Measuring poverty - alternative approaches

What is an adequate income that allows one to live free of poverty? By setting the poverty line at 60 per cent of median household income, Households Below Average Income (HBAI) suggests that any amount over this level is sufficient to lift a household out of poverty.

In fact, what HBAI provides is information about a household’s income relative to other households, and the level of income (in)equality in the UK. But it says nothing about whether 60 per cent of median household income is adequate to allow individuals and families to enjoy a socially acceptable standard of living.

Minimum Income Standard (MIS)

Exercises such as the Minimum Income Standard (MIS) project seek to fill this gap. Representative groups of the public work with experts to determine the income required to live at a socially acceptable level.

This approach captures changes in customary lifestyles as well as the necessary resources required to live a decent and inclusive life.

Comparison of HBAI and MIS

When we put the HBAI poverty line next to minimum income determined through the MIS project the full extent of the difference between the two approaches become apparent.

Family composition HBAI £/week MIS £/week shortfall £/week HBAI as a percentage of MIS
Couple     
One child under 14 257 300 43 86
One child under 14, one child over 14 300 387 87 78
 
Lone parent     
One child under 14 167 220 53 76
One child under 14, one child over 14 210 295 85 71