Did Howard cut poverty? Absolutely (but not relatively)

Peter Siminski (who is coming to ANU for part of his sabbatical next year) has coauthored an interesting paper in the latest issue of the Australian Economic Review.

Changes in Poverty Rates during the Howard Era (gated, alas)
Joan R. Rodgers, Peter Siminski and James Bishop
This article considers changes in poverty rates under the Howard government. We also make three methodological contributions. We consider the statistical significance of the estimated changes in poverty. We propose a decomposition technique that reconciles the trends in absolute and relative poverty. We also use ‘poverty profiles’, which illustrate sensitivity to alternative poverty lines. We find decreases in absolute poverty and increases in relative poverty, both of which are statistically significant over a range of poverty lines. At a poverty line equal to half of the median income, the increase in relative poverty is statistically significant for all people and borders on significance for children.

I like that they’ve looked at absolute and relative poverty, and also that their study shows results using a variety of poverty lines. Here are two of the key graphs:



5 thoughts on “Did Howard cut poverty? Absolutely (but not relatively)”

  1. So to sum up over the period the poor became better-off but those on median incomes became (awful English)  ‘more better-off’.

    Trends in estimated relative poverty look shakier – and close to negligible – compared to those picked up for absolute poverty.


  2. I thought we only measured poerty relatively in Australia. So an ‘absolute’ measure is nonsensical, since the starting point is a relative measure.


  3. Wilful, An absolute measure is not nonsensical. It is defined relatively at the START of the series and then held fixed. Whereas, relative poverty compares people to a (presumably) increasing poverty line over time.
    It is also  harder to get as upset about relative poverty which (a) does not necessarily involve people shivering or starving and (b) contains at least an element of class envy.


  4. “It is also harder to get as upset about relative poverty which (a) does not necessarily involve people shivering or starving and (b) contains at least an element of class envy.”

    What a strange view of Australian life on the bottom rung.

    Relative poverty in the years cited often did actually mean a choice between shivering or starving in winter for those who rented and whose sole income was a Centrelink pension/bebefit/allowance, because increasing energy costs were never fully covered by the welfare saftey net and the increasing percentage of income spent on basic rent was out of proportion to that low income.

    It also meant that doing something as simple as buying one pair of shoes so that feet remained shod would limit the amount of food money available.

    For a good many Australians, making choices between “shivering or starving” remains a fact of life today.

    As for “class envy” – that’s an odd term for someone living in relative poverty (and reliant on Medicare) noticing that being able to afford medical insurance buys better health and dental care; that living in regional areas means that public health care is often limited or sub-standard (as well as frequently involving additional unaffordable long-distance travel costs)for chronic or life threatening illness, which leads to poor health outcomes.

    That’s not an example of class envy – that’s recognizing inequality and inequity.


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