Israeli poverty rate 30% higher than NII figures, economist says
By Ruth Sinai
Haaretz, 29 December 2004
The poverty rate in Israel is at least 30 percent higher than the measurement by the National Insurance Institute, according to Dr. Daniel Gotlieb, a senior adviser to Bank of Israel Governor David Klein.
Gotlieb suggests adopting a different method for measuring poverty so that it will be possible to adopt a more effective policy for treating the problem.
Gotlieb, an economist from Ben-Gurion University of the Negev in Be'er Sheva, examined four different standards for measuring poverty. He found that on the basis of the method used in the United States, the rate of poor families in Israel reaches 28 percent; according to the Canadian standard, the rate drops to 24 percent; the method proposed by the National Research Council in the U.S. lowers the rate further to 23 percent; and the Israeli method calculates the rate of poverty in Israel for 2002 at 18 percent.
Gotlieb's calculations are based on data for 2002. According to the Poverty Report for 2003, the rate of poor families in Israel rose to 19.3 percent; Gotlieb believes he would have also had higher figures had he used the 2003 data. The American standard for measuring poverty is based on the sum of money an individual or a family requires for basic needs, such as food, housing and clothing. The measure used in Israel is based on the income of individuals or of families, relative to others.
In Canada, the system is based on expenditures on essentials, such as food, clothing, housing, transportation and education, and on income, both from wages and assets.
Gotlieb believes the Canadian method is appropriate for Israel and recommends that, in addition to revenues, public services that depend on where one lives also be included. When Gotlieb used the Canadian system to measure poverty in Israel, he also included a broad criterion of basic needs, such the cost of a proper food basket according to nutritional values set by the Health Ministry. The Israeli system does not take this into account, focusing only on income.
When using the Canadian and Israeli systems, Gotlieb found significant disparities in poverty rates. For example, using the Canadian system, 40 percent of the new immigrants were poor, compared to 21 percent with the Israeli method; similarly, 37 percent of single-parent families were poor according to the Canadian method, compared to 26 percent using the Israeli system.
The reason for the difference, Gotlieb said, is the housing element: new immigrants and single-parent families spend more on housing because they do not own homes.
Gotlieb also found a significant disparity when using the two systems for families with two incomes: 9 percent according to the Canadian system and 2 percent according to the NII.
"The choice in the poverty standard is the first step for a rational policy," Gotlieb said.
The great advantage of the current system is in its simplicity and the fact that it is acceptable in many countries in the world. But Gotlieb said it is not accurate enough for a country like Israel, where there are cultural, religious and ideological differences between the different poor sectors.
He points to the paradox in Israel, where the number of poor increases as the economic conditions improve, because the poverty line rises and more people are left below it.
Under such conditions, it is difficult to convince politicians to direct funding toward fighting poverty, he says.
