Tuesday, 4 October 2011

'Changing Fortunes': the 'rubber band' model

Changing Fortunes is a fascinating new dynamic sociological analysis of income and poverty by Stephen Jenkins from the LSE. The particularly interesting aspect of this work is that it is a longitudinal study (using data from the British Household Panel Survey) of the same cohort over a lengthy period rather than a series of snapshots using different sample populations and that it looks at all sources of income including wages, savings and benefits rather than focusing solely on one source. 

If the population is then divided up into 10 blocks containing equal numbers it is possible to look at both the overall shape and the degree of movement between the blocks. Two metaphors are perhaps useful here - a building for the overall shape and a rubber band for the degree of movement.

In terms of the building what is increasingly apparent is that it is a skyscraper rather than a bungalow which is entirely consistent with the plethora of recent studies showing increasing income inequality.

The rubber band is more interesting. There are both relatively small movements between consecutive floors in the building where the band is stretched a little but not greatly but also some much larger tensions where someone moves several floors up or down.

The extent of movement is considerable. About 50% of those in the basement (the lowest floor) will move upwards although the tension on the rubber band means that the movement up becomes increasingly difficult so smaller and smaller numbers reach the upper floors. But about 30% of the inhabitants of the building (taking all floors together) will at some point visit the basement.

This is fascinating since it suggests that:

- the extent of a residual underclass may be overstated in some analyses (although it has to be said that whilst this study is a reasonably lengthy one going back to 1991 it is not and does not pretend to be an inter-generational study and even on this analysis about half of the people in the basement stay there)

- there are some perhaps unsurprising developments for individuals (such as educational attainment) which allow them to access the stairs between floors

- the experience of poverty (using the standard definition of <60% median income in the relevant year) is much more widespread across the population at least at some point in the lives of individuals.

The study ends in 2006 prior to the credit crunch, the recession and the austerity package introduced by the current Government. The analysis suggests that the policies designed to address income poverty had some effect in the period under consideration and made the UK less vulnerable to increasing poverty than some others such as the US.

The big question for the future is how far the pattern described in the study will be affected by the recession and by changes in public policy.

But the most interesting point of all is that poverty is something that many people will experience in their lives, certainly not just the the province of a feckless, lazy or feral underclass. If that experience is increasingly shared it should make us all think about our attitudes to those who happen to be in the basement at a given point in time and just how tall the building rising above them has become.

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