Is family income an adequate indicator to define poverty?


Part of the new Lingnanian Opinion Column for HKET. Please follow link for full article.

“What is poverty in Hong Kong?” Most readers, if asked this question, will likely think of situations where everyday people fail to secure a sufficient work income to enable them to secure food, appropriate shelter, or clothing. Internationally, the predominant understanding of poverty as an ‘absolute’ deprivation of material goods is based on the notion that people of all ages have essential needs to secure physical health in order to be able to successfully participate in social life. Typically, those emphasising the alleviation of ‘absolute poverty’ as a key goal for policy makers have argued in favour of a more residual approach to welfare policy, based on the conviction that its role should first and foremost be to provide a ‘basic safety net’ that no member of the community should fall below. The flip-side of this view is that only those people that can demonstrate to the government that they have severe physiological and or safety needs – typically via passing means- and asset tests of various social assistance programmes – can hope to receive government subsidies for themselves as well as their loved ones. 

Indeed, in Hong Kong the conditions for receipt of government subsidies is largely determined by claimants’ ability to demonstrate to the government that their household income falls below one of several poverty lines, which are reviewed annually in line with the movement of living standards. As such, using the measures of monthly household income, and using 50% of the median of the pre-intervention monthly household income to identify poor households, the current poverty line for a one-person household was set at HK$4,000 per month prior to taxes and social benefits, HK$9,800 for a two-person household, HK$15,000 for a three-person household, and so on, up to HK$22,500 for a six-person household. In this sense, the Hong Kong government does not use an ‘absolute’, but a ‘relative’ definition of poverty, which is based on the idea that people should be considered as ‘poor’ if they lack the minimum amount of income needed not only to meet essential universal and permanent physical and safety needs, but also if they fail to maintain a typical standard of living in Hong Kong society due to a lack material resources.

Using household incomes to determine poverty lines in this manner facilitates comparisons of how poverty alleviation targets are met over time and has become the international gold standard across rich societies in the world. As such, the official Hong Kong government statistics suggest that in 2017, 23.1% of children aged 0-17, 13.7% of the working age population, and 44.4% of elderly were not able to meet the relative poverty threshold without government assistance. However, it is preferable to consider ‘relative poverty’ levels after receipt of government subsidies since this better reflects the actual poverty situation faced by households in Hong Kong. Indeed, the poverty figures for each of the above population groups diminish significantly once the effect of the ‘social safety net’ is taken into account – 17.5% for the 0-17 years old, 10.4% for the 18-64 years-old, and 30.5% for the over 65 years old – but remain high in comparison to other rich societies around the world. Not least, these are record numbers in Hong Kong suggesting that overall 1 in 5 people are considered poor. As the Hong Kong government strives to find ways to reduce the number of ‘poor’ residents further, should it continue to predominantly rely on measures derived on the basis of family income?

Admittedly, this may sound like an overly technical and yes, ‘academic’, question, but the implication of the choice of preferred poverty measurement by the Hong Kong government are significant. Some voices have argued for an extension of the ‘relative poverty’ measurement since a measure of poverty that is purely based on a percentage of median household incomes tells us nothing about the level of resources needed to avoid social exclusion. This is particularly true for a society like Hong Kong’s where living costs, especially due to spiralling housing costs, have increased at a rapid pace in recent years. Hence, it has been argued that the Hong Kong government should place greater attention to the cost of things, or the level of resources needed to avoid social exclusion.

Here, it may be useful to consider a few more questions. First, should we consider working adults as being ‘poor’ if they have enough money to afford three meals per day, but not enough to own a smart phone or transport to commute to work on a daily basis? Surely, Hong Kong people in the past did not have access to smart phones, so how can this suddenly be considered as a valid criterion for whether such a person should receive government subsidies or not? Similarly, should we consider a child as living in poverty in Hong Kong today, if it has a properly fitted school uniform, but fails to have access to his/her own personal computer or own desk to study at home? How about an elderly person that may benefit from public housing, but cannot afford to eat meat and hand out ‘pocket money’ on national holidays? Should these examples be considered as describing instances of ‘life in poverty’ in Hong Kong?

It is easy to dismiss these people’s needs for support because they are not related to inherent physical needs – i.e. owning a smart phone is certainly not a matter of sustaining one’s physical health or even survival, neither is having an adequate space to study, or the ability to give presents. Yet, from the perspective of whether or not people in these situations are able to maintain a typical standard of living in Hong Kong, the answer is not so straightforward. What is more, a lack of these items/activities does not only help to raise the dignity of the lives of the people affected, but also – in the medium and longer term – is likely to have a positive impact on the Hong Kong economy as a whole.  

Consider for example that having access to a smart phone and to the internet is increasingly crucial for people not only stay in touch with their families, but also to look for available job vacancies, internships, and training programmes in the case of unemployment. Consider that not having access to a computer at home will make it extremely difficult for primary and secondary school children in today’s society to complete their daily homework assignments and lead to a significant disadvantage to achieve their full academic potential over the years. And finally, consider that not having the ability to participate in social gatherings is a particularly strong barrier for elderly Hong Kongers to live an active, more fulfilling, and healthy life?

But maybe it does not matter what we individuals think about these matters. And maybe, it does not even matter what politicians, experts, or commentators on social media have to say either? Recent research conducted in Hong Kong tells us that a firm majority of the public actually states that having access to these resources or being able to engage in these activities should be considered a ‘necessity’ to be a full member of Hong Kong society today. If we accept that ‘poverty’ stems from social relationships and is the consequence of social arrangements, not simply the consequence of where certain people are positioned on the overall distribution of household incomes, policy makers are well advised to recognise more encompassing intermediate needs of Hong Kong people even if they depend on changing cultural and socio-economic contexts.

The main issue, of course, is that these different notions of ‘poverty’ are closely connected to ideas of social justice and what it means to live in a fair society that is conducive to people’s overall quality of life and well-being. The design of social policies has an important role in addressing poverty, but the extent to which it will facilitate poverty alleviation will largely depend on the very notion among policy makers and other stakeholders about ‘what is poverty’ and ‘who deserves support, and ‘how much’ under different circumstances. Therefore, one important step towards more effective poverty alleviation in Hong Kong would be if the government started to include broader and more diverse measurements of poverty and particularly the voices of Hong Kong people in their routine reporting of poverty dynamics going forward.