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Comparing the Monetary and Living Standards Approaches to Poverty Using the Australian Experience

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  • Peter Saunders

    (University of New South Wales)

  • Yuvisthi Naidoo

    (University of New South Wales)

  • Melissa Wong

    (University of New South Wales)

Abstract

This paper compares the monetary and living standards approaches to poverty using Australian data for the period 2006–2017. The aim is to highlight the conceptual and empirical strengths and weaknesses of the two approaches and identify the similarities and differences that emerge when both are applied to examine what happened over the period and to a limited degree, why. The acknowledged limitations of estimating poverty rates by comparing household income with a poverty line have to a degree been addressed by developments in deprivation research that have generated estimates that are more directly related to living standards, more democratic and more credible. But this approach also has limitations, so its growing popularity need not signify the end of poverty line studies. This paper compares the two approaches, with specific attention paid to ensuring that the estimates are internally consistent over time and comparable at a point in time. Both show a consistent pattern of modest improvement in social disadvantage over the period examined, but they reveal different aspects of change. The monetary approach highlights the role of housing costs in driving changes in poverty, while the more nuanced explanation generated by estimates of deprivation provides detailed insights. The results suggest that each has a positive role to play in better understanding the nature of poverty and identifying the factors driving change over time.

Suggested Citation

  • Peter Saunders & Yuvisthi Naidoo & Melissa Wong, 2022. "Comparing the Monetary and Living Standards Approaches to Poverty Using the Australian Experience," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(3), pages 1365-1385, August.
    • Handle: RePEc:spr:soinre:v:162:y:2022:i:3:d:10.1007_s11205-022-02888-8
    DOI: 10.1007/s11205-022-02888-8
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    References listed on IDEAS

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    Cited by:

    1. Liu, Edgar & valentine, kylie & Batterham, Deb & Stone, Wendy & Martin, Chris & Parkinson, Sharon & Hynes, Danielle, 2023. "Poverty and Australian housing: findings from an Investigative Panel," SocArXiv q2tfs, Center for Open Science.
    2. Wenguang Yu & Qi Wang & Yaxuan Wang & Guofeng Guan & Yixin Gao, 2023. "Does Targeted Poverty Alleviation Policy Reduce Poverty? Evidence From Rural China," SAGE Open, , vol. 13(4), pages 21582440231, October.
    3. Yiyan Chen & Zhaoyun Tang, 2023. "A Study of Multidimensional and Persistent Poverty among Migrant Workers: Evidence from China’s CFPS 2014–2020," Sustainability, MDPI, vol. 15(10), pages 1-15, May.

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