Publication - Statistics

Poverty in Scotland: methodology

Details on how poverty in Scotland is measured.

Poverty in Scotland: methodology
Poverty definition

Poverty definition

The most commonly used poverty threshold is 60% of the median household income.

In order to determine if an individual is in poverty, their equivalised net disposable household income before and after housing costs must be calculated and compared with the average for the whole population. Individuals are then defined as being in poverty if their equivalised household income is below a specified threshold.

Please note again that it is household income rather than individual income that is used, because the living standard of an individual may depend on the income of other members of the household (say for example a non-working person may live with a high earning partner, with both having a high standard of living). A key assumption therefore is that all individuals in the household benefit equally from the combined income of the household.

Which average - why median rather than mean? The median is the income value which divides a population, when ranked by income, into two equal sized groups. This measure is most commonly used to represent average income due to the highly skewed nature of the income distribution that can lead to the very high incomes of a few having a disproportionate impact on the mean.

Absolute and relative poverty measures

To define and measure those living in poverty over time there are two headline measures, relative and absolute poverty.

The relative poverty measure compares against the median in the same year.
The absolute measure compares against the median in a baseline year, adjusted to remove the effects of inflation.

In essence, the absolute measures whether individuals in the lowest income households are seeing their incomes rise in real terms. The relative measures whether those in the lowest incomes are keeping up with the growth of incomes in the the economy as a whole.

Absolute poverty: Individuals living in households whose equivalised income is below 60% of inflation adjusted UK median income in 2010/11. This is a measure of whether those in the lowest income households are seeing their incomes rise in real terms.
Relative poverty: Individuals living in households whose equivalised income is below 60% of UK median income in the same year. This is a measure of whether those in the lowest income households are keeping pace with the growth of incomes in the economy as a whole.

Contact

social-justice-analysis@gov.scot