The Treatment of Housing in Official Low Income Statistics

Paul Johnson and Steven Webb

Journal of the Royal Statistical Society Series A, 1992, vol. 155, issue 2, 273-290

Abstract: Official low income statistics contain analyses based on income ‘before’ and ‘after’ housing costs. We argue that in measuring changes in the real level of income before housing costs over time an inappropriate price index is used. In particular the price index accords insufficient weight to the relatively rapid rise in housing costs which form a disproportionately large part of the expenditures of the poor. We propose an alternative income measure which largely overcomes the sources of bias and appears to us to be a more reasonable definition of income before housing costs. In the final section we evaluate the usefulness of before and after housing costs measures.

Date: 1992
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