The Looking Glass | Defining Poverty
Defining poverty is about distinguishing between those who are poor and those who aren’t, and is an exercise in precision. If concepts deal with meanings, definitions deal with boundaries. The term “poverty” is often bandied about by politicians, the public, and even academics without much thought given to what any of these people actually mean by it. A “notoriously ill-defined term,” it is also a contentious one with different people and groups using it to mean very different things.
Often characterised as “absolute” and “relative” poverty, such comparisons between societies can sometimes lead to the conclusion that poverty doesn’t “exist” in New Zealand. This paper assumes that poverty is a meaningful concept and a reality in developing and developed countries like New Zealand alike, but leaves the door wide open for debate on what constitutes poverty here and now.
APPROACHES TO DEFINING POVERTY
Absolute poverty is usually associated with basic needs, and is most commonly tied to notions of subsistence or survival—people are poor if they can’t afford food. In its purest form, absolute poverty considers how many calories a person needs to survive and how much the acquisition of those calories would cost. But many definitions of absolute poverty go beyond mere caloric intake. Perhaps the most influential definition of absolute poverty was agreed upon at the UN World Summit on Social Development in Copenhagen in 1995, where 117 countries committed to end “absolute” and to reduce “overall” poverty.
Absolute poverty was defined there as—a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services.
The idea of linking basic needs with poverty makes sense, as it can be safely assumed that all humans have similar needs. And yet the definition of absolute poverty can never be fully objective. As leading UK expert on poverty Professor Peter Townsend famously argued, even basic needs such as nutrition cannot be separated from context. Caloric needs will vary based on metabolic rates, age, and activities. A teenager generally needs more food than an octogenarian, for example. Furthermore, food availability, taste, and costs need to be factored in to determine what is adequate. Even “absolute” poverty is, to some extent then, relative.
Relative definitions of poverty transformed our understanding of poverty in the same way Einstein’s theory of relativity did for physics. Poverty can be considered to be relative in three ways: over time, within a society, or across societies. To say someone is poor in this sense is similar to saying someone is short or skinny; these statements only make sense relative to a particular reference person or group—that is they only make sense when put into context.
Townsend defined relative poverty as follows—Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the type of diet, participate in the activities and have the living conditions and amenities which are customary, or at least widely encouraged, or approved, in the societies to which they belong. Their resources 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.
Interestingly, this definition from Copenhagen remains the only internationally agreed upon definition of poverty. It finds resonance here in New Zealand where our own poverty has also been defined in relative terms.
For instance, the 1972 Royal Commission on Social Security stated that everyone should be—able to enjoy a standard of living much like that of the rest of the community and thus is able to feel a sense of participation and belonging to the community…[so that] no-one… is so poor that they cannot eat the sort of food that New Zealanders usually eat, wear the same sort of clothes, [and] take a moderate part in those activities which the ordinary New Zealander takes part in as a matter of course.
And more recently, the Children’s Commissioner’s Expert Advisory Group (EAG) suggested this definition of child poverty—Children living in poverty are those who experience deprivation of the material resources and income that is required for them to develop and thrive, leaving such children unable to enjoy their rights, achieve their full potential and participate as full and equal members of New Zealand society.
While the EAG’s definition uses the language of rights, the idea of being excluded from participation in society due to lack of resources remains important and is common to all of the definitions of relative poverty in this section. The broad term “social exclusion,” used primarily in European countries, is related yet distinct from poverty. Using Townsend’s definition as a base, the distinction is that “poverty is a lack of resources (income, wealth, housing) and social exclusion a common consequence of poverty.” Some use the concepts synonymously, however this is a mistake for two reasons: 1) that people can lack resources but not be excluded from society, and 2) that people can be excluded from society for reasons not related to a lack of resources, such as for having a disability. In this sense, exclusion may result from poverty, but poverty does not necessarily imply exclusion and vice versa. Poverty is not exclusion from participation due to disability, racial discrimination, or unemployment—it is exclusion due to a lack of resources. Focussing on this “core” does not mean the broader aspects like broken relationships, shame and stigma, or lack of voice don’t matter—they do—but when defining poverty we must keep sight of what is unique to the experience.
The relative aspect of poverty also raises the question of inequality, another related, yet distinct aspect of poverty. In theory, under the relative definition above, a society could be extremely unequal, but not have any poverty if everyone had enough resources to avoid hardship. Conversely, a society could be poor but not unequal. Poverty is, as Alcock argues, better understood as “the unacceptable dimension of inequality,” or as MSD researcher Bryan Perry clearly explains, about “not enough” rather than just “less than.” It is the gap between those with an unacceptable way of life and those living minimally acceptable lives—sometimes called the poverty gap— that is most relevant to understanding poverty.
BEYOND ABSOLUTE AND RELATIVE POVERTY
What should be clear is that poverty is both absolute and relative. It is absolute in that there are certain reasonably universal needs that all humans have, and that to be without them is to live in a state of unacceptable hardship; it is relative in that different societies in different times impose different needs upon people which must be met in ways specific to their society and time. In other words, as Alcock puts it: “absolute definitions of poverty necessarily involve relative judgments to apply them to any particular society; and relative definitions require some absolute core in order to distinguish them from broader inequalities.” Amartya Sen’s famous Capability Approach also comes to a similar conclusion. Because poverty is both a universal human concept with respect to needs and a historical/cultural concept with respect to resources, there are necessarily shared meanings across both developed and developing countries. To have entirely separate definitions and measurements for developing and developed countries highlights a worrying lack of clarity over what exactly is being defined.
As we saw earlier, needs play a central role in understanding well-being. They also play a central role in understanding poverty. Lister argues that the “various articulations and re-articulations of the notions of and relationship between ‘absolute’ and ‘relative’ serve to illustrate that they represent different constructions of poverty, based on different understandings of human needs, rather than two distinct realities.” How does this work? The answer lies in the relationship between needs and resources.
Indeed, Adam Smith recognised this in the eighteenth century—By necessaries I understand, not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without.
Though poverty remains difficult to define, we can discern some harmony amidst the discord, that is some overlap between definitions and synthesis among approaches. Two key ideas or characteristics that consistently feature across definitions have hopefully become clear.
- an unacceptable situation where a person’s way of life falls below a decent minimum standard of a particular society at a particular time, and
- a lack of resources to rise above that situation.
Now that we hopefully have a better grasp of what we are talking about when we refer to poverty, we can finally move towards measuring it.
This is an extract from Kieran’s research series “The Heart of Poverty | Matching Passion with Precision for Struggling New Zealanders” Issues Paper. (Released 2014)
 B. Nolan and C. Whelan, Resources, deprivation, and poverty, (Oxford, Oxford University Press, 1996), 1.
 B. Nolan and C. Whelan, Resources, deprivation, and poverty, 1.
 B. Nolan and C. Whelan, Resources, deprivation, and poverty, 194.
 For an example definition, see K. Joseph and J. Sumption, Equality (London: 1979) cited in R. Lister, Poverty, 21. It can also refer to poverty lines that reflect a standard anchored in a particular reference year’s median income, also called “fixed line” or “constant value” measures. These measures are actually relative, and are only “absolute” in how the standards are set. The usage for “absolute” here can be confusing. We will discuss “fixed” lines more below in Section 4.
 United Nations, The Copenhagen Declaration and Programme of Action: World Summit for Social Development 6-12 March 1995, (New York: United Nations Department of Publications, 1995)
 Or as David Piachaud writes, “Close to subsistence level there is indeed some absolute minimum necessary for survival but apart from this, any poverty standard must reflect prevailing social standards: it must be a relative standard.” D. Piachaud, “Problems in the Definition and Measurement of Poverty.” Journal of Social Policy 16, no. 2 (1987), 148 cited in B. Nolan and C. Whelan, Resources, deprivation, and poverty, 11.
 P. Townsend, The international analysis of poverty (Harvester Wheatsheaf, 1993), 31
 P. V. Sukhatme, “Nutritional adaptation and variability,” European Journal of Clinical Nutrition (1989), 43; P. R. Payne, Poverty, Undernutrition and Living Standards, (Oxford: Clarendon Press, 1993) cited in Laderchi. et. al, QEH Working Paper Number 107, Does it matter that we don’t agree on the definition of poverty? A comparison of four approaches (Oxford: Queen Elizabeth house, 2003) 10.
 Laderchi. et. al, QEH Working Paper Number 107, Does it matter that we don’t agree on the definition of poverty? A comparison of four approaches, 10.. See also R. Lister, Poverty, 22-23.
 S. G. Reddy and T. W. Pogge, How not to count the poor, (New York: Barnard College, 2002); M. Ravillion, How not to count the poor. A reply to Reddy and Pogge, (Washington DC: World Bank, 2002) cited in Laderchi. et. al, QEH Working Paper Number 107, Does it matter that we don’t agree on the definition of poverty? A comparison of four approaches, 13.
 R. Lister, Poverty, 22.
 B. Abel-Smith and P. Townsend. The poor and the poorest (G. Bell & Sons, 1965), 63
 P. Townsend, Poverty in the United Kingdom (Harmondsworth: Penguin, 1979), 31.
 D. Gordon and S. Nandy, “Measuring child poverty and deprivation” in Global child poverty and well-being: Measurement, concepts, policy and action, A. Minujin and S. Nandy eds. (Bristol: Policy Press, 2012), 57-101.
 Ministry of Social Development, The Social Report 2010, (Wellington: Ministry of Social Development, 2011), 60.
 Expert Advisory Group on Solutions to Child Poverty, Working Paper No.1, Defining and Measuring Child Poverty (Office of the Children’s Commissioner, 2012). It is worth noting that this definition is almost verbatim from UNICEF’s child poverty definition, with the exception of “spiritual and emotional resources” being omitted from the EAG definition. UNICEF, The State of the World of the Children 2005 – Childhood under Threat (New York: UNICEF, 2005).
 A related distinction can be made between definitions with “a concern with the attainment of minimum standard of living and a concern with people’s rights as citizens to a minimum level of resources, the disposal of which is a matter to them.” Actual standards of living become irrelevant in the rights-based conception because rights to a minimum level of resources are paramount. B. Nolan and C. Whelan, Resources, deprivation, and poverty, 12. See also T. Atkinson et. al., Social Indicators: The EU and Social Exclusion (Oxford University Press: 2002), 81
 For a good discussion on the distinction, see B. Nolan and C. Whelan, Resources, deprivation, and poverty, 188-195.
 D. Gordon, “Definitions of Concepts for the Perceptions of Poverty and Social Exclusion” in J. Bradshaw et. al., Perceptions of poverty and social exclusion, (Bristol: Townsend Centre for International Poverty Research. 1998). Another perspective is that of Abrahamson, who argues that poverty is a phenomenon of early modern society and social exclusion a post-modern one, where “a minority of people who are marginalised from mainstream middle class society.” P. Abrahamson, “Combating Poverty and Social Exclusion in Europe,” in The Social Quality of Europe, eds W. Beck, L. Van der Maesen and A. Walker (Bristol: The Policy Press, 1998), 147 cited in R. Berger-Schmitt and H. Noll, Conceptual Framework and Structure of a European System of Social Indicators, EUReporting Working Paper No.9 (Mannheim: Centre for Survey Research and Methodology, 2000), 16.
 B. Nolan and C. Whelan, Resources, deprivation, and poverty, 187-188.
 This is particularly important when definitions are translated into measurements—broader definitions can be extremely difficult, if not impossible, to operationalise. R. Lister, Poverty, 13; B. Nolan and C. Whelan, Resources, deprivation, and poverty, 193.
 P. Alcock, Understanding Poverty, 6.
 B. Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2012, 95.
 Or as Else Øyen puts it, poverty is “at the same time culture-bound and universal.” E. Øyen, “Poverty Research Rethought” in E. Øyen, S. M. Miller and S. A. Samad, eds. Poverty: a global review: handbook on international poverty research. Vol. 5. (Scandinavian University Press, 1996), 4 cited in R. Lister, Poverty, 3.
 P. Alcock, Understanding Poverty, 68.
 For more on the capabilities approach, see A. Sen, Inequality re-examined, (Oxford University Press, 1992).
 This means that some literature on developing countries is relevant and included in this paper. See also, S. Chen and M. Ravallion. Weakly relative poverty, https:// openknowledge.worldbank.org/handle/10986/4168 (World Bank, 2009) (Accessed 14 January 2014); M. Ravallion, “Poverty Lines Across the World” in Oxford Handbook of the Economics of Poverty. P. Townsend, “Poverty, social exclusion and social polarisation: the need to construct an international welfare state” in P. Townsend, and D. Gordon eds. World poverty: New policies to defeat an old enemy. (Bristol: Policy Press 2002), 3-24.; K. Ohmae, K., “Managing in a borderless world.” Harvard Business Review 67 no.3, (1989), 152-161; R. Lister, Poverty, 12.
For a well-reasoned critique of poverty measurement over the past few decades, see S. Ringen, “Poverty – The Rowntree Project Revisited.” Kristian Niemetz clarifies further: “Understanding ‘absolute poverty’ as ‘extreme poverty’, and ‘relative poverty’ as ‘moderate poverty’, confounds two distinct categories. An absolute poverty indicator need not be minimalistic and a relative poverty indicator need not be encompassing. (See Canadian Market Based Measure as example of generous absolute standard)” K. Niemetz, A New Understanding of Poverty, (London, IEA: 2011), 44.
 R. Lister, Poverty, 34.
 A. Smith, Wealth of Nations, Bk. 5, Ch.2, P.2 (1776).
 See John Veit-Wilson’s section on poverty in Fitzpatrick et. al, Routledge International Encyclopedia of Social Policy, (Routledge, 2006) for an alternative definition which synthesises other widely accepted poverty definitions.