Skip to content

Document the default poverty measure: absolute, before housing costs #534

New issue

Have a question about this project? Sign up for a free GitHub account to open an issue and contact its maintainers and the community.

Sign up for GitHub

By clicking “Sign up for GitHub”, you agree to our terms of service and privacy statement. We’ll occasionally send you account related emails.

Already on GitHub? Sign in to your account

Merged
MaxGhenis merged 2 commits into from
Sep 29, 2026
Merged

Document the default poverty measure: absolute, before housing costs #534

Show file tree
Hide file tree
Changes from all commits
Commits
Show all changes
2 commits
Select commit Hold shift + click to select a range
f076767
Document the default poverty measure: absolute, before housing costs
MaxGhenis Sep 28, 2026
f78903a
Describe the FYE 2025 absolute poverty line in 'Which measure to head…
MaxGhenis Sep 28, 2026
File filter

Filter by extension

Filter by extension
Conversations
Failed to load comments.
Loading
Jump to
Jump to file
Failed to load files.
Loading
Diff view
Diff view
1 change: 1 addition & 0 deletions changelog.d/533.added.md
View file
Open in desktop
Original file line number Diff line number Diff line change
@@ -0,0 +1 @@
Documented the default headline poverty measure (UK: absolute poverty before housing costs) and the reasons for it.
12 changes: 12 additions & 0 deletions docs/outputs.md
View file
Open in desktop
Original file line number Diff line number Diff line change
Expand Up @@ -179,6 +179,18 @@ rates.dataframe

Call it once per simulation for a baseline-vs-reform comparison. Age / gender / race breakdowns: `calculate_us_poverty_by_age`, `_by_gender`, `_by_race`. UK counterparts: `calculate_uk_poverty_rates`, `_by_age`, `_by_gender`.

### Which measure to headline

PolicyEngine headlines **absolute poverty before housing costs** in the UK: `absolute_bhc` in `calculate_uk_poverty_rates`, from the `in_poverty_bhc` variable. That function also returns `absolute_ahc`, `relative_bhc` and `relative_ahc`. In the US, `calculate_us_poverty_rates` returns the Supplemental Poverty Measure (`spm`) and deep SPM poverty (`spm_deep`).

The reasons:

- **Relative poverty measures inequality, not poverty.** policyengine-uk draws the relative line at 60% of each simulation's own median income. A reform that raises the median raises the line with it, so relative poverty can rise when every household is better off.
- Example: raising the personal allowance to £15,000 in 2026-27 lowers absolute child poverty and raises relative child poverty.
- **After-housing-costs measures subtract housing spending,** and much of that spending is a choice: a flat or a mansion. International poverty statistics are computed on income before housing costs.

The absolute line is HBAI's: 60% of median income in a fixed reference year, held constant in real terms (the `household.poverty.absolute_poverty_threshold_bhc` and `_ahc` parameters). Since the March 2026 HBAI release, DWP's reference year is FYE 2025 for FYE 2022 onward: 60% of the FYE 2025 medians of £719.48 (BHC) and £623.14 (AHC), so £431.69 and £373.89 a week (HBAI table 2.4ts). Earlier years keep the FYE 2011 reference, and DWP plans to extend FYE 2025 back to FYE 2019 in its March 2027 release. policyengine-uk follows the same split from version 2.102.3: FYE 2022 to FYE 2024 use HBAI's own annual CPI-variant deflators, and later years are uprated by the OBR's CPI forecast. Earlier policyengine-uk versions use the FYE 2011 line throughout, so their absolute rates are lower than DWP's.

## Inequality

Gini, top-10 share, top-1 share, bottom-50 share — for one simulation.
Expand Down
Loading