New Understanding of Poverty

This ground-breaking study on the measurement of poverty shows how policy in this field has taken a wrong turn with disastrous results. In recent years, poverty has generally been understood in 'relative' terms. That is, people are regarded as poor if they earn less than some benchmark relative to average earnings. One perverse result of such relative poverty measures amongst many is that poverty often declines in a serious recession when the better paid lose their jobs. The policy response of income transfers, which are used to address the perceived problem of relative poverty, has often led to serious problems that actually reduce long-term opportunities for poorer people. The author proposes an entirely new way of measuring poverty. If this measure were applied, public policy would orientate itself towards creating the conditions that allowed the poor to become better off. Such a strategy would focus not only on ensuring economic growth and more labour market participation, but also on supply-side reforms that would reduce the cost of living for the poor. This monograph is essential reading for all involved in the poverty debate.Its approach to the measurement of poverty and its policy conclusion are original and soundly based on evidence.

Kristian Niemietz is the Institute of Economic Affairs' Poverty Research Fellow. He formerly worked for the Berlin-based Institute for Free Enterprise (IUF) and is the author of Redefining the Poverty Debate. John Meadowcroft is head of the department of political economy and senior lecturer in public policy at King's College London. He previously taught on the Hansard Scholars Programme at the London School of Economics and Political Science and in the department of politics at Queen Mary, University of London. He is book review editor of the journal Economic Affairs and serves on the Academic Advisory Council of the Institute of Economic Affairs.