Thursday, 16 February 2017

People believe poverty has increased because they are misinformed

The usually sensible John Rentoul has produced a very special sentence for the Independent...

So the solution to the puzzle is that, objectively, poverty hasn’t increased, but that people feel it has, which means that, in a way, it has. 

This could be read as the final, feeble pistol shot of the left after years spent predicting an epidemic of poverty due to 'austerity'/the Tories/the bankers that never appeared. In one line, Rentoul seems to have crystallised the left's preference for emotions over facts.

That is unfair, however. Badly worded though it is, Rentoul is making a point that is merely wrong, rather than insane.

It is a reference to the latest version of the Joseph Rowntree Foundation's Minimum Income Standard (MIS) which was published yesterday. JRF claims that 19 million people subsist on an inadequate income and are either in poverty or are 'at risk of poverty'. This is a rise of 4 million since 2008/09.

The MIS is based on what people in focus groups say they need to have an adequate standard of living. This is obviously subjective and, in practice, it is closer to an average standard of living than an 'adequate' one.

For example, here are some of the clothes that a mother of two needs to buy for herself (new) every single year in order to avoid being 'at risk of poverty', according to the MIS:

5 vest tops
4 pairs of jeans
4 jumpers
4 pairs of leggings
1 pair of jogging bottoms
2 summer skirts
2 winter skirts
5 smart tops
2 summer dresses
1 hat
1 scarf
1 pair of gloves
1 swimming costume
1 night dress
1 pair of pyjamas
1 pair of slippers
1 pair of flipflops
1 pair of flat boots
1 pair of heeled boots
1 pair of trainers
1 pair of court shoes

There are other items on the list that need to be bought more or less frequently, but that gives you a illustration. I'm not suggesting that this kind of annual wardrobe change is unusual for a woman, nor am I suggesting that you have to be rich to afford it. But to claim that you need to replace all this stuff every twelve months in order to have an 'adequate standard of living' is a bit of a stretch, in my view. And yet if you can't afford this, you are on the 'brink of poverty', according to the Independent.

I've written about the MIS before and was on the radio talking about it yesterday, so I won't go on about it here. Suffice to say, I don't think it measures poverty. The Joseph Rowntree Foundation also doesn't think it measures poverty and they are happy to confirm this when asked. But they can't stop the likes of The Guardian referring to the MIS as the 'poverty line' and I don't suppose they lose much sleep over people misrepresenting it as such.

Rentoul also interprets the MIS as a poverty line and he cites their figures as evidence that poverty has sort of got worse even though all the official evidence shows the opposite. For instance, here is the Office for National Statistics data showing income growth since 2007/08 (adjusted for inflation). Incomes have grown by 13 per cent in the bottom fifth. Only the richest fifth has seen a decline.

Since the strongest income growth has been in the poorest two fifths, it is hard to believe that four million people have been pushed into poverty an inadequate standard of living. JRF say this is because the cost of their basket of goods has risen by more than the RPI and CPI measures of inflation. I have no way of checking this but it would be surprising if the MIS basket was so dramatically different to the general basket of goods used by the government. It seems to be a partial explanation, at best.

Another explanation is that the JRF report stops at 2014/15 and thereby ignores the sharp rise in incomes seen in 2015/16. It is a shame they didn't wait a bit longer so they could get a more up to date picture (the new figures were published by the ONS last month).

In any case, if I am forced to choose between inflation-adjusted income data from the ONS and a dubious measure of not-really-poverty from JRF, I'm going to stick with the ONS. We know that unemployment is almost at a 40 year low, incomes are at an all-time high and wages grew by 2.6 per cent last year. Relative and absolute poverty are both lower than they were in 2008.

In other words, there is very little supporting evidence for JRF's claims except - as Rentoul points out - people's intuition. Accepting all the ONS evidence, Rentoul asks the question:

So why do people feel that poverty and inequality have become worse?   

In Rentoul's mind, the MIS holds the answer. People are getting wealthier but our definition of poverty keeps changing...

It would seem that the income most people think is needed for an acceptable life has risen faster than incomes generally. So we would now think of someone as “poor” if they cannot afford, say, a dishwasher, when we wouldn’t have thought that was necessary in the 1980s. 

This is true over the long-term, but I don't think the MIS has become conspicuously more generous since 2008/09. Even if it has, I don't think this explains the common belief that there is an epidemic of poverty and inequality.

I think there is a simpler explanation. Since at least 2008, the middle class left - as epitomised by The Guardian and Independent - has been asserting that poverty (a) is getting worse, and (b) will get even worse very soon. At first this was because of the recession - a plausible supposition but one that, broadly speaking, turned out to be false. Then it was because of cuts to public services under the umbrella of 'austerity'. Then it was because of welfare reform. And now it is because of Brexit.

They have been wrong every time for reasons I discussed in this post. There has been no audit of previous failed predictions and it has been remarkably difficult to get the basic facts in front of the public. The people Rentoul is addressing don't 'feel' that poverty has got worse in the sense that they, personally, have been plunged into poverty. They believe poverty has got worse because that has been the implicit or explicit message of the Independent for years.

They are simply misinformed - and they are happy to be misinformed because it suits their view of how the world works. That is why they cling to any crumb of evidence from the Joseph Rowntree Foundation or the Institute for Fiscal Studies while ignoring the Office for National Statistics. They are just wrong. No other explanation is required. People are wrong about all sorts of things and the belief in immiseration is just one of them.

No comments: