The government stops using a ‘poverty line’ to measure the number of hard-up households…
Hong Kong’s labour minister has said using a poverty line to measure inequality was “inadequate,” after pausing the publication of statistics after 2020 despite opposition from NGOs.
Sun instead touted the importance of “targeted” poverty alleviation that focuses on demographics including the elderly and subdivided housing tenants. His comments came after Chief Executive John Lee made no mention of the poverty line at last week’s Policy Address.
…Hong Kong introduced a poverty line, defined as any household making less than half the median monthly household income as living in poverty, in 2013. The city released annual figures for the number of people living below the poverty line, but stopped doing so after publishing the figures for 2020.
In a way, officials have a point. Let’s say the median four-person household income in Hong Kong is HK$10,000. That means only those families earning below HK$5,000 would qualify as poor, when most of us would accept that those on, say, HK$8,000 would be struggling. Conversely, if median income was HK$1,000,000, it would be absurd to claim that every family living on less than half a million was desperate.
Officials can also argue that the poverty line measurement is inaccurate, as it does not include universal benefits like health-care and transport subsidies for the elderly. Nor does it consider any assets the household might be sitting on.
But is the theoretical irrelevance or inaccuracy of the poverty line really the problem? In other words, why have officials stopped using these statistics? Cynics might wonder whether it was because the numbers were looking so bad in 2020.
A possible clue: academics and NGOs prefer having a poverty line benchmark because it provides a clear year-on-year picture of how well or badly the government is tackling poverty.
Now, the government is going to ‘focus’ on specific groups…
In May, the government identified around 950,000 elderly people, single-parent households, and tenants of subdivided flats as targets for its poverty alleviation programme.
Sun said that while the government had a comprehensive social security system, it needed to identify and provide assistance to those at the “end of the queue.”
It sounds as if so many people are now falling below the old official poverty line that there’s not much we can do to help them all. It would be more convincing if the recent policy address included real plans to boost welfare for near-indigent elderly and replace subdivided apartments with proper homes. But – over four years after Beijing essentially took tighter control over Hong Kong – the authorities are still unable or unwilling to get serious about these issues.
If median income is 10k, a big Mac costs $30. If median income is $1m, then a big Mac in this city would cost $3000, and average rent is also 100 times more., so anyone on half a mill would probably struggle?
P.s. I’m not an economist, obviously.
Wasn’t there a Financial Secretary in the 1970s who refused to collect economic data because people might identify problems and then expect him to do something about it?
This is the HK government rediscovering its roots.
Does not the current method of calculating the poverty line mean that there will always be a permanent lower quartile of earners deemed to be in poverty, no matter how well their actual living conditions are?
@Stanley: setting the bar at half the median income isn’t the same as the lowest quartile. The person at the 25th percentile does not necessarily make half the median income.
The distribution of incomes across the poorest 50% of the population can vary from year to year. The bell curve can skew towards the top end of that range (a large lower middle class) or the bottom end (much dire poverty).
@Cassowary
I understand your technical point but the line is always going to be drawn around 25% of the population, isn’t it?
The method necessarily posits a large, permanent class of people living below the “poverty line”, doesn’t it?
If one used the same method in Switzerland or Monaco, it would also produce a “poverty class” of around 25% of the population, wouldn’t it?
If that’s correct, then it seems like a flawed methodology.
It is possible to change the shape of the curve and have far fewer than 25% living in poverty. In a classic S-curve, you’re right, you’d be looking at about a quarter.
For example, we might look at a conveniently tiny population of four households, with incomes of 6, 9, 11, and 98.
In this case, the median income is 10, and no one is below the poverty line of 5.
In inconvenient real life, of course, there’s always someone below that line. But their numbers can be minimized and that in turn makes it easier to provide other forms of social assistance.
Using some back-of-a-chachaanteng-bill mathematics, in 2022 about 10% of Swiss households were below the poverty line as used in HK.
(Switzerland uses a fixed threshold.)