Gap between poverty report estimates sets off political jeering

Likud: Latet’s assessment was a sneaky way to move votes.

Yair Lapid (photo credit: MARC ISRAEL SELLEM)
Yair Lapid
(photo credit: MARC ISRAEL SELLEM)
A report this week placed the poverty rate far higher than government estimates, raising questions about methods used to calculate financial hardship in Israel.
The Alternative Poverty Report published by the nongovernmental organization Latet on Monday claimed that nearly a third of Israelis, or 2,546,000 people, are impoverished.
But government data tells a different story, placing the proportion of Israelis below the poverty line in the low-20 percents.
“[Latet] defines poverty completely differently than do the Central Bureau of Statistics and National Insurance Institute,” said Yair Assaf-Shapira, a demographer with the Jerusalem Institute for Israel Studies, which works closely with the CBS.
The National Insurance Institute last week reported that 1,658,200 Israelis, or 18.6% of the population, live below the poverty line. Unlike Latet, the NII uses government income data to calculate poverty.
A Likud representative on Monday called Latet’s estimate “a sneaky way to try to move votes from the Right to the Left,” referring to the NII’s findings as “the real report.”
Meanwhile, in an interview with Ynet, Yesh Atid chairman Yair Lapid used the Alternative Report to criticize Prime Minister Benjamin Netanyahu for “this shocking poverty, created by years of neglect” under his leadership.
But researchers said the vast difference between the Latet number and government poverty estimates is a matter of methodology.
“One wrong way to interpret the difference is to say we’re claiming that the NII is fundamentally mistaken in its calculations and estimates of poverty,” said Gilad Tanay, one of the researchers whom Latet contracted with to write the Alternative Report.
Instead, he said the estimate in the Latet report was “complementary but not competitive” with regards to the NII figure.
“[NII] defines poverty generally speaking as when the income per capita is half the median income,” Assaf-Shapira said. “If it’s lower than half the median income per capita, then the family or person or child is considered below poverty line.”
By contrast, Latet employed a “multidimensional poverty index” based on needs related to housing, education, health, food security and the cost of living, a standard adapted from the Individual Deprivation Measure often used in developing countries.
Tanay, formerly a lecturer in global justice at Yale, said the Alternative Report defined poverty as “a state of deprivation which is so severe that any reasonable person would say it is completely unacceptable and falls under the basic standards of dignified living.”
In that sense, it sidesteps the purely numeric approach used to set the poverty line.
Nonetheless, Latet’s executive director Eran Weintraub and chairman Gilles Darmon used the report to call for a focus on poverty relief in the upcoming election, and former president Shimon Peres called it a “damning indictment.”
The approach employed in the Latet report differs fundamentally from methods generally used by government offices and agencies abroad.
For instance, the Organization for Economic Cooperation and Development defines poverty as “the number of people living with less than 50% of median income,” where that median is “country-specific as well as year-specific,” an OECD spokesperson wrote via email, echoing descriptions of the NII method.
This method has merits – namely that it can be used to compare countries and time periods – but it lacks descriptive coherence, Tanay said.
“What it does not do is tell us in a non-arbitrary way how many people live in conditions that an ordinary person would say these are conditions of poverty,” he said.
And while both measures have their uses, “the two indexes are based on two very different conceptions of poverty,” he said.
“You can’t make comparisons – it’s impossible,” said Haim Bleikh, a researcher with the Taub Center for Social Policy in Israel, a Jerusalem- based NGO that also puts out a national report on Israel’s economy and welfare.
Among agencies using the same methodologies, poverty rates tend to differ by only 10ths of percentage points, said Bleikh.
With an apples-to-oranges comparison between a subjective well-being index and an objective measure of income, the difference can naturally be much greater.
The CBS also measures into account subjective well-being – but tends to do so under the heading of “welfare” rather than income.
For instance, the bureau’s 2014 Statistical Abstract reported that 44.2% of Israelis are unsatisfied with their financial situation – much higher than the proportion of Israelis living in poverty, but also a qualitatively different measure.
Another measure dealing with poverty, the number of people receiving “social services” as defined by the Central Bureau of Statistics, included 1,324,419 people in 2013, or 14.9% of the population.
Again, this number is related but not equivalent to the poverty rate.
The CBS has experimented with alternate definitions of poverty.
In 2005, a CBS working paper suggested an alternative method of determining poverty based on a “minimum necessities basket” of goods and services, and the ability of Israelis to purchase those items.
That approach – considerably more complex than splitting the population based on median income – has not been widely adopted.
Israel fairs poorly among developed countries on standard measurements of poverty.
OECD data from 2010 shows Israel with a 20.9% poverty rate, almost 9 points higher than the OECD average and the greatest of any member state.
In October, the United Nations Children’s Fund (UNICEF) released a report that said Israel’s child poverty rate is the fourth highest in the developed world.
Within Israel, poverty rates vary widely.
In 2012, 47% of Jerusalemites lived under the poverty line while the figure in Tel Aviv was 14%, according to the Jerusalem Institute.
Across demographics, the variation is even wider: an OECD report from December 2013 noted that “among Arabs and in the rapidly- growing ultra-Orthodox Jewish community poverty is over one in two, mainly due to low employment rates among Arab women and ultra-Orthodox men, which are still far below those of the rest of the population.”
Lidar Gravé-Lazi and Lahav Harkov contributed to this report.