Buying Quality Performance

Poverty is about money – or rather the lack of it. The reasons for, and results of, poverty can be many and myriad and, indeed, contestable, but the idea that the definition of poverty might be up for grabs is bizarre at best. Yet the decision by the UK government to move away from using the (OECD standard) income-based measurement of poverty, decried as “the left’s materialistic idea of poverty”, in favour of broader measurements including work and education is an attempt to do just that.

Of course, better work and education outcomes are vital, but to assume that meeting them will end poverty has little basis in fact. In reality, an increasing proportion of those living in poverty are in work, and poor children with good qualifications still do worse than rich children with poor qualifications.

Source: http://www.jrf.org.uk/data/child-poverty-parent-work-status

The planned cuts to tax credits are set to reduce further the income of a considerable number of working households (the IFS have said that 3,000,000 families will lose an average of £1,000 a year), deepening this poverty and its consequences.

Last month the US National Bureau of Economic Research published a fascinating paper: How Does Household Income Affect Child Personality Traits and Behavior. It showed the difference an increase in unearned income had on children in terms of emotional behavior and personality traits, and that these positive impacts lasted. The longitudinal data the paper is based on was made possible by evaluation put in place two decades ago by Jane Costello and her team. They followed almost 1,500 children from poor families in North Carolina. Unexpectedly, four years into the study, a quarter of the families had a sudden and long-term increase in their annual income. As a result of a casino being built on tribal land, all members of the Eastern Band of Cherokee Indians received c.$4,000 a year in shared profits. The combination of a longitudinal study already in situ and the increase in income to some participants has provided a rich field for research over the years.

The paper describes the size of the effects as ‘relatively large’. Behavioural disorders were decreased by 26.7% of a standard deviation, and conscientiousness was increased by 42.8% of a standard deviation. Importantly, the effect was most significant for those children who were initially behind their peers in these traits, and among those who previously exhibited more symptoms of disorders.

There was little to no evidence of change in parental employment – parents did not decrease their hours of work, or stop working in response to additional income. Instead, there was significant evidence to suggest that parental relationships with both children and partners improved. The constant worry about money (a huge stressor for low-income families) was relieved. Some families used the additional income to move to higher-income areas with better community amenities so this environmental change may have also contributed to the impacts on behaviour and personality traits. The increased wealth empowered the parents to make choices to improve the life chances of their children.

In effect, in North Carolina, the very impacts that DWP want to measure to tell us about poverty, were created by reducing poverty. If we get stuck pretending poverty isn’t about being poor, and that the impact of changing incomes won’t have an impact beyond the material, we lose the opportunity to really understand what a difference money can make.