Hostname: page-component-7c8c6479df-8mjnm Total loading time: 0 Render date: 2024-03-19T09:03:41.768Z Has data issue: false hasContentIssue false

Accounting for Housing in Poverty Analysis

Published online by Cambridge University Press:  05 August 2011

Killan Mullan
Affiliation:
Social Policy Research Centre, University of New South Wales, Sydney E-mail: k.mullan@unsw.edu.au
Holly Sutherland
Affiliation:
Institute for Social and Economic Research, University of Essex E-mail: hollys@essex.ac.uk
Francesca Zantomio
Affiliation:
Department of Economics, Ca’ Foscari University of Venice E-mail: francesca.zantomio@unive.it

Abstract

The treatment of housing in the definition of income used to measure poverty makes a big difference to who is counted as poor. Both the Before Housing Costs (BHC) and After Housing Costs (AHC) measures in current use in the UK pose problems. BHC income does not capture the advantages of living in owner-occupied housing and AHC income might not account for the benefits of living in higher-quality accommodation. We explore the potential of including in income the difference between the estimated value of housing consumed and housing costs, which we refer to as net imputed rent. We investigate whether findings about child and pensioner poverty, and judgements about the effectiveness of poverty-reducing policies, are affected by accounting for housing in this way.

Type
Articles
Copyright
Copyright © Cambridge University Press 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Atkinson, A. B., Cantillon, B., Marlier, E. and Nolan, B. (2002), Social Indicators: The EU and Social Inclusion, Oxford: Oxford University Press.Google Scholar
Buck, N., Sutherland, H. and Zantomio, F. (2007), Tackling Child Poverty in London: Implications of Demographic and Economic Change, London: Child Poverty Commission, http://213.86.122.139/publications/iser-rpt-0207.jsp [9 November 2009].Google Scholar
Buckley, M. and Gurenko, N. (1997), ‘Housing and income distribution in Russia: Zhivago's legacy’, The World Bank Observer, 12, 1, 1932.Google Scholar
Canberra Group (2001), ‘Final report and recommendations’, The Canberra Group, Expert Group on Household Income Statistics, Ottawa.Google Scholar
Department of Work and Pensions (DWP) (2005), Households below Average Income 1994–5–2003–4, London: Department for Work and Pensions.Google Scholar
Department of Work and Pensions (DWP) (2006), Income Related Benefits Estimates of Take-Up in 2004–5, London: Department for Work and Pensions.Google Scholar
Department of Work and Pensions (DWP) (2009), Households below Average Income 1994–5–2007–8, London: Department for Work and Pensions.Google Scholar
Eurostat (1998), ‘Recommendations on social exclusion and poverty statistics’, 31st Meeting of the statistical programme committee, Luxembourg, 26 and 27 November 1998, CPS 98/31/2, Luxembourg.Google Scholar
Eurostat (2010), The Distributional Impact of Imputed Rent in EU-SILC, Luxembourg: Publications Office of the European Union, 2010.Google Scholar
Frick, J. R., Goebel, J. and Grabka, M. M. (2007), ‘Assessing the distributional impact of imputed and non-cash employee income in micro-data’, in Comparative EU Statistics on Income and Living Conditions: Issues and Challenges, Methodologies and Working Papers, Luxembourg: Eurostat, chapter IV:2.Google Scholar
Frick, R. and Grabka, M. M. (2003), ‘Imputed rent and income inequality: a decomposition analysis for Great Britain, West Germany and US’, Review of Income and Wealth, 49, 4, 513–37.Google Scholar
Frick, J. R., Grabka, M. M., Smeeding, T. M. and Tsakloglou, P. (2008), ‘Distributional effects of imputed rents in seven European countries’, www.iser.essex.ac.uk/files/msu/emod/aim-ap/deliverables/AIM-AP1.1_final.pdf, 9 November 2009.Google Scholar
Gasparini, L. and Escudero, W. S. (2004), ‘Implicit rents from own-housing and income distributions: econometric estimates from Greater Buenos Aires’, Journal of Income Distribution, 12, 12.Google Scholar
Gottschalk, P. and Smeeding, T. M. (1997), ‘Cross-national comparisons of earnings and income inequality’, Journal of Economic Literature, 35, 633–87.Google Scholar
HM Revenue and Customs (HMRC) (2006), Child Tax Credit and Working Tax Credit Take-up Rates 2003–4, London: HMRC.Google Scholar
HM Revenue and Customs (HMRC) (2009), Child and Working Tax Credits Statistics 2009, London: HMRC.Google Scholar
Johnson, P. and Webb, S. (1992), ‘The treatment of housing in official low income statistics’, Journal of the Royal Statistical Society, Series A (Statistics in Society), 155, 2, 273–90.Google Scholar
Redmond, G., Sutherland, H. and Wilson, M. (1998), The Arithmetic of Tax and Social Security Reform: A User's Guide to Micro-Simulation Methods and Analysis, Cambridge: Cambridge University Press.Google Scholar
Sefton, T. (2002), ‘Recent changes in the distribution of the social wage’, CASE paper, 62, Centre for Analysis of Social Exclusion, LSE, London.Google Scholar
Smeeding, T. M., Saunders, P., Coder, J., Jenkins, S., Fritzell, J., Hagenaars, A. J. M., Hauser, R. and Wolfson, M. (1993), ‘Poverty, inequality, and family living standards impacts across seven nations: the effect of non-cash subsidies for health, education, and housing’, Review of Income and Wealth, 39, 3, 229–56.Google Scholar
Sutherland, H., Evans, M., Hancock, R., Hills, J. and Zantomio, F. (2008), The Impact of Benefit and Tax Uprating on Incomes and Poverty, York: Joseph Rowntree Foundation.Google Scholar
Yates, J. (1994), ‘Imputed rent and income distribution’, Review of Income and Wealth, 40, 1, 4366.Google Scholar