A Poisson-Based Framework for Setting Poverty Thresholds Using Indicator Lists

Co-authored with Jehane Simona Moussa and Christian Suter, Institut de Sociologie, Université de Neuchâtel

Poverty is one of the most important concepts in the social sciences, yet commonly-used thresholds for the operationalization of poverty have little or no conceptual basis. This is especially true of the "relative deprivation" poverty concept, where the arbitrary threshold of missing k ≥ 3 items from a list of socially defined necessities is the accepted operationalization. This paper presents a conceptual framework for meaningfully setting k based on the properties of the Poisson distribution. Data from the 2011 Swiss Household Panel are used to illustrate this approach for three poverty concepts: conventional relative deprivation based on non-affordability of items ("afford-deprivation"), simplified relative deprivation based on non-possession of items ("possess-deprivation"), and a novel approach based on the status syndrome concept ("high life burden"). Proof-of-concept analyses suggest thresholds of k ≥ 2 for conventional afford-deprivation, k ≥ 5 for possess-deprivation, and k ≥ 6 for high life burden. In addition to providing a rationale for k, the Poisson-based approach allows for the systematic variation of k in different empirical contexts. It also supports the estimation of "adjusted" poverty rates that account for the chance probability that non-poverty households are accidentally miscategorized as being in poverty.

Salvatore Babones is an associate professor of sociology and social policy at the University of Sydney. He writes on comparative international development and on quantitative methods for the social sciences. His most recent book is Sixteen for '16: A Progressive Agenda for a Better America (Policy Press, 2015).