture of trends can be developed.  But, for reasons of consistency and clarity, there has to be a 'headline' threshold and, for this, we use the same threshold as both the UK government and the EU, namely a household income of less than 60% of contemporary median household income.

Some people criticise the concept of relative poverty on the grounds that it is to do with 'inequality' rather than 'poverty'.  At one level, this is simply an issue of semantics - because of the potential confusion between 'absolute poverty in the third world' and 'relative poverty in the UK', we are also not very comfortable with the phrase 'relative poverty' and this is why we use the more descriptive 'in low-income households' throughout this website.

But at another level, the criticism is simply confused: whilst 'inequality' is about differences in income across the whole of the income distribution, 'relative poverty' is about the number of people who have incomes a long way below those of people in the middle of the income distribution.  These two things are very different.  For example, whilst there will inevitably always be inequality, there is no logical or arithmetic reason why there should always be people in relative poverty.

To summarise: whether one believes that relative poverty is important or not is a matter of opinion, but all political parties in the UK believe that it is important and so do we.  There are well-established ways of measuring the extent of relative poverty and it is these methods to which this website adheres.

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