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1、2020 A CRITICAL ASSESSMENT OF CANADAS OFFICIAL POVERTY LINE Christopher A. Sarlo fraserinstitute.org fraserinstitute.org Contents Executive Summary/i Introduction/1 The Market Basket Measure: Origin and Development/3 The MBM Conceptual Foundation /7 The Nature and Structure of the Market Basket Meas
2、ure /8 Commentary (Conceptual and Empirical Issues with the MBM) /26 Conclusion /46 Appendix /48 References/51 About the authors/55 Acknowledgments/55 Publishing information/56 Supporting the Fraser Institute/57 Purpose, funding, and independence/57 About the Fraser Institute/58 Editorial Advisory B
3、oard/59 fraserinstitute.org fraserinstitute.org / i Executive Summary In November 2018 the Liberal government selected an existing low- income indicator as Canadas first official measure of poverty. The govern- ment chose this indicator, the Market Basket Measure (MBM), to play a key role in the gov
4、ernments new Poverty Reduction Strategy by allowing it to track progress towards its goals. Specifically, the government set a tar- get to reduce poverty by 20 percent by 2020 and to fully halve the poverty rate by 2030. This study critically examines the newly established “official poverty line” as
5、 it has been laid out since its origin in 1998 and in the various revisions, especially the latest version in Djidel et al. (2020) entitled Report on the Second Comprehensive Review of the Market Basket Measure. This assessment looks at both technical and conceptual issues with the poverty measure a
6、nd finds that there are serious concerns in both areas. Right from the beginning, the MBM was intended to be a com- promise measure between the prevailing relative measures of low-income produced by Statistics Canada and a newer basic needs budget basket measure produced by Christopher Sarlo and the
7、 Fraser Institute. The MBM developers listed an array of goods and services without which, in contemporary society, a person would not be “creditable.” Over the past 20 years as the measure has evolved that description has been rephrased to the more commonly used “inclusion” or “participation” and i
8、t is operation- alized as a “basic, modest, standard of living.” Among the technical concerns with the MBM are a striking lack of published detail about the construction of many of the components and their revisions (research transparency) and an inconsistent methodology. That is, some components ar
9、e estimated using expert judgements (food and clothing, for example), while others (like shelter, transportation, and the “Other” category), are wholly or in large part estimated as a percentile in the distribution of consumption. There is no coherent approach. Shelter costs increased dramatically i
10、n the 2018 revision driven in large part by the results of a flawed, online survey. The latest published poverty lines are expressed (but not labelled) as levels of disposable income that a family of four would need to avoid poverty. This lack of clear labelling serves to mask the levels of total in
11、come required to avoid poverty. For example, the fraserinstitute.org ii/A Critical Assessment of Canadas Official Poverty Line poverty line for a family of four in Winnipeg in 2018 is $44,000. However, given the stringent definition of disposable income used (deduct taxes, CPP, EI, and RPP payments,
12、 union dues, support payments, daycare, out- of-pocket medical costs, etc.) a family would have to earn about $60,000 to avoid poverty. The lack of any mention of the possibility of inaccurate or understated raw dataas if the data drawn from the census and other surveys are perfectand the rather obv
13、ious attempt to predetermine the approximate poverty rate by a series choices relating to the distribution of consumption are both surprising. Specifically, the MBM team appeared to want to situate the ultimate rate of poverty somewhere within the second decile of the distribution of incomes. The mo
14、re important concern with the MBM as our official measure of poverty is conceptual. By choosing to define poverty as a condition in which a person is unable to acquire a living standard needed to integrate and participate in society, the government has rendered poverty un- measurable. There is simpl
15、y no way to credibly assign an income (or a bas- ket of goods) that will assure “participation,” in large part because of the widely divergent interpretations of participation or inclusion. It is arguable whether income is even as important as other attributes (like intelligence, attractiveness, sel
16、f confidence, and self sufficiency) to the goal of inclusion. As of the latest (2020) revision, the MBM line has increased sub- stantially (due largely to higher deemed costs of shelter) so that families of four in most urban centres in Canada would have to have total incomes in excess of $60,000 to escape poverty. This, I suggest, is not a reasonable line for poverty. It bears no connection to the understanding of poverty that most people have (as cited in the paper), which relates to th
