Misrepresenting ‘at-risk-of-poverty’ statistics

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Writing in today’s Irish Times Vincent Browne says:

On Monday last, Eurostat published its latest report on poverty and social exclusion. It showed that for the EU as a whole the at-risk-of-poverty rate was 24 per cent, but for Ireland, it was almost 30 per cent. Only three other countries in the EU 27 had a higher at-risk-of-poverty rate: Latvia, Lithuania and Romania.

This is the 2011 Eurostat press release on social exclusion and at-risk-of-poverty rates.  The first thing to note is that is contains no figure on the at risk-of-poverty rate in Ireland for any year.  It does contain 2010 data that gives the sum of the following three measures for each country.

  • Persons at-risk-of-poverty after social transfers
  • Persons severely materially deprived
  • Persons aged 0-59 living in households with very low work intensity

From the report there is no way of knowing how much of the 29.9% figure for Ireland (the joint fourth highest in the EU) is attributable to each category.

We have 2010 data on the at-risk-of-poverty rate.  The table from page 77 of the CSO’s 2010 EU-SILC publication released in March of this year is below the fold.

The three average figures provided for the at-risk-of-poverty rates in 2010 are:

  • EU-27: 16.4%
  • EU-15: 16.2%
  • Eurozone: 16.1%

The 2010 figure for Ireland is 16.1%.  This is lower than the EU27 and EU15 averages and equal to the Eurozone average.  Bulgaria, Greece, Spain, Italy, Cyprus, Latvia, Lithuania, Poland, Portugal, Romania and the United Kingdom all had a higher at-risk-of-poverty rates than Ireland.

In the same table it can also be seen that Ireland has the second-highest at-risk-of-poverty rate excluding all social transfers, well above all the EU averages.  The distribution of cash benefits improves Ireland’s ranking from 26th in the EU27 to 16th, with an at-risk-of-poverty rate below the EU27 average.

In 2010, the at risk-of-poverty rate in Ireland for people aged under 60 in households with very low work intensity was 38.8%.  The EU27 average was 56.9%.  Ireland’s at-risk-of-poverty rate for households with very low work intensity was the second lowest in the EU. Only the Netherlands at 36.7% had a lower rate in this category.  A table of these figures taken from Eurostat is also below the fold.

In 2010, the percentage of people aged under 60 living in households with very low work intensity was 22.8%.  the EU27 average was 10.0%.  Ireland’s rate on this measure was the highest in the EU, by a distance.  The next highest rate was in the UK at 13.1%.  These are also provided in the second table below.

Conclusion for 2010: Ireland has lots of people who live in households with very low work intensity.  Just over a third of these are at-risk-of-poverty, compared to nearly 60% in the EU.  Ireland’s at risk-of-poverty rate is below the EU27 average.

The 30% figure cited in today’s Irish Times is because Ireland has an very high number of households with low work intensity, not because Ireland has a high at-risk-of-poverty rate.  Ireland’s cash benefits system does more for people living in households with low work intensity than almost any EU country.  It is a pity the readers of the paper won’t know this.

Here are the overall at-risk-of poverty rates for 2010.

Here is a table which gives the proportion of people in household with low-work intensity and the proportion of those people who are at risk-of-poverty (below 60% of median equivalised income).  Figures relate to the population aged under 60.

23 Responses to “Misrepresenting ‘at-risk-of-poverty’ statistics”

  1. The Dork of Cork. Says:

    Its a policy tool.
    Irelands domestic economy uses a overvalued non national currency as a result of it non sov nature and high value multinational operations which pays the interest on debt.

    As a result many people who travel to work in the domestic rump sector of the economy burn more resources then what they produce.
    To make the economy more sticky many local people are paid to do nothing.

    They are in a sort of battery hen system.
    Some are happy within their confined space , some are not.

    The UK has much the same issue with its financial sector , nothing much happens outside of the London area.
    Basic Industry has been outsourced because its currency is too strong.
    It can also use monetary rather then fiscal means to keep the ship together so there is no need to give them much dole.

    In contrast Ireland must use fiscal measures and a higher dole to keep domestic demand above the point of absurdity.

    These people are conduits.

  2. fergaloh Says:

    So Ireland has a very large underclass that is stagnating and dependent on hand outs. That is massive structural mismanagement and a terrible waste of human resources.

    It would be better if there were less people in the ‘at risk of poverty’ than readers getting a warm feeling that the transfers are compensating for their poverty.

  3. bazza Says:

    Does anyone know of more detailed studies of this “low work intensity” category?

    Is this linked to the black market? There must be thousands of self-employed construction workers, taxi drivers, childminders etc. who are work almost full-time but claim that they work far less hours than they do.

    There really should be a carrot-and-stick approach to bringing black-labourers into the tax net: lower tax rates for small businesses and stricter enforcement of tax evasion.

  4. The Dork of Cork. Says:

    Great interview
    Economics professor Peter Bells portrait of England recorded a few days before the 1979 election. (starts 12.30)

    http://archive.org/details/AV_032-THE_NOT_SO_JOLLY_SIDE_OF_OLDE_ENGLAND

    This is very much where Ireland is today.
    It was the last time that someone could describe British towns as “Industrial.”

    To maintain the value of Sterling the city of London exported North Sea oil to the PIigs so as to earn a income from the Grot production , subtracting from domestic industrial consumption & production.

    For Ireland to remain in the eurozone the domestic (or external ?)elite will need to destroy all domestic demand.

    In many ways Ireland no longer exists much like British culture of the 70s & 80s.

  5. Brian Woods Snr Says:

    @ bazza: “There really should be a carrot-and-stick approach to bringing black-labourers into the tax net: lower tax rates for small businesses and stricter enforcement of tax evasion.”

    Eh! No, bazza! (by the way, hi there Dork!) – You need to dis-incentivize investment in financial capital and instruments and reward investment in productive (capital and labour) enterprises. The higher you set wage labour and consumption taxes the higher you push un-employment and lessen the likelyhood of any meaningful job creation.

    Neither do we need stricter tax enforcement – just abolish ALL tax write-off scams. Like, NO exceptions: period! If non-wage labour incomes (interest payments; rentals; cap gains) were taxed in exactly the same manner as wage-labour taxes (sort of a leveller field) then we might be able to slow the rate of our economic regression. Halting the regression means having balanced budgets for day-to-day spending (income = spending).

    The so-called Property Tax being proposed is actually an extractive wage-labour tax (or income tax, if you prefer). It is by no stretch of a dilusional imagination a land/ property asset value tax – despite all the PR sh*te from the usual sources. Stamp Duty is a what? Yeah! I thought so! Funny that!

  6. The Dork of Cork. Says:

    @Brian
    Its not a question of tax., more tax etc……..it a question of money supply.

    Ireland is taxed to debt.

    As for the micro social dynamic…..

    Something has happened to what I call the hungry low skilled but hard working lower class.
    He got work in factories up until 2004 ~ but after that he found he could not compete with a sophisticated middle class czech bloke who was prepared to do even more work for less.

    Many gave up on life after their houses went bust as the working class were the last people to get mortgages between 2004 & 2007.

    We have experienced a major social breakdown since about 1995 ~ as wages in the high energy industrial sector was suppressed to express false profits………….credit filled the hole until the hole became full.

    Its hard to motivate people when they know the system is a scam / a giant extraction mechanism.

    After this capital must use brute force so as to get a return on their declining real capital base.

  7. Paul W Says:

    @ Brian
    “The so-called Property Tax being proposed is actually an extractive wage-labour tax (or income tax, if you prefer). It is by no stretch of a dilusional imagination a land/ property asset value tax – despite all the PR sh*te from the usual sources. ”
    +1
    Well explained to the Man on the Street in this good article from Colette Browne in the Irish Examiner:

    http://www.irishexaminer.com/budget/analysis/somethings-rotten-in-state-of-ireland-the-coalition-and-its-regressive-budget-215976.html

    @ SC Your conclusion that “Ireland’s at risk-of-poverty rate is below the EU27 average.” simply does not tell the story. Yes, Ireland had an artifically high baseline for same during the boom years, which is currently (artifially) kept going with unlimited liquidity from the EU /IMF (to keep Ireland’s fixed cost base artificially high, to maintain some demand in the economy, to avoid total collapse). Your conclusion does not therefore address the underlying artificiality and that this is changing very rapidly in a very negative direction as the country’s debt situation becomes ever increasingly unsustainable…..And there will be no debt restructure for the country anytime soon. That is simply wishful thinking and is currently no basis upon which to plan.

  8. OMF Says:

    The first thing to note is that is contains no figure on the at risk-of-poverty rate in Ireland for any year.

    Irrelevant. The figure given (“30%”) is the total percentage of the population “at risk of poverty or social exclusion” as calculated by Eurostat.

    The 30% figure cited in today’s Irish Times is because Ireland has an very high number of households with low work intensity, not because Ireland has a high at-risk-of-poverty rate.

    Not true. The figure given is the at-risk-of-poverty rate.

    Yes, that figure is composed of
    1. Persons at-risk-of-poverty after social transfers
    2. Persons severly materially deprived
    3. Persons aged 0-59 in living in households with very low work intensity.

    But the final figure given is the total percentage of people at-risk-of-poverty.

    This figure is the percentage of people falling into at least one of the three categories. If you disagree with a category being a measure of persons at risk of poverty, fine. But Eurostat don’t, and so the 30% figure is correct and representative of the number of people on the breadline in this country.

    Mr Coffey I feel you are shifting the goalposts again. This is just like the 90 dpd mortgage arrears figure, and just as in that case my position is that we should not abandon a good measure simply because the numbers of people falling into it become too large. Households with low work intensity should still be regarded as a measure of risk of poverty in this country regardless of how many people fall into them.

  9. seafóid Says:

    I presume there are many formerly self employed who have now fallen into the low intensity of work category as demand continues to be sucked out of the economy so Bondwallahs can say things are getting better.

  10. The Dork of Cork. Says:

    During the credit boom budgets were given a importance above what was really going on in the economy.

    Now fiscal stuff is the only new money in the system efforts to revive the “real” economy (see speculative free banks issuing credit for a long run negative return) is given importance via “jobs Programmes ” with little domestic money /credit in the system.

    Both the credit inflation and money deflation periods post single European act must be looked at as the same event.
    Its a consequence of a fully private money system as private actors seek to extract and run down what remains of the real capital base.

  11. Paul W Says:

    @ Dork
    Debtors Prison….The Prisoner is still far too fat so far as the Jailors are concerned.

  12. DOCM Says:

    @ fergolah

    You put your finger on it!

    But the bigger question is how we got to this situation. I would suggest that a major element has been the clientelism resulting from the system of multi-seater constituencies and the PR electoral system. What we have in effect is a situation where the votes of one sector of the community are being purchased by politicians at the expense of another. This was fine while the one paying was prospering. This is no longer the case. And the losers have copped on to what is going on!

    This also holds true for the grey vote.

  13. JudgeJohnDeed Says:

    @Dork of Cork.
    Great to see you back commenting here.

  14. Seamus Coffey Says:

    @ OMF,

    The at-risk-of-poverty rate is the percentage of people whose equivalised income is less than 60% of the median income. This is the goalpost as defined by Eurostat.

    In 2010, the at-risk-of-poverty rate in Ireland was 16%. That is nearly half the 30% rate quoted in the piece. Ireland ranks 16th in the EU, not 24th.

    There is no need to abandon the at-risk-of-poverty rate although there are alternatives that can be used to complement it. What needs to be abandoned is the use of imaginery figures.

    Do you disagree that the at-risk-of-poverty rate is 16%?

  15. PR Guy Says:

    @The Dork of Cork

    “In many ways Ireland no longer exists much like British culture of the 70s & 80s.”

    Ah yes. The decades that taste forgot.

    @Seamus

    “It is a pity the readers of the paper won’t know this.”

    I will ask the Ed what the chances are of a correction.

  16. The Dork of Cork. Says:

    @PR
    What I mean by that is that one hinterland (former nation) did not trade with another ……….
    (there is no final settlement now)
    When the UK went into current account deficit in 1984 it no longer became a physical reality in some sense.
    It occupied a new and strange ether.

    In such a case Ireland should break from the euro soviet and free float the punt ?

    Why not ?

    Consumption , production and trade flows have no basis in rationality – we could get the motherlode of free inputs for no cost to ourself.

    All the cars we can drive.
    http://www.youtube.com/watch?v=ON-7v4qnHP8

    The Eurozone can continue to live in a fiat gold standard where each country cannot even print domestic money to rebalance its systems and get lectures about fiscal thingies from some retarded German who does not even realize he is a slave of the city.

    The worst of all worlds.

  17. The Dork of Cork. Says:

    @John~
    Yes but for how long…….

    I am beginning to think I am playing the fool as in King Lear……..

    The car crash will not be stopped.

  18. eamonn moran Says:

    @ Seamus Coffey and Paul W

    “Your conclusion does not therefore address the underlying artificiality and that this is changing very rapidly in a very negative direction as the country’s debt situation becomes ever increasingly unsustainable…..And there will be no debt restructure for the country anytime soon. That is simply wishful thinking and is currently no basis upon which to plan.”

    I think you are spot on there Paul but Seamus is right to question Vincent Brownes figures when they are wrong.

    There was an interesting study done recently for the Department of Social welfare on this issue. I noticed one table that the authors barely mentioned. Its on Page 28

    http://www.socialinclusion.ie/documents/2012-10-15_DSPFoodPovertyPaper_001.pdf

    18-30 years 16%
    31-40 years 13%
    41-50 years 11%
    51-60 years 10%
    61+ years 5%

    The HRP for young people is 3 times higher 16% than for older people 5%.

    This is a very dramatic change in a short period of time and is a direct result of social welfare policy. In the 2006 census 56% of people in the lowest decile were over 65. In 2011 it was only 24%

    The basic rate of social welfare has had either a dramatic change or remained static depending on your age between 2007 and 2011.
    Older people have been protected (old age pension has actually gone up about 10%) and younger people have had cuts of up to 47%
    The cut in child benefit yesterday for even the poorest families continues that trend of attacking the young disproportionately.

    So Seamus you are correct to point out that things are not as bad as Vincent makes out in his article but Paul is correct to point out that this is changing quickly, especially for younger age cohorts.

  19. Brian Woods Snr Says:

    ‘At risk of poverty’?? Now whose poverty would that be then? The purveyors of pieces of string?

    I have not got the relevant citations to hand, but some of our (western) historical Political Economists had this somewhat ‘warm glow’ explanation’ of what constituted a ‘living income’. It was certaintly not a minimum.

    So all those nifty stats averaging this or that are essentially useless – except to the intellectually and cognitively challenged – who wave them about with great flourishes. No thinking needed!

    Inconvenient truths are another matter entirely. Folk need an income to live by. So what is that level of income here in Irl Inc? – not in some other state. So whence a living income?

    Is waged-labour the ONLY way to obtain an living income? Clearly not. Is it possible to provide this living income to those who are unable (because of age, educational, physical, medical or cognitive reasons) to obtain it by engaging in waged-labour activities?

    Is it an economic, social or perhaps a political problem if there is a constant ‘demand’ to lower waged-labour incomes and welfare transfers?

    If capital investment is directed away from productive activities (making stuff) toward financial activities (rent-seeking) then you are guaranteed to have less employments and greater numbers of dependents. Is this an economically, socially and politically desirable outcome?

    Incomes have different natures and sources and uses. You must consider and understand this carefully. This is the ‘hard’ thinking – it confronts those inconvenient truths and challenges our ‘growth’ paradigm.

  20. Paul W Says:

    @ Brian
    +1
    Good post.

  21. Seamus Coffey Says:

    For those interested here are a couple of notices circulated by the CSO:

    First on the 22nd of November last:

    Dear SILC users,

    I would like to introduce myself, my name is Steve MacFeely and I have recently been appointed Assistant Director General of CSO with responsibility for Social and Demographic Statistics. Unfortunately, one of my first tasks in this role is to inform you that the publication of SILC scheduled for 28th November has been postponed and is now rescheduled for 12th December. I apologise for this delay but I assure you it is unavoidable, as we need more time to investigate and perhaps correct a number of unexplained anomalies. You should note that these analyses may result in some revisions to the 2010 data.

    Again, I would like to apologise for the delay but as I am sure you will appreciate, our primary focus is to ensure that CSO publishes accurate and robust information.

    And then this morning:

    Dear SILC users

    Unfortunately, we will be unable to publish SILC data on 12th December as we had hoped. Investigation of the data is continuing. I apologise for the extra delay and will inform you as soon as a new publication date has been decided.

    It will be interesting to see what impact the revisions have on this.

  22. ObsessiveMathsFreak Says:

    The at-risk-of-poverty rate is the percentage of people whose equivalised income is less than 60% of the median income. This is the goalpost as defined by Eurostat.

    I don’t understand how we are reading the same report. The Eurostat report(5th column) gives 30% as the at-risk-of-poverty rate for 2010. There was not rate given for 2011, but are you saying that this rate should be 16%? But that would only count on of Eurostat’s three categories.

    Do you disagree that the at-risk-of-poverty rate is 16%?

    Yes. I think that the figure is at least the 30% figure from the year 2010.

  23. Seamus Coffey Says:

    @ OMF,

    the 30% number refers to “Persons falling under at least one of the three
    criteria (at risk of poverty or social exclusion)”.

    It is a combination of at-risk-of-poverty and social exclusion. Social exclusion is measured by material deprivation and very-low work intensity. The breakdown into each category for Ireland is not provided in the release because the 2011 figures are not yet available from the CSO.

    We have the 2010 figures (though these are subject to revision)

    At-risk-of-poverty: 16.1%
    Severely materially deprived: 7.5%
    Very-low work intensity household: 22.8%

    The 29.9% figure is the percentage of the population who are in at least one of these categories. The figure for at-risk-of-poverty is 16.1%. I cannot see how it can be 30%.

    Just because a person lives in a household with very-low work intensity does not automatically mean they are in the at-risk-of-poverty category.

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