Why We Need a New Perspective on Poverty

If governments across the world had waited for official poverty data before addressing the drop in income due to the COVID-19 pandemic in the first quarter of 2020, they would have acted too late - probably well into 2021. In fact, poverty data are measured and released once-per-year, and with a substantial lag.

The reduction of poverty has long been of societal interest and importance. The push to reduce or eliminate poverty has been the focus of many high-level national and international campaigns: a poverty reduction target was enshrined into the UN's Sustainable Development Goals, the EU's "Europe 2020" strategy, the UK's "pledge to eliminate child poverty," and, in the U.S., President Lyndon B. Johnson's "war on poverty." But how should we measure and understand the concept of poverty, as well as the social mechanisms through which it is reproduced?

Zachary Parolin, Assistant Professor at Bocconi Department of Social and Political Sciences, obtained a €1.4mln ERC Starting Grant from the European Research Council for ExpPov - The Experience of Poverty in the Post-Industrial Economy, a research project aiming to find a new conceptual approach for understanding poverty and a new methodological framework for the collection of data related to the experience of poverty.

The month-to-month volatility of income and well-being has been threatening the usefulness of a once-per-year poverty measure since well before the pandemic, and it isn't the only understudied aspect of poverty in modern societies.

"In addition to evaluating rising income volatility," Professor Parolin said, "this project will expand the measurement of poverty to take into account other dimensions of hardship and need. Housing costs, for instance, vary widely within countries and tend to compose a large share of residents' spending, particularly in high-cost cities, yet they are not factored into most measures of poverty."

Furthermore, in post-industrial societies, poverty tends to be hyper-locally concentrated in certain neighborhoods, a fact that can escape detection if data are collected for larger areas or regions.

Finally, the rise of gig work and atypical employment has prompted rising uncertainty that traditional income surveys struggle to measure. Prof. Parolin's project will study how poverty is associated with such new forms of employment.

The innovative poverty data collection framework proposed by the project allows to securely match respondents to postal codes to uniquely investigate the social consequences of the geographic concentration of poverty across the European Union. Poverty, in turn, is not strictly measured in terms of income, but includes other aspects, such as housing costs, wealth, access to in-kind services and other indicators of individuals' subjective and physical well-being.

Received wisdom identifies poverty as an outcome of family, market, and state (i.e. an outcome of family relations, labor market conditions, and state policy interventions), while Prof. Parolin underlines that causality might also run in the opposite direction. "One major advantage of this project," he said, "is its ability to target survey respondents in hyper-local geographic areas to investigate how the concentration of poverty affects labor market outcomes, family relations, and the efficacy of state social policies, each of which in turn is associated with the experience of poverty."