The Peter Saunders Wars

I’ve just finished reading a book by the left-wing Peter Saunders, entitled The Poverty Wars. Much of it is a critique of the right-wing Peter Saunders, which as the author mentions at the outset has caused them both frustration.* He gets around this by referring to his opponent as "Peter Saunders" and to himself as "Saunders". In this post, I’ll take an even simpler approach – referring only to the left-wing Peter Saunders from now on.

There’s plenty to like in the book. Peter strikes a nice balance between the politics, statistics and anecdotes of poverty. I had some minor quibbles (eg. I think the connection between inequality and health is more tenuous than he acknowledges – though Imagining Australia also overstates the evidence, so I’m a glasshouse-dwelling stonethrower on this point).

But the big point is the "right" measure of poverty. Whereas Americans use a basket of goods approach** ("absolute poverty"), Australian and European poverty researchers prefer to measure poverty relative to average earnings ("relative poverty"). A commonly used standard in Australia is the fraction of people with size-adjusted family incomes that are below half the median (typical) family income.

So which is better? Critics of absolute poverty – like the left-wing Peter Saunders – charge that societal standards about what constitutes "deprivation" change over time. What Australians regarded as poverty in 1900 is clearly different to 2005. The only way of working out poverty, he argues, is to calculate it by reference to the income of the typical Australian.

On the other hand, critics of relative poverty charge that it’s really measuring inequality. If we tripled the income of those on and above the median, and doubled the income of those below the median, the poverty rate would rise dramatically. Somehow I don’t think this is what most Australians have in mind when they think about poverty. Indeed, Peter quotes from several surveys in which people seem to be rejecting the relative poverty notion in favour of an absolute standard. I’d reckon most Australians would be surprised to learn that regardless of how fast the incomes of the poor are rising, the poverty rate will rise if the median worker is doing better still.

Although Peter points out that relative poverty doesn’t measure inequality at the top of the distribution, it’s clearly highly correlated to inequality at the bottom of the distribution. And the two measures co-move closely. For example, when you take the Luxembourg Income Study data, the correlation between the gini and relative poverty is very high (0.91). I happen to think that inequality matters, so I’d rather see a serious debate about inequality, than having it dressed up as poverty.

At the end, Peter gives the example of the Blair government, whose "abolish child poverty by 2020" goals will take both absolute and relative poverty into account. This seems a sensible start. Better yet, they might consider jettisoning relative poverty, and taking about two concepts: absolute poverty and inequality. Absolute poverty lines might have to be rejigged every few decades, but they’re closer to what most people mean when they talk about poverty.

* I once met a 3rd Peter Saunders, who works in the Department of Finance.

** The US poverty line starts by tripling the food requirements for a family of three, and is then adjusted to account for family size.

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12 Responses to The Peter Saunders Wars

  1. Sacha Blumen says:

    Hi Andrew,

    Yes, the idea of relative poverty is nonsense, for just the reasons you mention. To me, poverty is the lack of sufficient resources to sustain life in a non-struggling way (and here I mean really struggling, not the “oh isn’t it hard to pay an expensive mortgage and maintain two cars” type of struggling). Something of this order. Perhaps one measure is –
    (i) having sufficiently good shelter
    (ii) having sufficiently good food for nutrition
    (iii) and then all the relationship/emotional connections.

    These are just some thoughts.

  2. Sacha Blumen says:

    Just another thing – inequality is quite a different thang (as you suggest).

  3. Why didn’t they do what a lot of academics with common names do and publish using their middle initials – ie Peter A. Saunders and Peter B. Saunders?

  4. Sinclair Davidson says:

    I went on a social history tour of Soweto once (and sent some afternoons at Baraganth Hospital – now Chris Hani Hospital), and tend to be very irritated when people speak of poverty in Australia. There may be some Aboriginal communities that approach what you would see in Africa, but the general commentary about people living in poverty in Australia is just bunk. While Andrew is an exception, I think the welfare lobby in general is happy to muddy the waters on this point.

  5. spog says:

    One common practice (intentional or not) of those who like their poverty measures to be relative is to write about it as if they are discussing absolute measures. It’s difficult to fire up people to join an anti-poverty crusade if you reveal that your terminology reflects a very different concept (“inequality”) from that which you appear to be writing about.

    Suggesting x million people are living in poverty conjures up a different set of emotions from saying that x million people’s standard of living isn’t improving as fast as the rest.

  6. Actually, using the HPI as a poverty measure — if you double everybody’s income then poverty goes up and if you halve everybody’s income poverty goes down.

    In the face of that — I would have thought people who continue to call the HPI a poverty measure should be henceforth banned from all serious debate.

  7. Andrew Leigh says:

    Mark, I met the right-wing Peter Saunders at my Melbourne conference today, and asked him your question. He said their middle initials are indeed different, but neither like using them. Might be a British thing…

  8. Don says:

    When the two Peter Saunders gave evidence at the Senate poverty inquiry they had them give their middle names:

    Peter Gordon Saunders SPRC (left)
    Peter Robert Saunders CIS (right)

    Since they’re both late-career academics they probably don’t want to lose continuity with their citations.

    A few years ago I started referring to the left-wing Peter Saunders as ‘good’ Peter Saunders and the right-wing Peter Saunders as ‘evil’ Peter Saunders. Paddy McGuinness adopted a similar strategy — Peter Saunders the Good and Peter Saunders the Bad.

    On the subject of absolute poverty measures — these often seem more objective and value-free than they really are.

    Seebohm Rowntree’s poverty line, for example, drew on Atwater’s research into nutrition and was supposedly based around the amount of food needed for bare physical efficiency. Rowntree didn’t even allow for expenses like the burial of a dead child. But, curiously, Rowntree’s budget was designed to cover the cost of coffee, tea, and cocoa. In a footnote he has a story about what happened in an English workhouse when the local government board decided to replace tea with gruel — there was an uproar and the inmates got up and marched out of the room.

    In the end just about everyone ends up agreeing with Adam Smith’s idea that some goods are social necessities.

  9. I know three Barry Joneses.

  10. spog says:

    The two names for Peter S. are interesting. Round here, they are known as Peter the evil and Peter the boring. You can choose which is which.

  11. Andrew Leigh says:

    Nicholas, that must make it hard to keep up with them.

  12. Jason D'Abreo says:

    Relative poverty is a difficult concept to grasp when you compare the deprivation experienced by someone living in St. Albans to someone living in Toorak and than compared the living conditions in Africa to those in St. Albans. But the point which always clarifies the importance of relative deprivation measures for me is when you consider the difference in growing up in a family from St. Albans vs a family in Toorak. In a neoliberal society which stresses competition, a level playing field and survival of the fittest there is a serious problem when a considerable portion of our youth are competing against other youth with resources and help which they could never imagine. Sure the unemployed worker looking to feed of the system does not deserve more than what he needs to survive, but is it fair that a young child attending school is unable to adequately compete with other children because of the choices of his/her parents? I think that absolute poverty can work, it just needs to consider the minimium required to survive and give opportunity to succeed within society, not the minimium to simply subsist as a human being.

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