2 November 2004 - Publication of DWP research report: “The Dynamics of Deprivation: the Relationship between Income and Material Deprivation Over Time” - By Richard Berthoud, Mark Bryan and Elena Bardasi (Institute for Economic and Social Research, University of Essex)
Research published today by the Department for Work and Pensions presents new and original analysis looking at the relationship between income and deprivation over time. Previous research has looked exclusively at the relationship between income and deprivation at a single point in time.
This research considers how changes in income relate to changes in deprivation dynamically. The analysis is based primarily on data from the Department’s Families and Children Study (FACS) and the British Household Panel Survey (BHPS).
Comparing income patterns over the period 1999 to 2002 with deprivation levels recorded in 2002 for families with children.
- The analysis reveals that the risk of hardship at a point in time is related to the number of previous years spent in income poverty. Those persistently income poor between 1999 and 2002 are most likely to be in hardship at 2002.
- Unexpectedly, it didn’t seem to matter very much for families whether their experience of income poverty was toward the end of the 1999-2002 period, or at the beginning, in terms of their risk of material hardship at 2002.
- Only a very small proportion of families that left low-income left material hardship simultaneously.
Measuring material deprivation.
- Measures of deprivation showed steep downward declines over the period of analysis, for both those based on FACS (1999-2002) and BHPS data (1996-2002).
- These declines were steeper than expected and related weakly to changes in income over the same period. Such ‘unexplained’ declines have also been noted in the Irish index of material deprivation.
The ‘single point in time’ relationship between income and hardship.
- The research finds a relationship between income and material deprivation, but that other factors, apart from income, are important in accounting for different levels of material hardship.
- After accounting for income, couples reported lower levels of deprivation than single people or lone parents; the presence of younger children was associated with high levels of deprivation; work had a positive effect on levels of deprivation independent of income; and claiming certain benefits also seemed to be associated with material hardship (however, it is not always easy to separate out the effects of various sources of income from the actual changes in income amounts).
- Households that were home-owners had lower levels of deprivation than both social and private tenants.
The underlying relationship between income and hardship over an extended period of time. Looking over seven years, a family’s average income (underlying level of income) over the period was strongly related to their average level of deprivation. About a quarter of the variation in deprivation across families was explained by variations in family income.
The relationship between year-to-year changes in income and hardship – the longitudinal relationship.
- The analysis shows that the effect of changes in income on changes on material deprivation is about half that of the underlying relationship (see above).
- This means that, for example, a household improving its income from one year to the next is still more deprived than a household which had a better underlying position in the income distribution all along.
- Looking at factors other than income, the effects of changes year-to-year in some characteristics were of the same magnitude as the underlying effects. These are employment and partnership status.
- Thus moving into employment reduces levels of material deprivation, independently of any simultaneous increase in income.
- The effect of partnership status indicates that becoming single increases deprivation, forming a partnership reduces it.
Notes for editors
- The analysis in this report is based primarily on analysis of the Families and Children Study (FACS) and the British Household Panel Survey (BHPS).
- The report was commissioned under the Families and Children Strategic Analysis Programme (FACSAP). FACSAP is a framework agreement that the Department has with eight academic and research institutions, including the Institute for Social and Economic Research (ISER) at the University of Essex responsible for this piece of work. FACSAP allows the Department to commission relatively small pieces of analytical work, on issues of relevance to policy, in the areas of children and family policy as the need arises.
- ‘The Dynamics of Deprivation: the Relationship between Income and Material Deprivation Over Time’ by Richard Berthoud, Mark Bryan and Elena Bardasi, DWP Research Report Series (no.219) is published on 2nd November 2004. A summary and copy of the report is available on the DWP website: http//www.dwp.gov.uk/asd/asd5.
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