Wednesday, April 18, 2012

Lindsay Mitchell: Something is growing but I'm not sure it's poverty or inequality

The Waikato Times reports :

"New Zealand's biggest growth industry isn't agriculture or manufacturing – it's poverty, a Waikato University professor says. Social scientist, Professor Darrin Hodgetts, said New Zealand was "growing poverty". "It's our growth industry and it's growing at three times the OECD average," Prof Hodgetts said ahead of a public lecture in Hamilton tonight.... New Zealand had gone from one of the most equitable societies – in terms of income  distribution – to one of the worst. "And the cracks are getting bigger."

Look at the following graphs from the OECD Factbook:

What these graphs show is that New Zealand's percentage point change in the Gini index (official measurement of income inequality) was greatest between the mid-1980s and mid 1990s. Between the mid 1990s and lates 2000s the percentage point change was negative.

Not according to the professor:
"Things like Working for Families have had an impact but they haven't stopped the growth and the OECD figures are pretty conservative," he said.
The OECD measures relative poverty. If the Gini index shrinks there is less relative poverty.

In respect of OECD poverty rates go here and look at the graph on page 4.

It shows that between the 1980s and late 2000s New Zealand's poverty rate grew at two and a half times the OECD average. But the highest rate of change was in Sweden at 3.7 times the OECD average. Other countries with higher rates of change than NZ were the Czech Republic, Austria, the Netherlands and Ireland.

Featuring in negative rates of change were Greece, Spain and France. And they are all in the doggy-do.

NZ's population poverty rates have been falling. This table shows the most commonly used poverty indicator - percentage living below the 60 percent threshold of median household income after housing costs:

AHC ‘fixed line’ 60%

In a nutshell poverty/inequality grew after the mid eighties. It decreased over the 2000s but has yet to fall to mid-eighties levels.

But what is actually growing right now? The number of people clamouring about, and the level of noise being made about poverty and inequality.


Barry said...

I wouldn't trust anything from the u of waikato

Anonymous said...

It is high time that a proper definition of poverty was written. To say that it is:-
The most commonly used poverty indicator - percentage living below the 60 percent threshold of median household income after housing costs"
has to be nonsense! This definition means that, no matter what level household income reaches - even if everybody is well-fed, well-housed, owns a large yacht, etc, a portion of them are still "living in poverty'.
So - before you begin to address poverty - define it - otherwise you are simply chasing an everlasting chimera.