How can I be less miserable?

Poverty: from the misery of a concept

“Poverty” is a perennial hit in the media. In the meantime, hardly a month goes by in which no scientific findings are reported. Because poverty is generally perceived as an unacceptable social reality, the media is only too happy to take up this topic - and reporting, be it direct or subliminal, is often accompanied by an indictment against society. The scandal of the allegedly widespread social grievances in Germany is based only on the internal perspective. The perception from the outside is clearly in sharp contrast. For about four years now, Germany has been experiencing a strong influx of immigrants who have been drawn here across many countries and across half of Europe to apply for asylum. The impression arises that one is dealing with different realities or with the perception of them. The striking paradox should be used as an opportunity to critically question the understanding of poverty that is widespread in research and politics.

Absolute and relative poverty

To understand something, concepts are necessary. As the example of poverty shows, this is often not enough: a definition is also required. A nominal definition, which is at issue here, can be chosen arbitrarily. In order to avoid vagueness and thus confusion in the public as well as in the scientific debate, the definition should be clear and adequately outline the intended issue. Because the definition is intended to serve as an explanation, theory is always involved or should actually be.

The United Nations Organization (UN) has put the reduction of poverty - no matter what kind - as the first goal on its agenda for sustainable development, but nevertheless the main interest lies in extreme poverty.1 The definition has changed over time. In the past, extreme poverty existed when a person in a household had less than US $ 1 a day available.2 In another definition, it is US $ 1.25; However, it is also pointed out that the international poverty line is US $ 1.90.3 The UN followed the World Bank, which set the limit at US $ 1.25 from 2008 and at US $ 1.90 from 2015. $ stated; these are amounts adjusted for purchasing power. This is about absolute poverty, i.e. the minimum of material resources that are absolutely necessary for life.

The amounts mentioned may secure the subsistence level in many developing countries. In the industrialized world, however, US $ 1.90 per day would be nowhere near enough for food and shelter. But that is also irrelevant, because here the subsistence theory approach was pushed more and more into the background. Instead, the focus has long been on relative poverty: in other words, an endowment of resources that is viewed as inadequate compared to a certain social standard.

A forerunner of such a view was de Tocqueville, who observed 170 years ago that pauperism4 in affluent England had to be understood as different from that in Spain and especially as in Portugal. For example, in the parishes of interior England, one-sixth of the population lived on public welfare, while in Portugal, where poverty was much more prevalent, it was a much smaller proportion (one-twenty-fifth)

The turn to the concept of relative poverty in the western industrialized countries is based on social changes. A necessary prerequisite was an increasing production of goods and an associated growing prosperity in society. In addition, there were social and political disputes about the distribution of the production result, which was associated with an ever-expanding state interventionism.

In the early years of the Federal Republic of Germany, pronounced low income - especially in old age - was by no means a rare phenomenon. At the time of the economic miracle and in the subsequent 1960s with largely full employment, poverty seemed to disappear on its own or at least to be limited to small marginalized groups. It was not until the 1970s, and especially the 1980s, that the topic came up again - triggered above all by sociology and political science.6 The sharp rise in underemployment at the time and the widespread long-term unemployment led to a growing part of the population in a economically difficult situation got. The precariat was no longer a marginal phenomenon and it was increasingly becoming an object of scientific interest.

The EU's definition of poverty: Poverty ...

At the official political level, poverty was first addressed primarily by the EU. In 1985 the Council of Ministers decided: “Impoverished individuals are those who have such limited resources (material, cultural and social) that they are excluded from the minimum standard of living in the Member State in which they live are acceptable. ”7 A broader definition was given almost 20 years later:“ One speaks of poverty when people have such a low income and so few resources that they are denied a standard of living that corresponds to the society in which they live , is considered acceptable. Because of their poverty, they can be exposed to numerous disadvantages - unemployment, low income, poor housing conditions, inadequate health care and obstacles in education and training, culture, sports and leisure. They often find themselves marginalized and excluded from participating in activities (economic, social and cultural) that are the norm for other people. Their access to basic rights can also be restricted. ”8

Since it is a question of relative poverty, a standard of orientation is required: According to the EU definitions, the reference is society in its entirety or its way of life or standard of living. However, society is something abstract; it is divided - depending on the point of view - into classes, strata or social milieus and thus into different living environments and styles as well as behaviors. This is completely hidden. In addition, it is assumed that there is a social consensus or at least a widely held opinion about what is to be regarded as an “acceptable” lifestyle. But because society is not a homogeneous mass, the assessments of what has to be considered an acceptable standard of living are likely to differ.

illustration 1
Risk-of-poverty rates of the adult population in 2016 according to different calculation methods

Source: Socio-Economic Panel (V33).

In fact, according to a survey commissioned by the EU Commission9, there is a divergence of views among the population about what poverty actually is. According to this, almost a quarter are of the opinion that poverty would exist if one “cannot fully participate in social life” due to limited financial resources. Almost as large is the proportion of those who are more inclined to an understanding of absolute poverty and then see it as a given when there is insufficient food and no shelter available. Another fifth classify people as poor if they are supported by charities or the state. But there are also those who do not attach poverty to the material situation at all, but to the status (8%).

It should also be mentioned that the EU definition contains unusual causalities. Unemployment and low incomes are seen as disadvantages that result from poverty. The relationship is more likely to be exactly the opposite: Poverty is not a cause, but a consequence of unemployment and low income. Moreover, unemployment and low incomes are not disadvantages, but the result of the market.

... and the risk of poverty

In the context of the Lisbon Strategy of 2000, the EU Council of Ministers decided “to make the Union the most competitive and dynamic knowledge-based economy in the world - one that is capable of sustained economic growth with more and better jobs and greater social cohesion . ”10 In this context,“ the eradication of poverty must be decisively advanced ”11. However, since poverty was vaguely defined, a concrete operationalization was needed. A group of scientists was commissioned to develop indicators to record poverty and social exclusion.12 In 2001, the “Indicators” subgroup of the Social Protection Committee was established and is still working on the development of indicators to this day. It is made up of staff from national ministries.13 In the same year, indicators were presented at the meeting of the Council of Ministers in Laeken, Belgium. The so-called Laeken indicators are made up of primary and secondary indicators. This includes, for example, long-term unemployment or the school dropout rate (primary indicators) or the proportion of the population with little education (secondary indicator) .14 However, the focus is on income. However, this does not operationalize poverty, but - in various variants - the risk of poverty. The outstanding indicator is the at-risk-of-poverty rate, i.e. the proportion of so-called people at risk of poverty in the population. It is also the most important indicator in poverty research15 as well as in the regular reporting of the national statistical offices agreed within the framework of the EU.16

This approach is astonishing in several ways:

  • Poverty in its relative form is only defined generally and vaguely - since a concrete definition and precise operationalization is probably not possible either. However, since the reference remains unclear, the risk of poverty cannot be determined at all. Because it would have to be differentiated from actual poverty - which, however, is not specifically defined.
  • When at-risk-of-poverty rates are mentioned in reports and study results, it is meant that a certain proportion of the population has an income that is below the so-called at-risk-of-poverty line. All people to whom this applies are therefore at risk of poverty. According to this logic, however, there are only those at risk of poverty, but not actually poor.
  • The term “at risk of poverty” is an unfortunate choice. Because pretty much everyone is at risk of becoming impoverished. This is the case, for example, if a liability claim has to be met or a high-cost illness occurs whose expenses are not insured. Apart from special events, the following generally applies: Those who permanently live beyond their means will at some point get into financial difficulties and are therefore at risk.

People or households whose income is less than 60% of the mean, needs-weighted income in the respective EU member states are usually at risk of poverty.17 The definition of 60% of income is arbitrary because there is no scientific justification for why this percentage is chosen and not, for example, 48% or 67.25%. The weighting of needs is intended to take into account the size and composition of private households; Their income is put in relation to the need, i.e. to the expenditure. The first person receives the factor “1”, each additional person from the age of 14 “0.5” and persons under 14 years “0.3”. The total household disposable income is divided by the sum of the factors. Whether the factors for the second person and other household members actually reflect their needs is questionable, because their determination is also arbitrary and not scientifically based.

Inadequate national standards

Orientation towards the respective national income level is also problematic. Apart from the fact that the social structure is abstracted, i.e. with a view to different classes or social milieus, regional income differences are in fact also ignored. Since it is a question of relative poverty, it is not the national income level that is decisive for individuals, but the income in their living environment - that is, in their region. The regional differences are considerable. According to the data from the Eurostat database, the disposable income per inhabitant in 201118 in Mecklenburg-Western Pomerania was 75% of the German average, Sicily reached 71% of the national level, the north-east of Romania achieved only 71% of the national result, 19 Extremadura came to 77% of the Spanish average and the overseas territories were 66% of the average in France. If the national benchmark is used, there is a great risk that it is less the alleged risk of poverty than regional economic backwardness and low income that is recorded

The distortions that occur in the use of national poverty risk rates can be demonstrated using the example of Germany. If the at-risk-of-poverty rate is calculated as usual - i.e. on the basis of the national risk-of-poverty threshold - the data from the Socio-Economic Panel (SOEP) results in a much higher value for eastern Germany than for the old federal states (see Figure 1). If, however, regionally specific thresholds, i.e. separate thresholds for east and west, are used as a yardstick, the rate is slightly higher in the west, but much lower in the east. In the east, the proportion of people at risk of poverty would not be much higher than the national average. The quota for the Federal Republic as a whole would be almost one percentage point lower than for the calculation for Germany as a whole.

Poverty and wealth

An important variable is missing from the Laeken indicators: wealth. Because wealth or the complete lack of property is also associated with poverty in everyday life - and not just a low income. The SOEP data can also be used to determine whether and to what extent the poor or people at risk of poverty have wealth. However, corresponding data are only available up to 2012; People at risk of poverty are also delimited according to the EU definition.

Figure 2
Asset structure of people at risk of and not at risk of poverty in 2012

Source: Socio-Economic Panel (V33).

As expected, people at risk of poverty relatively often have no net wealth or, on balance, even debts: this is the case for more than half (see Figure 2). Another sixth has only meager reserves (up to 10,000 euros). The rest comes from a higher fortune: another sixth has at least 50,000 euros, one tenth more than 100,000 euros. In terms of wealth, a small proportion of people at risk of poverty are by no means poor - at least according to the everyday understanding.

If the asset limit is set at 50,000 euros, it becomes apparent that a particularly large number of pensioners have at least this amount of property (see Figure 3). This is explained by the fact that it takes time to build wealth. Accordingly, at the other end of the scale, there are people in training (schoolchildren, students and trainees), of whom hardly any have 50,000 euros or more. Among those at risk of poverty, the proportion of those with such wealth is consistently - in some cases very much - smaller than among the rest of the population. But at least almost a third of the pensioners among them get the said amount, among the employed it is almost a fifth. Among the unemployed at risk of poverty, however, there are hardly any with any significant wealth.

Figure 3
Proportion of people with a net worth of at least 50,000 euros in 2012

1 Without apprentices and without employed pupils and students.

Source: Socio-Economic Panel (V33).

Different ideas of poverty

According to another approach, people or households are classified as poor if they receive social benefits because they do not receive any or only very little income themselves that are not sufficient for a living under the legislation.21 However, this definition would probably contradict the intentions of the social legislation , because the support services should guarantee a “life in dignity”, but not help in poverty. In terms of its approach, however, this definition hardly differs from that of the EU; only when setting the poverty threshold should other values ​​be found.

An approach that goes beyond material resources comes from Sen, who sees “poverty as a lack of opportunities for realization” .22 According to his theory, which is to be noted from the perspective of a developing country, the focus should not be on resources such as income, but on the freedoms that Allow people to achieve the goals they have set themselves and thus to exploit their potential. Poverty should not be described (like by the level of income), rather its causes should be recorded.Whether or not opportunities can be taken advantage of often depends on income or assets, but other factors also come into play - such as age, traditions, gender, region of residence and access to good education and health care. And there are constellations in which there is sufficient income or assets, but still only limited opportunities for realization can be used.

The life situation approach has become increasingly important in the Federal Republic of Germany, also in view of the criticism of the problematic definition of poverty, which is focused on income. Townsend's deprivation approach shows strong similarities.23 According to this, “Poverty ... is essentially understood as a lack of means and opportunities to live and shape life as it is customary in our society on the basis of the historically attained level of prosperity is possible. "24

Which indicators are used to record poverty in the context of the living situation approach, however, varies considerably. Because there is no generally recognized theoretical concept about which areas of life are relevant and therefore need to be included - and accordingly there are no binding deficiency indicators. Actually, there is only agreement that the income is insufficient and that other indicators must be used. “Multidimensionality” is the frequently used catchphrase. The EU has already proceeded accordingly with the distinction between primary and secondary indicators, and in addition to the poverty risk rate, the Federal Government also uses the development of income inequality in society, the extent of long-term unemployment and the number of recipients of Hartz IV and basic social security in old age .25 Since this is not based on any empirical theory - certainly not a social theory - the selection is arbitrary. A supposedly usual, average standard of living is used as a benchmark.

Attempts to determine deprivation in terms of standard of living by means of a survey are more elaborate. It can be asked whether it is possible to satisfy certain needs that are to be regarded as fundamental - for example, to pay treatment costs that are not covered by health insurance, or to heat the apartment sufficiently. It has been shown that such deprivation is often not associated with income poverty; this was the case for only a third of those at “risk of poverty ”.26

The classification by research and politics is one thing. But does it also agree with the self-assessment of the individuals, so do the supposedly poor actually feel inadequately provided for, materially and with regard to their standard of living, or neglected? This question is rarely pursued in poverty research. In one of the few studies that dealt with this, the result turned out that the great majority of those who were classified as low in deprivation or as “low income” were quite satisfied with their standard of living. On a school grade scale, more than 80% of those who were either deprived or low in income stated that their standard of living was at least satisfactory; of those who did both, it was more than half. 27

The SOEP data point in the same direction, because in 2016, according to our own analysis, the majority of those who were at risk of poverty according to the EU definition were rather satisfied with their household income.28 At this point, another aspect should be pointed out. According to the SOEP, students made up almost a tenth of those at risk of poverty in Germany in the same year. Students can be seen as a special social milieu with a specific living environment. It can be assumed that for the most part they are not subject to any risk of poverty, but will rather be among the high earners after completing their studies.

Figure 4
Assessment of a proportion of the standard of living perceived as fair in 2016

Source: ALLBUS; own calculations.

The theory of relative deprivation comes from social psychology, 29 which deals with the perceived unfair violation of expectations30 in comparison to a reference group. In essence, it is about whether someone feels socially unfairly treated. Because the standard of living is the focus of poverty, the question arises as to whether the people at risk of poverty feel treated fairly in this regard. As expected, according to the data from the General Population Survey of the Social Sciences (ALLBUS), this is less often the case with them than with those whose income is above the poverty line. But at least half of those at risk of poverty believe that they have a fair share of the standard of living; similarly many believe that they are receiving “a little” less than they are entitled to (see Figure 4). Only one seventh thinks that their share in the standard of living is “much” too low.

Conclusion

Even the UN definition of absolute poverty is vulnerable. In the case of relative poverty, which is in the foreground in industrialized countries, the definitions are consistently unconvincing. This applies in particular to the definition of the EU, which is also followed by a large part of empirical poverty research in Germany and which constantly presents new results on the extent of people “at risk of poverty” in Germany from a variety of perspectives.

Even if there is talk of a multidimensional approach, the focus is on the risk of poverty threshold. The determination of their amount and the weighting of the needs that go into their determination are chosen purely arbitrarily; there are neither empirical nor theoretical reasons for this. The same applies to the other indicators of the EU concept used to measure poverty. Theoretically, they stand side by side without being connected. Wealth is completely disregarded, although - as shown - there are certainly wealthy “poor” people.

The use of a national benchmark carries the great risk that regional differences in economic strength in the EU member states are more likely to be recorded than poverty. Orientation towards a national average also means that classes, strata or social worlds are hidden - and thus differences in lifestyles and worlds. The decisive factor for individuals, however, is not a national average, but their environment. Relative poverty and exclusion are therefore not felt in relation to an abstract average; the reference is rather the region or the city quarter, the circle of friends, work colleagues or the children's classmates. Accordingly, it is not surprising that quite a few of those who are classified as “at risk of poverty” according to the EU definition are not dissatisfied with their income and do not feel that they have been treated unfairly. The orientation towards the national average follows an easy-to-use, atheoretical empiricism.

The establishment of poverty or poverty risk limits is always based on value judgments. A thorough discussion is therefore rightly called for about what is meant by poverty in society.31 However, this rarely takes place. Rather, there is the official definition of the EU, which many researchers adhere to in their work. The results they present are gladly picked up by the media, because reports about alleged social grievances achieve a high level of attention - especially when they have the nimbus of science attached to them. And the results are used to try to shape politics - again depending on one's own values.

Perhaps the now politically charged concept of poverty should be avoided altogether - because value judgments guided by interests will always be involved and because no convincing and generally binding definition is possible. If it is only about income, “low income” should be used instead. Poverty research is advised to focus less on poverty risk thresholds and rates and more to examine the causes of low income, deprivation and actual exclusion. It would then be about unemployment, training and education - always from the perspective of social milieus and specific life situations.

  • 1 See United Nations: Sustainable Development, Goals. Goal 1: End poverty in all its forms everywhere, http://www.un.org/sustainabledevelopment/poverty/ (16.1.2018).
  • 2 See United Nations Educational, Scientific and Cultural Organization: Learning to live together. Poverty, http://www.unesco.org/new/en/social-and-human-sciences/themes/international-migration/glossary/poverty/ (January 16, 2018).
  • 3 See United Nations, op. a. O.
  • 4 Pauperism describes the mass poverty of the 19th century.
  • 5 Cf. A. de Tocqueville: The misery of poverty. About pauperism, Berlin 2007, p. 9 f.
  • 6 Cf. inter alia J. Roth: Poverty in the Federal Republic. Studies and reports on the crisis of the welfare state, Reinbek 1971; and S. Leibfried, F. Tennstedt: The politics of poverty and the division of the welfare state, Frankfurt a. M. 1985.
  • 7 Quoted from W. Strengmann-Kuhn, R. Hauser: International comparative poverty research, in: E.-U. Huster, J. Boeckh, H. Mogge-Grotjahn (ed.): Handbook of poverty and social exclusion. The measure of poverty: Poverty limits in the welfare state context, Wiesbaden 2008, pp. 133-150.
  • 8 See European Commission, Directorate-General for Employment and Social Affairs: Joint Report on Social Inclusion, Brussels 2004, p. 12.
  • 9 See TNS Opinion and Social: Report on poverty and social exclusion, Euro-Barometer Special, No. 321, p. 10.
  • 10 See European Council: Presidency Conclusions, Lisbon, 23-24 March 2000, paragraph 5, http://www.europarl.europa.eu/summits/lis1_de.htm (16 January 2018).
  • 11 Ibid, paragraph 32.
  • 12 See A. Atkinson, B. Cantillon, E. Marlier, B. Nolan: Social Indicators: The EU and Social Inclusion, Oxford 2002.
  • 13 See European Commission, Employment, Social Affairs and Inclusion: Policy Areas and Activities. Subgroup "Indicators", http://ec.europa.eu/social/main.jsp?catId=830&langId=de (16.1.2018).
  • 14 Cf. P. Krause, D. Ritz: EU indicators for social inclusion in Germany, in: Vierteljahrshefte zur Wirtschaftsforschung, 75th year (2006), no. 1, pp. 152-173.
  • 15 See, among others, the German Institute for Economic Research: DIW Glossary. Poverty, https://www.diw.de/de/diw_01.c.411565.de/presse/diw_glossar/armut.html (16.1.2018).
  • 16 Cf. Federal Statistical Office: 19.7% of Germany's population at risk of poverty or social exclusion, press release from November 9, 2017.
  • 17 See the definition of social reporting in official statistics. Federal and State Statistical Offices: Poverty and Social Exclusion, http://www.amtliche-sozialberichtdienstleistungen.de/A1armutsgefaehrdungsquoten.html (16.1.2018).
  • 18 More recent data are currently not available.
  • 19 Here the use of the term “at risk of poverty” is already cynical, because in Romania in 2016 people with an income of less than 4 euros per day were considered to be at risk of poverty.
  • 20 However, at-risk-of-poverty rates are sometimes also shown, which were calculated on the basis of income in the regions (see footnote 17). However, they hardly play a role in EU reporting or in German poverty research.
  • 21 Cf. inter alia A. Tschoeppe: New system for measuring the standard rates in social welfare according to § 22 BSHG, in: Intelligence Service of the German Association for Public and Private Welfare, 67th year (1987), no. 12, p. 433- 442.
  • 22 Cf. A. Sen: Economics for people. Paths to Justice and Solidarity in the Market Economy, Munich 2002, p. 110.
  • 23 Cf. P. Townsend: Deprivation, in: Journal of Social Policy, 16. Jg. (1987), no. 2, pp. 125-146.
  • 24 Cf. Federal Ministry of Labor and Social Affairs: Living conditions in Germany. The fifth report on poverty and wealth of the federal government, August 2017, http://www.bmas.de/DE/Service/Medien/Publikationen/a306-5-armuts-und-reichumsbericht.html (March 22, 2018).
  • 25 Ibid.
  • 26 Cf. G. Lipsmeier: Potentials and Problems of the Deprivation Approach in Poverty Research, in: Archive for Science and Practice of Social Work, Volume 32 (2001), No. 4, pp. 3-29.
  • 27 Ibid, p. 25.
  • 28 Satisfaction is recorded on a scale from 0 (“completely dissatisfied”) to 10 (“completely and completely satisfied”). Of the people at risk of poverty, 59% gave values ​​between 5 and 10.
  • 29 See, inter alia, S. A. Stouffer: The American Soldier. Adjustment During Army Life, Princeton 1949; W. G. Runciman: Relative Deprivation and Social Justice: A Study of Attitudes to Social Inequality in Twentieth-Century England, Berkeley 1966.
  • 30 See J. S. Adams: Inequality in Social Exchange, in: Advances in Experimental Social Psychology, No. 2/1965.
  • 31 R. Hauser: The Measure of Poverty: Poverty Limits in the Welfare State Context. The social state discourse, in: E.-U. Huster, J. Boeckh, H. Mogge-Grotjahn (eds.), A. a. O., pp. 94-117.

Title: Poverty - Misery of a Term

Abstract: Poverty is a frequent topic in the media and in politics, but the definition of poverty is not satisfactory. The European Commission’s poverty of risk concept ignores social and regional income discrepancies, assets are disregarded, and real poverty is not defined. Other definitions show that poverty is difficult to grasp in practice. There are also differing opinions on and definitions of poverty in the population. A lot of those people who were defined as at risk of poverty according to the EU concept are not poor in reality and not unsatisfied with their income. This lack of clarity has led to the proposal to replace the term “poverty” with “low income”. Future research should place greater weight on determining the causes of low incomes.

JEL Classification: B41, I3, I32