Making ends meet: revisiting the consensual income approach to measuring poverty

Abstract

Conventional (income-based) poverty measures have been criticised for being narrowly focused and failing to provide evidence that those identified as poor have an unacceptable standard of living. The consensual approach to deprivation addresses both weaknesses by drawing on community perceptions of what items are essential for all and establishing that those who do not have them cannot afford them. In contrast, the consensual income approach maintains the role of income as a key determinant of poverty but uses community perceptions of how much is needed to make ends meet to set a poverty line. Although perceptions vary widely, it is possible to estimate the income level at which people with that income would say that their current income is just enough to make ends meet. This article re-examines this approach drawing on recent developments in poverty research and using new data for Australia. The consensual poverty lines produced are shown to have similarities with those used in existing poverty studies, but also to exhibit important differences. An overlap measure is developed that includes those in consensual poverty who also indicate that their current income is not enough for them to make ends meet. The poverty rates produced by this overlap measure is shown to align with those based on the 50 per cent of median-income OECD equivalised poverty line used in most Australian studies. It is argued that the consensual income approach has the potential to advance our understanding of poverty beyond that provided by conventional income-based measures.