Jun 18, 2010

A new era for measuring poverty in Canada


Last Thursday’s Statistics Canada release of individual and household income data for 2008 marks a new era in the study of poverty in Canada.

Instead of reporting only on the Low Income Cut Offs (LICO), as they used to, Statistics Canada reported on three of the most common measures of low income in the same publication (LICO, the low income measure and the market basket measure). Gone are the days of looking for different studies produced by different institutions to compare trends of low income in Canada.

Even more importantly for those of us looking for reliable and timely data on low incomes, Statistics Canada has now taken over producing the Market Basket Measure (MBM) from HRSDC.

The Market Basket Measure — an absolute measure of low income which captures the actual costs of living in 49 communities across Canada — was developed by HRSDC in early 2000s. This is the only Canadian low income measure that takes into account regional differences in cost of living, but it hasn’t been used a lot so far partly because data was only available back to 2000 and partly because there was no regular schedule for new MBM data releases so researchers never knew when the next one will be available. As a result, the latest available numbers often lagged 3-4 years behind.

The fact that Statistics Canada has now committed to make the data available annually makes this a much more reliable measure so get ready to hear a lot more about it in the near future.

Statistics Canada has long complained that LICO should not be used as a poverty line, but in the absence of a viable alternative the LICO became the default poverty measure in Canada.

It seems that the fine folks at Statistics Canada have finally realized that there is substantial interest in studying trends of low income and poverty in the country and are taking important steps to make more comprehensive data available, both on the breadth and on the depth of low income.

In fact, a more comprehensive report on the topic seems to be in the works: Incomes in Canada 2008 announced that “an Integrated Report on Low Income, which uses a multi-line, multi-index approach is forthcoming.”

Kudos to Statistics Canada for improving the quality and availability of data on low income and poverty trends in Canada. Better data will help policy makers make better decisions about tackling serious social problems like poverty. It will also make it easier for researchers to evaluate the impacts of government policies on the prevalence and depth of poverty in the country, paving the way for greater accountability of our governments.

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