Exploring the Consensual Income Approach to Measuring Poverty with an Application to Hong Kong

Abstract

Income-based poverty measures have been criticised for being narrowly focused on income and lacking consistency with community expectations and experience. The consensual income approach produces a poverty line that draws on community perceptions of how much is needed to avoid poverty (or make ends meet). Perceptions vary widely, although it is possible to estimate the income level at which people would say on average, that their current income is just enough for them to make ends meet. This paper re-examines the approach using new survey data for Hong Kong. The estimated consensual poverty lines are shown to have similarities for some households with those used by the Hong Kong Commission on Poverty, but there are also marked differences, particularly for single-person households. An overlap measure is developed that includes those in consensual poverty who also answered Yes when asked if they regard themselves as living in poverty. This overlap measure is shown to more closely resemble the poverty lines used by the Commission, although the gap for single-person households remains large.