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Why refer to poverty as a proportion of median income?

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The most widely used indicator of poverty refers to a threshold set at 60% of median income. This paper reviews the implications of this approach and the conceptual problems it raises. The threshold relates to inequality and 'economic distance' rather than need. Though it was initially intended to be simple and comprehensible, the indicator causes considerable confusion, and successive refinements, including adjustments for disposable income, housing costs and equivalence, have limited the accessibility and use of the figures. Referring to median earnings would be a simpler, more practical approach.
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Keywords: EQUIVALENCE; INDICATORS; INEQUALITY; MEDIAN INCOME; POVERTY

Document Type: Research Article

Publication date: 01 June 2012

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UA-1313315-21
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