All poverty measures define a ‘poverty line’, which separates those in poverty from everyone else. For example, when measuring child poverty by looking at family income, a ‘poverty line of £270 per week’ implies that a child is in poverty if their family’s weekly income is less than £270. This would be an absolute poverty measure, since the poverty line does not depend on the income of other families in the population. However, the measure of child poverty currently most cited is not absolute but relative, with the poverty line defined as 60% of the median family income. If you order families from highest to lowest income, the median family is the one in the middle. The poverty line, therefore, moves when median income moves, so a child’s position is assessed by looking at the income of its family relative to the income of other families. The government’s foremost child poverty target uses this relative income measure.
There are good reasons not to look exclusively at relative poverty. With a poverty line that increases with median income, it is better for relative poverty if median income is lower, other things being equal, but lowering the median income is not most people’s idea of desirable policy. During recession, when incomes across the board are likely to struggle, we should keep a close eye on absolute living standards. If all incomes fall, with median income falling fastest, then relative poverty will decline, but this would not be a laudable achievement.
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