Changing UK: The way we live now

Measures of wealth and poverty used in the report

The measures of breadline poor, core poor, asset wealthy and exclusive wealthy come from an earlier report for the Joseph Rowntree Foundation (JRF), published as "Poverty, wealth and place in Britain, 1968 to 2005: Understanding the Transformation of the Prospects of Places".

Our advice is that the measures of asset wealthy and breadline poor are the more robust of these measures, especially at lower geographical levels.

A summary of the JRF report is available at http://www.jrf.org.uk/knowledge/findings/housing/pdf/2077.pdf

It summarises the measures as follows:

• 'Breadline Poor'
  households living below a relative poverty line, and, as such, are excluded from participating in the norms of society
• ‘Asset wealthy’
  estimated using the relationship between housing wealth and the contemporary inheritance tax threshold

A researcher at Leeds University (Paul Norman) explains how the Breadline Poor measure is derived in more detail:

The Breadline Britain method (Pantazis et al, 2006; Gordon and Pantazis, 1997; Gordon et al, 2000), measures relative poverty based on a lack of the perceived necessities of life. Items defined as necessities are those that more than 50% of the population believes “all adults should be able to afford and which they should not have to do without” (Gordon et al, 2000). Dorling et al (2007) note that this approach can be replicated for a time series when census data and poverty surveys occur at roughly the same time and that this has been the case approximately every 10 years since 1970. The method uses information from detailed poverty surveys, carried out on a sample of 1,000 or 2,000 households, to classify each household as ‘poor’ or ‘not poor’. The survey also includes information comparable to the census, such as household composition, tenure, car ownership and social class. The survey data is analysed to assess the relationship between these census-type variables and the poor/not poor classification of households in the survey. These relationships are applied to census data to estimate the number of poor households in each area and has been applied to create a time-series relating to approximately 1970, 1980, 1990 and 2000. The main variable of interest is the percentage of households which are ‘ Breadline poor’. These households are under the poverty line, defined theoretically as the resource level that is so low that people are excluded from participating in the norms of society (Dorling et al, 2007).