September 2000 Fraser Forum: Lies & Statistics

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Chris Sarlo

The headline, "Canada Does Poorly on Child Poverty" from the Globe and Mail in June of this year, says it all. Or does it?

The article states: "Canada lands near the bottom in a new ranking of child poverty in the world’s richest nations. With 15.5 percent of its children considered poor, Canada won the dubious distinction of ranking No. 17 among 23 industrialized nations in the first such report by Unicef." My comment on this so-called study is brief: utter nonsense!

But before we get to the nonsense part, let’s take a look at the rankings (see table 1).

What we find out, in reading the full article, is that the poverty measure used by Unicef is a purely relative indicator. A child is considered poor if he or she lives in a family with an income less than half the national median income. It doesn’t matter whether the child is hungry or not, or whether the child is ill-housed or not, or whether the child is likely to be well-educated. All that matters is the family’s relative position in the society in which it lives. What Unicef is selling here is not a poverty measure at all. It is nothing more or less than an indicator of inequality.

Thus, the top six countries in the ranking come as no surprise at all. These northern European nations are notoriously and aggressively redistributionist. The Scandinavian countries have long disdained financial success and have heavily penalized it. So, because the "poverty line" is purely relative, these nations with compressed income distributions fare much better than more market-oriented economies with greater dispersion of income.

What is surprising is the inclusion, above Canada, of such nations as Poland, Spain, Greece, Hungary, and the Czech Republic. While these countries are apparently improving by some indicators, they are hardly children’s paradises. As a group, the domestic product per capita is less than half that of Canada. Infant mortality rates are higher (excepting Spain’s); life expectancy is lower; and education attainment is considerably lower. Moreover, in 1993, three of these countries had some of their citizens surviving on less than $2 per day (in equivalent domestic purchasing power). The proportions in each country (Hungary (10.7%), Poland (15.1%) and the Czech Republic (55.1%)) reflect a widely accepted threshold for international (absolute) poverty comparisons. Canada had none of its citizens at this low level.¹ For Unicef to suggest that these countries are far better places for children than is Canada is simply senseless.

Indeed, the Unicef report does at least acknowledge that there is a debate about poverty definition going on and does do an interesting comparative calculation using the absolute US measure as a basis. Converting the US poverty threshold into other national currencies using equivalent purchasing power indices, Unicef determines the real child poverty rates in the various industrialized nations. (This is very close, incidently, to the basic needs child poverty rate for Canada.) Canada, in this case, ranks 7th at 9.5 percent. By comparison, Netherlands had an 11.1 percent child poverty rate, Italy had 38.1 percent, and the Czech republic, 83.1 percent! But this is not the information Unicef believes is relevant.

The absurdity of relative measures of poverty needs to be emphasized. People in the same circumstance in different countries are not treated equally. A hungry child in Canada will certainly be poor, but an equally hungry child in the Czech Republic may not be counted as poor by Unicef because she is not sufficiently different than most other children. With relative measures, we have no idea how many children in the various nations are genuinely deprived. We simply know how unequal they are within their own country. That is just not good enough. We desperately need legitimate international poverty rankings.

It is important that statistical reports, including my own, face critical examination. Statistics can deceive, mislead, or confuse. I urge readers to carefully examine any study that has findings contrary to other, credible evidence. Focus particular attention on how the key concept is defined; ask if it is a reasonable definition. I expect more "nonsense" studies will be released in the near future, so treat such studies warily.

Note

¹The data quoted in this paragraph is drawn from the World Development Indicators, published by the World Bank, 1999.

Chris Sarlo teaches economics at Nipissing University in North Bay, ON. He is the author of Poverty in Canada, published by The Fraser Institute.

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