Skip to main content
Bookmark and Share

Understanding poverty measures and indicators

Why measure poverty?

The way in which we understand and define poverty has far-reaching implications on anti-poverty activity, debate and policy. It determines the number of people who are counted as living in poverty; and it has a bearing on the outcomes that practitioners seek to meet and the solutions that are developed.

A strong, well-structured evidence-based approach and effective measurement allows organisations and Community Planning Partnerships to do four critical things:

·          "What do we need to know?" - Evidence allows you to clearly identify the major challenges and priorities that face you locally in terms of child poverty.

·          "What works?"-  Evidence helps you to determine the most appropriate policy and intervention response to address your key child poverty priorities and achieve your stated outcomes.

·          "Are we measuring what we need to or just what we can?" -  Evidence supports you to make sure that the indicators used are the most accurate measure of success against your desired outcome

·          "What difference are we making" -  Evidence allows you to track, over time, the impact you are having against your child poverty outcomes.


Definitions of Poverty

Poverty is a complex and multi faceted issue. In order to help break it down the following definitions are used by the Scottish Government (and the UK Government) to estimate the level of the different types of poverty in Scotland.

Absolute low income
Number and proportion of people living in households whose equivalised income before housing costs is below 60 per cent of inflation adjusted UK median income in 2010/11. This is a measure of whether the poorest families are seeing their incomes rise in real terms.

Relative low income
Number and proportion of people living in households whose equivalised income before housing costs is below 60 per cent of UK median income in the same year. This is a measure of whether the poorest families are keeping pace with the growth of incomes in the economy as a whole.

Material deprivation and low income combined
Number and proportion of people living in households that are both materially deprived and with an equivalised income before housing costs is less than 70 per cent of the UK median in the current year. This is to provide a wider measure of children's living standards.

Persistent low income
Number and proportion of people living in households whose equivalised income before housing costs is below 60 per cent of UK median income in the same year for three of the previous four years. This is a measure of whether or not families are consistently in a position that their income keeps pace with the growth of incomes in the economy as a whole.


Key Surveys

Key surveys which are used to help determine levels of income poverty in Scotland and across the UK.

Housing Below Average Income (HBAI)
 is the key dataset for the analysis of income poverty. It has been extensively reviewed and processed by government to ensure that it is properly comparable between households. This involves a process (called ' equivalisation') whereby household incomes are adjusted to reflect the fact that, to have the same standard of living, a family of four (for example) requires more money than a family of one… but not four times as much.

As well as extensive income data, HBAI also contain data about individuals' pay rates, working hours, tax credits, housing costs, etc, thus allowing complex analyses. Furthermore, data from HBAI can be linked with the data for the same individuals/households in Family Resources Survey on which it is based. For Scotland level analysis it is essential to use the datasets themselves rather than the annual report.

Source - The Poverty Site

Family Resources Survey (FRS)
FRS is the main UK-wide general household survey and contains a variety of information about households, families and individuals. Example uses therefore include analyses of those lacking central heating, essential items, pensions, bank accounts.

Source - The Poverty Site

What makes a good indicator?

Local areas may chose their own indicators which are suitable to their needs. However, it is important to choose indicators which not only reflect poverty in terms of income but give a fuller picture through indicators concerned with wider deprivation and well being. Outcome indicators are long terms measures. It is important to have a range of short term and medium term milestones to demonstrate progress and that you are on the right track. It may also be worthwhile to give thought to the benefits of using indicators which can be compared nationally.

Output indicators  - these demonstrate the work the organisation does and show progress towards meeting objectives.
Outcome indicators - these demonstrate changes which take place as a result of the organisation's work, and show progress towards meeting specific aims.
Impact indicators  - these demonstrate longer-term change relating to the overall aim or mission of the organisation.

A proxy indicator is an indirect measure which can be used to demonstrate change. For example rates of breast feeding or childcare although not directly related to child poverty can be strong proxy indicators of progress.

The list below outlines criteria that indicators can be assessed against.

Relevant and unambiguous
The indicator should be clearly and directly relevant to at least one of the high level poverty outcomes that are being sought. It doesn't have to be a direct measure but it should be an unambiguous indicator of progress. The definition should be suitable for non-experts with no possibility of misinterpretation.

Complement other frameworks and concepts
The indicator should complement any similar measures being used in other frameworks, performance management systems, legislation or national or international conventions.

Timely and accessible
The data should be published regularly enough to tie in with the Single Outcome Agreement reporting arrangements, the time-lag between recording and reporting of data should be minimal and the data should be easily accessible to all (i.e. available publicly).

Statistically Robust and Consistent
For data from surveys:
The data should be precise enough to measure change. The data should be based on a sample that is representative of the relevant population and collected using recognised best practice in surveys. The data should be consistent across time and place in terms of both the survey questions asked and the survey design and analysis methodology.

For data from administrative systems:
All bias and error in the data should be recognised and the implications assessed against the usefulness of the data. There should be minimal risk to changes in systems and recording practice over time and minimum inconsistencies between geographical areas. The data should be fully quality assured and auditable.

The cost of collecting the data to a sufficient quality standard should be outweighed by the usefulness and utility of the data.

Source - IS local outcome indicator project guidance note


Data and indicator sources


Scottish Neighbourhood Statistics (SNS) -  datazone level
Scottish Neighbourhood Statistics is the Scottish Government's on-going programme to improve the availability, consistency and accessibility of small area statistics in Scotland. It includes information on health, education, poverty, unemployment, housing, population, crime and social / community issues at the data zone level and above.

Scottish Index of Multiple Deprivation (SIMD) -  datazone level
The SIMD provides a wealth of information to help improve the understanding about the outcomes and circumstances of people living in the most deprived areas in Scotland.

Centre for Economic and Social Inclusion Toolkit  - some indicators not available for Scottish Local Authorities
CESI have produced an up-to-date and interactive resource that uses a combination of charts, tables and text to describe and analyse child poverty at a local level, and how it has changed in recent years.

Community Health Profiles -  Health Board, Community Health Partnership, Local Authority and intermediate small area level.
These profiles highlight the considerable variation in health between areas and help identify priorities for health improvement, along with complementary profiles focussing on children and young people. The profiles give a snapshot overview of health for each area using spine charts (which show how the area compares to the Scottish average), and allow further understanding of the results via rank and trend charts.


Scottish Government Analytical Pages
The income and poverty statistics web pages provides information about income and poverty statistics for Scotland. It includes the latest publications, a broad range of Family Resources Survey based analyses relating to income and low income in Scotland as well as performance against UK child poverty targets

Scotland Performs
Reducing levels of child poverty and alleviating its impacts are reflected throughout the National Performance Framework. All of our national Purpose targets, outcomes and indicators are reported on annually in Scotland Performs'

Department of Work and Pensions
DWP publish a range of statistics that provide information about DWP's client groups, benefits, employment programmes, estimates of households living in poverty and other areas that the Department is responsible for.

Office for National Statistics
The Office for National Statistics produces independent information to improve our understanding of the UK's economy and society.

The Poverty Site 
This site monitors what is happening to poverty and social exclusion in the UK and has material organised around 100 statistical indicators covering all aspects of the subject, from income and work to health and education.

Scottish Public Health Observatory
Along with summary data and statistics, they aim to provide background information, interpretation, policy notes, commentaries on data sources, references and links to further information for a wide range of topics relating to the health of the Scottish population.

Information Statistics Division of NHS National Services Scotland.
There are a number of general public health and health improvement measures which help to measure progress in tackling poverty, ranging from rates of smoking, drug misuse and alcohol consumption to data on sexual health outcomes.


More data and indicator sources

Data Guide, Scottish Neighbourhood Statistics
Describes data, explains who created it, supplied it and how often it is updated. Poverty indicators can be found under different headings, notably 'Economic Activity, Benefits and Tax Credits', but also, for example, 'Special Interest Reports' (for financial inclusion), Scottish House Condition Survey (for fuel poverty), etc.

Scottish Indicators, New Policy Institute
User-friendly website that provides data and straightforward explanation of these data for a wide range of poverty-related issues and age groups in Scotland. Of particular interest, is the provision of data and analysis of 13 indicators for local authority areas across Scotland. This covers the topics of location of low income, receipt of tax credits, concentrations of poor children, location of low pay and lack of central heating.

Local Outcome Indicators, Improvement Service
Although not designed to provide specific advice on poverty indicators, the menu of local outcome indicators (now at version 5.1, updated November 2010) offers clear guidance on the nature of many useful poverty indicators.

Local Authority Level Child Poverty Proxy Indicator Data

HMRC tax credit claimant data and Scottish Household Survey income data. Last updated July 2011.

Local Authority Relative Poverty Estimates

A report which presents new figures about the proportion of households in relative poverty at LA level across Scotland.These data are published as 'Data being developed' and are undergoing further quality assurance work.

Joseph Rowntree Foundation's Minimum Income Standard
Project website of the joint project of York University and Loughborough University to determine "what level of income is needed to allow a minimum acceptable standard of living in the UK today".

Poverty and Social Exclusion Project
Project website of a major academic research project funded by the Economic and Research Council. It builds on the methodology developed in earlier studies (Breadline Britain). Led by the University of Bristol, but with academics from Heriot-Watt University and Glasgow University as part of the team.

Qualitative Information - the stories and perspectives of young people and families experiencing poverty

Poverty Truth Commission
The Poverty Truth Commission has been a two year project bringing together some of Scotland's civic leaders with people at the sharp end of poverty. They have worked together to discover the truths about poverty, and explore real solutions to it. They have also become friends.

Scottish Commissioner for Children and Young People (SCCYP)
The SCCYP promotes awareness and understanding of the rights of children and young people. In particular they must promote and commission research on matters relating to the rights of children and young people and involve them in decisions around how we improve their rights and wellbeing.