Poverty in Canada (2nd Edition)

THE RELATIVE APPROACH TO DEFINING and measuring poverty is an illegitimate way of looking at this important social and economic problem. Relative poverty lines are simply not believable because they are not related to most people's understanding of what it means to be poor. By including social amenities, explicitly or otherwise, the relative approach effectively redefines poverty as inequality. This is not appropriate. Poverty is a strong and uncomplimentary term. It does not mean, nor has it ever meant, "comparatively less well-off." If poverty is to mean anything and if the problem is to be taken seriously, its connection to basic necessities must be restored. We trivialize the hardship and deprivation of those who are struggling to get by when we include those who are substantially better off. Traditionally, a person or family has been regarded as poor if they can, at best, afford just the basic necessities. They are deprived of any amenities or non-necessities that are available in their society. It's precisely the deprivation of amenities that renders them poor.

An alternative approach to defining and measuring poverty based on the cost of providing essential goods and services—the so called "absolute" approach—is a far more reliable and satisfactory way of viewing this important issue. What I propose then is a restoration of the traditional "necessities" notion of poverty and therefore a brand new way of measuring it.

Critics of the absolute approach have argued that the concept of absolute poverty is too narrow and that there is a "social deprivation" component to poverty that goes beyond the insufficiency of physical necessities. "Absolute poverty lines are too low to ensure that a person can fully participate in society." Supporters respond by arguing that, first and foremost, poverty means physical deprivation. We must have a way of identifying those in our society who lack basic necessities. Even die-hard relativists would, surely, regard this as important information. Supporters of the relative approach are quite entitled to develop social adequacy levels but they should not be confused with poverty lines. Elevating the poverty line does nothing at all for the poor. It may in fact do them great harm as was argued earlier.

The advantages of the absolute approach are threefold. It allows us to identify those who lack basic necessities. This is an important demographic fact independent of its usefulness as a guide to policy. It also makes possible valid intertemporal comparisons of the incidence of poverty within a given society. The relative approach, lacking a constant standard, cannot do this. Finally, the absolute approach potentially permits legitimate international comparisons of poverty incidence. Such comparisons are useful to a wide range of scholars.

It is best to begin with a very simple definition of poverty and leave any adjustments, amendments and exceptions for later. An economic unit is defined as poor if it can, at best, afford only the basic necessities. Income rather than consumption is used as an indicator of poverty. Although income may understate the actual standard of living, as, for example, when a household dissaves, borrows or receives private assistance or when it spends unreported income, data availability constrains us to employ income as our measuring stick.

Now the very difficult question of what constitutes basic necessities must be dealt with. While I believe it is possible to achieve wide agreement on a list of basic necessities, there is simply no question that the choices rely on subjective judgments. It would be a mistake to regard the absolute approach as totally "objective." It is essential therefore that every assumption and judgement be clearly identified and justified.

The first judgement has already been made. Social amenities are excluded from the list of necessities. To include any of them would be inconsistent with our definition of poverty. This is not to deny that social amenities may be relevant in determining psychological well-being and that psychological well-being has an affect on long term physical health. However, there exists no necessary relationship between the absence of social amenities (such as alcohol, vacations and tennis lessons) and psychological health. It is not obvious that the social needs of the middle class are less intense than those of low income families. Once basic physical needs have been satisfied, misery and income may no longer be inversely related.

The construction of a "social comfort line" or "social amenities index" might be a way to integrate notions of poverty and social deprivation. I would expect, however, that such a construct would be fraught with theoretical and practical difficulties. Consider, for example, the social activity of gift giving. What level of expenditure on a gift is a social necessity. Some might argue that $50 is perfectly adequate while others will maintain that you can't get anything "decent" unless you spend several times that. Should the amount allowed for gifts take into account the number of friends and relatives one has? Similar problems are encountered with amenities such as vacation expenditures. The amounts allocated do matter especially if they are used as the basis for rates of social assistance. If the recipient perceives the amounts allowed for social amenities to be insufficient or to be merely token, the allowance may not have the desired effect of improving psychological well-being but rather cause frustration and dissatisfaction.

Rather than develop a specific social amenities list, one might prefer to "add-on" a percentage to the poverty line as a way of avoiding these difficulties. For example, the social comfort level could be set at, say, twice the poverty line. Since social adequacy is about having choices, it is not necessary to specify, even generally, what those choices should be. In spite of the arbitrariness of this approach, it has many advantages over the budget method, not the least of which is simplicity.

The point of this discussion is that social amenities cannot be considered as equivalent to basic physical necessities. The poverty line should not be an index of inequality. I count myself among those who want much more for the poor than they currently have. Poverty should not have to be redefined to help them get it.

Poverty defined

Poverty can now be defined more precisely. Someone is in a state of poverty if he lacks any item required to maintain long term physical well-being. For able bodied persons, the list would consist of a nutritious diet, shelter, clothing, personal hygiene needs, health care, transportation and telephone. Transportation means any mode required in the process of obtaining other basic necessities. In order to operationalize this definition, we need to specify the "nature" of each of the items. This is where the "relative" aspect of "absolute" poverty is introduced. It is assumed that the type and quality of each item (or sub item) is at least at the minimum acceptable standard within the community in which one resides. For example, if the community norm for shelter is a mud hut, then anyone lacking a mud hut (or better) is poor. In Canada, the shelter norm in most communities is a home or an apartment. If one can, at best, afford only a hostel or a tent, one is poor by that standard alone. Similarly, with food there not only exists minimal nutritional standards but also palatability norms. The usual way of acquiring food in Canadian communities is the selection of a list of healthy, enjoyable foods at grocery stores. Anyone whose low income means that they must use food banks, beg for food or can only afford a boring and unappetizing diet is poor. For each and every item, whatever is regarded as the normal minimum acceptable or "decent" is used here. In summary then, the overall list remains constant over time but the type and quality of each item will change to reflect improving community standards.

Does this approach permit valid intertemporal comparisons? I argue that it does. With the exception of a telephone, the list of basic physical needs would be relevant for the Canada of 100 or even 200 years ago. Only the standard of quality of each item will have changed. Homes and rented accommodations now, almost universally, have indoor plumbing, electricity, central heating systems, refrigerators and other labour saving devices and appliances. Nutritional and hygiene standards have improved markedly, accounting in large part for increased longevity. The normal modes of non-human transportation have changed. People had the same physical needs many years ago even if they were satisfied less adequately, as a norm. Since the early post war period, a telephone has become part of the standard facilities in a home, like indoor plumbing, refrigerators and stoves. It has become part of the minimum acceptable standard for shelter just as private bath has. What has changed most dramatically over time is the provision of medical care. The little professional care that was available, say around the time of confederation, was almost the exclusive preserve of the wealthy. The "norm" at that time was undoubtedly medical care by family members or relatives in times of emergency. The minimum acceptable standard today is a full range of preventative and emergency care, medicines as well as dental and vision care.

In the future, we expect continued improvements in each area, particularly in the quality of shelter and health care. Even though the standards of acceptability will change over time, the basic list remains constant. Intertemporal comparisons, therefore, are completely valid with the 'necessities' approach. An individual or family that was unable to acquire all of their basic needs 50 or 100 years ago is just as poor as their counterparts today, regardless of the fact that minimum acceptable community standards have improved.

What about international comparisons? Again, the answer is affirmative. The necessities definition permits valid comparisons between nations. Norms of minimum acceptability vary substantially between countries, and sometimes between regions of the same country. With the necessities approach, we compare the same things even though the standards of quality of those things may be different. A person who cannot acquire acceptable shelter in Canada suffers no less than someone in the same situation in Mexico or India in spite of the fact that the shelter he is without contains more facilities. The man in China who cannot afford his daily rice and corn is no more poor than the woman in Canada who cannot acquire a nutritional, balanced, and palatable diet. It is true, however, that both the incidence and depth of poverty in less developed countries will generally be much greater than in Canada. The necessities approach, unlike the relative approach, will capture that.

Our understanding of the extent of poverty in Canada is wholly inadequate because of the reliance on relative measures. We must divorce what we want for the poor from the attempt to determine the conditions in which they live. Poverty means that people do not have all of their basic physical needs and only a "necessities" approach is useful or valid in measuring its incidence. As defined here, it is the only way to make legitimate intertemporal and international comparisons.

Chapters 5 and 6 contain the detailed methodology for the determination of the essential costs of living. Chapter 7 pulls essential costs together, establishes poverty lines and estimates the extent of poverty in Canada, province by province. A detailed profile of the poor is the subject of chapter 8.