Understanding the Implications of Choice of Deprivation Index for Measuring Consistent Poverty in Ireland

In this paper we make use of the Irish component of the European Union CommunityStatistics on Income and Living Conditions (EU-SILC) survey for 2004 in order to develop a measure of consistent poverty that overcomes some of the difficulties associated with the original indicators employed as targets in the Irish National Anti-Poverty Strategy. Our analysis leads us to propose a set of basic deprivation items that covers a broader range than the original set and provides a more reliable and valid measure. Consistent poverty measures incorporating the revised basic deprivation measure and adopting a threshold of two or more items provide similar estimates of levels of poverty to the original measure. The new broader measure is more strongly associated with current income, surrogates for permanent income and subjective economic pressures. Furthermore, by constructing a consistent poverty typology we are able to demonstrate that when we contrast those defined as poor when employing the new 11-item index but not the 8-item one with those for whom the opposite is true the former display a multidimensional deprivation profile that is substantially less favourable. The accumulated evidence supports the view that the revised consistent poverty measures, which combine a threshold of two or more items on the broader basic deprivation index comprising the 11-item index available in EU-SILC with income poverty, identify those exposed to generalised deprivation arising from lack of resources. This revised deprivation threshold taken together with being below 60 per cent of median income has now been adopted as the official consistent poverty measure in the Irish National Action Plan for Social Inclusion.