Last update - 00:00 06/02/2007
PM appoints committee to develop new methods to measure poverty
By Ruth Sinai, Haaretz Correspondent
Prime Minister Ehud Olmert and Finance Minister Abraham Hirchson have appointed a committee to develop new methods to measure poverty in Israel. The new indexes created by the committee will take into account not only income from wages or allowances, as is the current policy, but also the value of benefits such as discounts on municipal fees and day care, for example, and spending on necessities, such as food, housing and clothing.
The new committee is headed by Prof. Shlomo Yitzhaki, the chief statistician of the Central Bureau of Statistics. Other members include National Insurance Institute director general Dr. Yigal Ben Shalom and NII research department director Leah Achdut, who has been in charge of measuring poverty in Israel for at least a decade, as well as representatives from academia, the treasury's budget division, the Bank of Israel, the Prime Minister's Office and the Myers-JDC-Brookdale Institute.
The committee's second meeting, Monday, coincided with the publication of a public call for proposals for measuring poverty, which can be submitted by March 8. Any new proposals that are adopted will be added to the NII's current methods rather than replace them.
Yitzhaki said the forum's goal is to include additional parameters that will help the government to develop tools for fighting poverty. He opposes the use of a poverty line to distinguish between the poor and the not-poor. "The poverty line is an attractive method because it is cheap to put someone over the line, for example by adding a few shekels to the allowances," Yitzhaki said.
Yoram Gabai, formerly director of state revenues in the treasury and currently an economics lecturer at the Hebrew University of Jerusalem and the chairman of Peilim Capital Markets, believes that defining poverty on the basis of income alone leads to policies that focus on allowances alone. For example, if the government increases welfare and old-age payments but cuts health and education budgets, those who are dependent on subsidies may be worse off even though they are no longer considered poor.
The organization Latet - Israeli Humanitarian Aid has drafted a poverty index based on an individual's ability to provide for the basic needs of employment, education, housing, health and food.
According to four poverty indexes examined by Dr. Daniel Gottlieb, an adviser to the governor of the Bank of Israel, the poverty rate in Israel is at least 30 percent higher than NII figures indicate. Gottlieb notes that the NII index does not take into consideration, for example, the fact that 58 percent of Israel's poor live in their own apartments. This means that the situation of a family that is below the poverty line can actually be better than one that is slightly above the line that does not own its own home.
Achdut believes that adding elements such as discounts and housing subsidies, or home ownership, will not change the poverty picture significantly, in light of the fact that in countries that do consider government aid the poverty rate was barely affected.
The question of how to define poverty has engaged researchers since the issue first came under study, in late 19th-century England. Some researchers believe that only actual income should be included in the calculation, such as wages, rent and interest on savings, as is done in Israel. Others want to include assets, such as property, savings, inheritances and other resources. A third school calls for including elements that can be translated into money, such as discounts and subsidies, and perhaps even state services such as education, health care and nursing. Yet another group supports basing the measurement on the value of the minimum cost of living in dignity. At the end of the day, the decision has more to do with values than with economics.