Dollars and Sense of Solving Poverty (2011)

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    AUTUMN 2011 | VOLUME #130

    ThE DOLLArs AND sENsE

    Of sOLViNg POVErTy

    NATIONAL COUNCIL OF WELFARE REPORTS

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    Copies of this publication may be obtained from:

    National Council of Welfare9 th oor, 112 Ke t Street Place de Ville, To er B Otta a, O tario, K1A 0J9 Tel: 613-957-2961 / Fa : 613-957-0680 E-mail:i fo@ c -c b.gc.ca Website: .c b- c .gc.ca

    This document is available on demand in alternate formats(Large Pri t, Braille, A dio Cassette, A dio CD, e-Te t Diskette,

    e-te t CD, or DAISY), by co tacti g 1 800 O-Ca ada (1-800-622-6232). If yo have a heari g or speech impairme t a d se ateletype riter (TTY), call 1-800-926-9105.

    galeme t dispo ible e fra ais so s le titre :

    RAPPORTS Du COnSEIL nATIOnAL DuBIEn-TRE SOCIAL / LE SEnS DES SOuS POuRRSOuDRE LA PAuVRET

    Her Majesty the Q ee i Right of Ca ada, 2011 Cat. no. HS54-2/2011E ISBn 978-1-100-18989-5

    P blicatio s mail agreeme t # 40065597 Return undeliverable Canadian addresses to:112 Ke t Street, 9th Floor Otta a, O tario, K1A 0J9 E-mail:i fo@ c -c b.gc.ca

    mailto:[email protected]://www.cnb-ncw.gc.ca/mailto:[email protected]:[email protected]://www.cnb-ncw.gc.ca/mailto:[email protected]
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    TAbLE Of CONTENTs

    Letter from the Chairperson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I

    Snapshot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .III

    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

    PART ONE SENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

    1. Costs, be e ts a d the differe ce bet eespe di g a d i vesti g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

    2. The economy and poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133. Society and poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234. Social and economic relationships . . . . . . . . . . . . . . . . . . . . . . . . . . 29

    PART TwO DOLLARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

    5. Comprehe sive cost/be e t calc latio s . . . . . . . . . . . . . . . . . . . 416. Speci c cost/be e t e amples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

    PART THREE DOLLARS AnD SEnSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

    7. Governance and public policy . . . . . . . . . . . . . . . . . . . . . . . . . . . .698. Canadian policy in practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

    PART FOuR SEnSIBLE InVESTMEnT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

    9. Taki g actio : Co cil recomme datio s . . . . . . . . . . . . . . . . . . . . 87

    Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Appe di : notes o the Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

    About the National Council of Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

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    The natio al Co cil of welfare is gratef l to everyo e hoseork is refere ced i this report for their ideas a d evide ce,

    a d to a thors a d e ter al revie ers ho e te ded their e pressio s of s pport a d commitme t to the ork of solvi gpoverty. Beca se o r report foc ses o co ecti g ideas

    a d di g patter s across differe t elds, e co ld ot goi to great depth i a yb t the depth is there. we ca otoveremphasize that there is a great deal more material

    derlyi g the e amples e se i this report a d e hopei terested readers ill co s lt the f ll bibliography o o r

    ebsite at . c -c b.gc.ca . We attempted to use as plainla g age as possible a d to choose e amples that co ld be

    derstood by a ide readership. Maki g those decisio s asa dif c lt respo sibility give the ealth of material. we took from larger orks hat e fo d most releva t to o r reporto poverty. I so doi g, e may ot have re ected all thea thors objectives or other importa t aspects of their ork.For more detail o a y s bject, e i vite readers to co s ltorigi al p blicatio s.

    ACKNOWLEDgEMENT

    NCW | The Dollars a d Se se of Solvi g Poverty

    http://www.ncw-cnb.gc.ca/http://www.ncw-cnb.gc.ca/
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    LETTEr frOM ThE ChAirPErsON

    Dear Readers,

    I the follo i g pages yoill be prese ted ith the

    dist rbi g pict re of povertyi Ca ada. Yo ill also bei trod ced to a d challe gedby an investment model full ofpromise for all Ca adia s. Asyo read a d re ect, I i viteeach of you to be a part ofcreati g lasti g sol tio s topoverty. By impleme ti gthem, e ill all gai , omatter o r backgro ds or o r vario s i terests i family,

    comm ity, b si ess or gover me t. Ma y Ca adia s seem to be co cer ed thatred ci g poverty mea s more spe di g o people livi g ipoverty, leavi g others orse off. The gro i g body of researcha d e perie ce, ho ever, tells a very differe t story. It sho s thatinvesting to reduce poverty improves wellbeing for everyone.

    E visio the day he e plai i g hat poverty is to o r gra d childre req ires co s lti g a history book. My c rre treality, orki g i the ho si g eld, is that my yo g so dersta dshomeless ess i a ay that is be ilderi g a d dismayi g.S rely homeless ess i Ca ada is ot somethi g e a t to cometo accept as familiar or ormal. S rely e ca create a better society here people have a proper place to live, e o gh food toeat, a d m ltiple opport ities i life, here people are healthy a dhappy, a d here ork provides more tha e o gh to makee ds meet.

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    Poverty i Ca ada, especially amo g some pop latio gro ps,

    creates damage that is pervasive thro gh ge eratio s. we m strge tly galva ize hatever reso rces e eed to ght thethreat of this epidemica d preve t the persiste ce of poverty.

    As this report sho s, fear ca be a po erf l motivator a d itmight ork i a crisis, b t it ca ot s stai actio .

    A practical pla is eeded for lasti g progress. I the aftermath ofthe most rece t a cial crisis, the federal gover me t a o cedthat old assumptions must be tested and old decisions must beretho ght. The Dollars and Sense of Solving Poverty does j st that.It sho s ho e have falle i to some e pe sive spe di g patter sthat carry large i direct costs a d hy e are ot getti gappropriate res lts. More importa tly, it reveals that there aremore effective a d more hopef l approaches to poverty. what

    e eed is to apply the best of o r e perie ce a d k o -ho ia coordi ated strategy that i vests i people, partic larly thoseat the bottom of the i come ladder. I the process, all Ca adia s

    ill see gai s i o r allets a d o r ellbei g.

    Yo r participatio a d commitme t are a vital part of the sol tio .

    Si cerely,

    Joh Rook Chairperson

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    Poverty is costi g s too m ch. The natio al Co cil of welfareprovided e amples i its 2002 report o the Cost of Poverty .I 2006, i Solving Poverty: Four Cornerstones of a WorkableNational Strategy for Canada , e o tli ed a gover a ce modelbased o lo g-term visio , pla s a d b dgets, acco tability

    a d meas res to assess progress.The Dollars and Sense of Solving Poverty e pa ds o bothreports by providi g more e amples from a gro i g bodyof st dies as ell as i sights that ca improve s ccess iestablishi g clearer visio , desig i g more effective pla s a db dgets, improvi g acco tability to Ca adia s a d e s ri gprogress by meas ri g hat matters.

    This report provides i sights i to:

    why the costs of poverty are far higher tha ma ypeople realize;

    why poverty has persisted i ealthy co tries despite ma ypolicies a d programs for people livi g i poverty;

    what eco omic a d social factors eed to be take i toacco t for p blic policy to be s ccessf l i e di g poverty;

    A ide ra ge of e amples of the costs e are payi g ocompared to the savi gs a d positive ret r o i vestme t

    e co ld be getti g; The role of gover me t a d Ca adas e perie ce a d

    pote tial to be more s ccessf l.The report reveals:

    T e total co t o pove t e t an man t nk

    The costs a d co seq e ces of poverty are m ch larger thadirect spe di g o poverty programs. we see the totalcost he i direct a d societal costs are take i to acco t.

    sNAPshOT

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    The poverty gap i Ca ada i 2007the mo ey it o ld

    have take to bri g everyo e j st over the poverty li e as$12.3 billio . The total cost of poverty that year as do bleor more si g the most ca tio s estimates.

    There is a consistent pattern of studies from Canada andother co tries sho i g that i vesti g to elimi ate povertycosts less tha allo i g it to persist.

    T e nd ect and oc etal co t o pove t a e t e mo te pen ve one

    Ca adia s are payi g the most i the least prod ctiveareas, tryi g to costly problems li ked to i eq ality,i sec rity a d poverty that are preve table.

    If someo e ca t afford medici e, for e ample, they e dp i a emerge cy ard; itho t s pport for child care, a

    mother ca t take a paid job; if someo e has o home, theyca t ma age a ill ess or employme t.

    The bigger that eco omic a d social problems become theless likely i divid als, families, comm ities or b si esses cameet the eed a d the greater the odds that gover me thas to step i that mea s all of s pay a higher bill.

    An nve tment app oac needed to end pove t , not ju tallev ate t mptom

    The old sayi g that a o ce of preve tio is better thaa po d of c re applies to solvi g poverty as m ch asa ythi g else.

    A lo g-term, i vestme t approach is more appropriateto h ma ellbei g a d developme t tha a short-termspe di g approach foc sed largely o costs.

    we co ld achieve better h ma a d a cial o tcomes

    by co trib ti g to greater prod ctivity a d ellbei g. Theres lts ill sho p i lo er poverty rates, red ced strai ohealth care a d other p blic service systems, a d less stress,a iety a d debt i o r lives.

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    E ect ve nve tment equ e t at we unde tand w at c eate

    uman well e n Poverty is ot i evitable, at ral, or too comple to ma age. Poverty is about more than money because life for all of us is

    abo t more tha mo ey. The ork e do itho t pay a dthe time e devote to family, frie ds a d comm ity, or to ed catio a d sleep, are esse tial to o r ellbei g a dq ality of life.

    Time stress ca matter as m ch as i come stress i meeti geeds. Livi g i poverty i Ca ada is very time-co s mi g.

    Societal et orks a d the ability to have some co trol over life are importa t to everyo e. Scie ce sho s that a littlestress is good for s, b t too m ch stress ca damage o r bodies a d brai s, triggeri g physical a d me tal ill ess.

    Achievi g greater ellbei g req ires a better bala ce a dco ectio bet ee the eco omic a d the social aspectsof life.

    Good gover a ce, here people participate a d have tr sti gover me t i stit tio s a d p blic policy, s pports botheco omic a d social goals.

    Canada a t e capac t to nve t n well e n and olve pove t Ca ada is a ealthy co try. we have a great deal of

    k o ledge a d e perie ce, good p blic policy models,a d a co cer ed pop latio . we have had s ccess idramatically red ci g poverty amo g se iors over thepast fe decades.

    As a co try e are i the middle of the i ter atio al pack a d slippi g o some key i dicators of ellbei g. If e cat r thi gs aro d, avoid bigger problems that eed bigger

    es a d i vest more isely, o r f t re ca be brighter a d

    more s stai able.We will all bene t from a Canada without poverty

    All Ca adia s be e t by bei g able to se o r time a dmo ey for the thi gs that matter most to s i divid allya d collectively a d that make life more orth hile.

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    Recomme datio s for Taki g ActioThe patter s revealed i this report, alo g ith the Co cilso deliberatio s a d the co versatio s e have had ithpeople from ma y alks of life, clearly sho that it makeseco omic se se to solve poverty. The natio al Co cil ofwelfare s ggests that Ca ada ca do this, for the be e tof all Ca adia s, by:

    1. Adopt n a Canada-w de st ate o solv n Pove t thatb ilds o the Co cils fo r cor ersto es as a gover a cemodel, b ilds o e isti g poverty red ctio strategies a d

    i itiatives, a d co ti o sly improves ith e perie ce.2. E ta l n a su ta ned inve tment Plan ithi the strategy

    that b ilds h ma capacity, removes barriers, createsopport ities, a d co siders i terrelatio ships amo gpolicies as ell as the cha gi g realities of Ca adia sover the co rse of their lives.

    3. Develop n a Con tent De n f amewo k to get thegreatest effective ess from policies a d programs. It sho ldbe based o : fair ess a d reaso able re ard for ork effort;s pport for a to omy a d i itiative; portability, sec rity a d

    stability; coordination and simplicity; and accountabilitya d comm icatio .4. fo te n an Open fo um o Conve at on and Act on

    i volvi g ma y part ers i a o goi g, i cl sive pa -Ca adia space for shari g ideas, q estio s, research,evide ce, progress reports, a d lived e perie ce.

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    The natio al Co cil of welfare p blished a rst report o TheCost of Poverty i 2002, looki g at st dies of the relatio shipbet ee poverty a d the ve most cited areas here theco seq e ces of poverty appear:

    health;

    justice;

    h ma rights a d h ma developme t; ork a d prod ctivity; a d child developme t.

    That report co cl ded that poverty is costi g s dearly i h maa d eco omic terms, m ch of it preve table.

    The , i 2007, the Co cil highlighted the importa ce of agover a ce model for comple problems like poverty i SolvingPoverty: Four Cornerstones of a Workable, National Strategy for Canada . The cor ersto es re ect the eed for lo g-term visio

    ith targets a d timeli es, coordi ated pla s a d b dgets,acco tability to Ca adia s for res lts, a d the meas reme ttools eeded to pla , mo itor a d assess progress.

    The Dollars and Sense of Solving Poverty e pa ds o eleme tsof both reports. Research, e perie ce a d p blic debate releva tto poverty have virt ally e ploded i the past fe yearsivariety, depth a d breadth. nee amples from this gro i g bodyof k o ledge provide importa ti sights that ca make a strategyto solve poverty in Canada moreaffordable tha the stat s q o a d more s ccessf l. The e te sivebibliography of books, jo r al

    iNTrODUCTiON

    Many Canadians are concernedthat red ci g poverty mea s morespe di g o people livi g i poverty,leavi g others orse off. The gro i gbody of research a d e perie cetells a very differe t story. It sho sthat i vesti g to red ce povertybe e ts everyo e.

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    articles, academic papers, semi ar prese tatio s, media stories

    and commentary that informed this report can be found onlineat . c -c b.gc.ca .

    This report sy thesizes the mai i sights, themes a d tre ds ima y elds that the natio al Co cil of welfare is co vi cedhold the keys to s ccessf l a d cost-effective sol tio s. Thee amples, take together, have bee chose to ill stratethe ra ge of reso rce material sed:

    Approaches a d methodologies from dollar calc latio sof cost to more conceptual studies;

    Eco omics as ell as sociology, psychology, biology,medicine and more;

    Areas li ked to poverty s ch as health, ed catio a dho si g, a d e er st dies o b si ess a d the private sector;

    Small, precise st dies of partic lar programs to larger st dies of atio al ta systems a d revie s of vario sprogram i teractio s;

    Ma y co cer ed actors at local, provi cial, atio al a dinter national levels from individuals and communities toacademic i stit tio s, research bodies, gover me ts

    a d b si esses.Some of o r reso rces are highly tech ical, a d the co ceptsa d terms sed by e perts i o e eld are ot ecessarily

    derstood by average Ca adia s or e perts i other elds.Amo g eco omists i terested i the operatio of domestic a dglobal markets, for e ample, a hairc t is a a cial i str me t.

    I this report, e have made every effort to se plai la g agea d everyday e amples, so if yo see the ord hairc t, itmea s getti g yo r hair c t. Altho gh the reports foc s iseco omic, it is ltimately abo t people a d h ma val esa d it m st be mea i gf l to Ca adia s from all alks of life.

    http://www.ncw-cnb.gc.ca/http://www.ncw-cnb.gc.ca/
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    Sense:

    The rst few chapters are grouped under this title because they are about themean n o dea , wo d and amewo k u ed to talk a out econom c and oc ala pect o p o lem l ke pove t . T e elp make en e o t e num e n latec apte and pave t e wa towa d wo ka le olut on .

    Dollars:

    The chapters in this section provide cost/bene t estimates from comprehensivepove t tud e and om ocu ed a ea l ke ou n and u ne . T e majo t u ecalculat on n dolla , and ome u e well e n mea u e . some p ov de e t mateo etu n on nve tment.

    Dollars a d Se se:T e e c apte n to et e mone and mean n n t e Canad an eal t o pu l cpol c , ove nance and t e potent al o u n ou mone mo e w el and e ect vel .

    Sensible Investment:

    T e Nat onal Counc l o Wel a e ecommendat on o tak n act on.

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    1. COSTS, BEnEFITS AnD THE DIFFEREnCE BETwEEnSPEnDInG AnD InVESTInG

    2. THE ECOnOMY AnD POVERTY3. SOCIETY AnD POVERTY4. SOCIAL AnD ECOnOMIC RELATIOnSHIPS

    PART ONEsENsE

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    1COsTs, bENEfiTs ANDThE DiffErENCE bETWEENsPENDiNg AND iNVEsTiNg

    There are differe t ge eral approaches to poverty i Ca adaa d else here. O e approach is based o a ass mptio that

    i come from ear i gs a d the s pport of family a d frie dsill meet peoples eeds. A other approach sees a greater

    role for gover me t i terve tio , ofte short-term, especiallyhe large problems arise, s ch as d ri g recessio s. A third

    approach foc ses more o preve ti g poverty thro gh i comesec rity programs, alo g ith lo ger-term i vestme ts to e s repeople have opport ities to achieve ellbei g or q alityof life, s ch as getti g a ed catio , holdi g a dece t job,mai tai i g good health, a d participati g i the larger society.

    Elements of each of these approaches can be found in

    Ca adas c rre t array of p blic policies. There is o de edstrategy ith the e plicit goal of e di g poverty or a target for red ci g it for Ca ada as a hole, altho gh there are certai lyprograms directed to lo -i come Ca adia s. I rece t years,several provi cial a d territorial gover me ts have adoptedpoverty red ctio strategies a d others seem to be movi g ithat directio . Some strategies are q ite comprehe sive, a dacross the co try there are some promisi g e i itiatives.

    Policies foc sed o poverty, ho ever, are o ly o e part of theeq atio . The larger p blic policy co te t i Ca ada i cl desmajor systems that may ot have bee desig ed speci cally toaddress poverty, b t that evertheless ca have a large impacto the risks of povertya d its costs. These i cl de o r healthcare system, the j stice system a d policy areas co cer ed

    ith childre , ed catio , the labo r market a d ta atio . I thislarger co te t there are opport ities to preve t poverty. wherepoverty persists, ho ever, it adds a strai i all these areas thatraises their costs.

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    It is ithi this larger p blic policy frame ork i Ca ada that amore complete pict re of the costs a d be e ts of alter ative,a d better, approaches to solvi g poverty ca be fo d.

    T e h Econom c Co t o Pove t

    Regardless of hether poverty is vie ed as a ca se or co seq e ce of social ills, there is ab da t evide ce iresearch, a d i fro t of o r eyes every day, that poverty isli ked ith poor physical a d me tal health, jobless ess, lack of ed catio a d skills, developme tal dif c lties i childre ,crime, homeless ess, racial discrimi atio a d other iss es.S ch problems are costly for societies.

    The eco omic costs of poverty fall i to three ge eral categories:

    D ect co t of poverty, s ch as i come s pports (e.g., socialassista ce, orki g i come ta be e ts) a d servicesspeci cally for people i poverty.ind ect co t , s ch as high se of emerge cy ards, police,co rts, remedial ed catio a d other specialized servicesthat are amo g the most e pe sive parts of the p blic servicesystems o hich e all rely. There are i direct private coststo i divid als a d b si esses as ell, s ch as i creased eed

    for perso al i s ra ce a d sec rity systems, i cl di g gateda d privately policed comm ities for the ealthiest.soc etal co t represent the loss of potential contribution tosociety a d the strai that poverty a d steep i eq alitiesplace o everyo e alo g the i come ladder. People ipoverty ofte m st devote a large part of their e ergyto di g e o gh food to eat, stayi g safe, traveli g toa d from part-time jobs a d follo i g the r les of vario sb rea cracies. Their time co ld be spe t more prod ctivelyi trai i g a d ed catio , pare ti g a d better jobs.The opportunities that are denied to children can carryespecially lo g-term costs. Poverty a d steep i eq alities areconnected to increased social ills and health problems thate te d to the ider pop latio .

    $

    $

    $

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    Gover me t b dgets have ofte foc sed o co tai i g directcosts. Ma y st dies pro led i this report, ho ever, sho hovery high the i direct a d societal costs of poverty ca be. For e ample, if a pare t ca t afford good food a d medici efor a sick child, that family is more likely to have to se hospitalemerge cy services to treat the child. The child may also havebecome more serio sly ill a d s ffer lo ger-term impacts. Ithis e ample, ta payers o ld be better off directly e abli gpare ts to b y good food a d medici e. This e ample alsohighlights that hile spe di g matters, it matters eve more

    hat that spe di g is fori other ords, hat val e or be e te are getti g for the cost.

    The Bene t Side of Cost/Bene t Analysis

    People rarely b y a ythi g o cost alo e e have to k ohat e a t before decidi g hat e are illi g to pay.

    we also have to look at the pros a d co s of o r optio s. Thee ample belo ill strates a basic cost/be e t a alysis.

    i a $150 pa o oe wo t t e p ce? Yes a d no. It depe ds o hat yoeed, hat yo ca afford a d ho it ill be e t yo .

    No :

    If yo a t somethi gstylish that doesnt need tolast a d yo ca get thatfor $50.

    If yo o ly have $150a d yo eed t o pairsof shoes.

    If yo ca afford $200shoes that are much morecomfortable a d d rable.

    ye :

    If yo have $150 a d less e pe siveshoes h rt yo r feet.

    If yo have $100 a d ca b y ocredit because the shoes have thesafety or support features needed for yo r e job. The shoes ill cost a fedollars more ith i terest b t getti gthe job is orth it.

    If yo feel it re ects fair pay for theorkers prod ci g them.

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    Bene ts are a central focus of this report for several reasons:

    I o r i itial research o the cost of poverty, e fo d that

    the be e t side of cost/be e t a alysis as ofte lessdirectly spelled o t tha cost. Be e ts are s ally derstoodto be i creased ear i gs, here possible, a d greater

    ellbei g. Those be e ts co ld also be derstood asthe policy goals of poverty elimi atio .

    There are major e developme ts i meas ri g be e ts ieco omic a d social ellbei g.

    I p blic debate, a d i m ch of the i formatio historicallyprovided by gover me ts, the desired be e ts, or goals,appear mi ed.

    Gover me ts reg larly p blish i formatio o i comesec rity program costs. I formatio o the be e ts of thoseprograms is harder to d a d less freq e tly disc ssed.

    I some debates, the goalappears to be to d morecost-effective ays to alleviatepoverty. C tti g social assista cerates o ld be a e ample ofco ti i g to e able peopleto s rvive i poverty ith lessp blic spe di g. The m chhigher i direct costs of povertys ch as added stress, safe

    eighbo rhoods a d the eedfor emerge cy health services,ho ever, are ofte left o t ofthe eq atio .

    A positive goal, s ch as e abli g people to be moreprod ctive or improvi g health a d other aspects of theq ality of their lives, may help ge erate p blic s pport for effective policy i itiatives.

    Foc si g o be e ts allo s s to move a ay from o e-sided disc ssio s abo t spe di g a d move to ards ai vestme t approach.

    Estimating the costs associated withpoverty can also be understood ase t mat n t e total econom c valueo nc ea ed p oduct on and equal t o l e t at would acc ue if poverty were eliminated.

    Holzer et al. (2007)1

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    spend n on Pove t P o am

    Ca adas approach to poverty amo g orki g-age ad ltsappears largely drive by a co cer ith the spe di g side ofcost/be e t a alysis. There is very little i formatio availableo hat be e ts are bei g obtai ed, s ch as perce tages ofpeople co sidered employable ho leave elfare for jobsthat keep them o t of poverty a d e able them to i creasetheir ellbei g a d their co trib tio to society. I the case ofmater ity a d pare tal policy, the be e ts to mothers healtha d their babies developme t by havi g more time to devoteto pare thood a d less a cial stress may be more dif c lt tocalc late tha yearly program dollars, b t they are of great a d

    lasti g val e.2

    Ca adia s spe d a large amo t of mo ey o poverty-relatedprograms. Yet, the perce tage of orki g-age ad lts a dchildre e perie ci g poverty has ct ated ith eco omic psa d do s, ith little evide ce of lasti g cha ge over the pastfe decades. Some of the people ho have lived i poverty

    ill s ffer lo g-term effects that add to i direct poverty costs.The story for se iors is more positive, tho gh ot completelysolved, a d e ill ret r to it i later chapters. The persiste ceof poverty amo g Ca adia s i their prime developme tal a d

    active years is a problem that eeds rge t atte tio .If the bene t Canada seeks is to enable people to survive inpove t , t en we ave ac eved a mea u e o ucce . T ,

    oweve , ac eved at eat oc etal e pen e. i uccemean end n pove t and t co tl con equence , a d e entapp oac nece a .

    inve t n to get bette Value fo Mone

    Poverty-related e pe dit res are ot s ally co sidered i vestme ts,especially i gover me t b dgets. The majority of the research

    derlyi g this report, ho ever, i dicates that a i vestme tapproach is more likely to s cceed i halti g the gro i g costsof poverty a d improvi g q ality of life for Ca adia s.

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    As a st dy from Statistics Ca ada e plai s, he a i divid al(or eco omic e tity) dertakes e pe dit res, the effects cabe categorized i o e of t o types:

    The be e ts of the e pe dit res are realized i the same timeperiod as he the o tlays occ r (e.g., a period of o e year);

    The be e ts are realized i f t re periods a d possibly after co siderable aiti g.

    The rst type of e pe dit re is categorized as co s mptio ,hile the seco d type of e pe dit re is de ed as i vestme t.

    T econom c p nc ple u e t t at e pend tu e on umandevelopment should be classi ed as investment . becausethe bene ts of these e penditures accrue to the individualove a l et me.3

    I other ords, if be e ts are goi g to be realized i thef t re, the costs are appropriately co sidered i vestme ts.The research and analysis that includes dollar calculationsof the cost of poverty te d to sho that i itiatives to red cepoverty can pay for themselves and provide positive returnso i vestme t over the lo ger term.

    Dollar estimates of ret r o i vestme t i this report te d tobe co servative. 4 That ca tio , combi ed ith a great deal ofother evide ce a d i sight gathered from ma y differe t areasof st dy, sho s there might be room to debate the mbers,but the tendenc almo t nva a l n a po t ve d ect on o

    oc et and o t e econom .

    T c apte e pla ned t e mpo tance o tak n an nve tmentapproach focused on bene ts. The ne t chapter addresseseconom c ue mpl cated n ett n ette value o mone .

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    2ThE ECONOMy AND POVErTy

    There is o do bt that the eco omy has a major impact o poverty,especially for orki g-age ad lts a d childre . Chart 2.1 clearlysho s the impact of recessio s a d periods of stro g eco omicgro th i the market eco omy o overall poverty rates over thepast fe decades. 5

    * All Perso s, si g after-ta Lo i come c t-offs (LICOs).So rce: Statistics Ca ada, Income in Canada 2009 , Table 2020-802

    Chart 2.1: The state of the eco omy i e ces povertytrends in Canada

    Poverty rates i the early 80s a d 90s j mped p q ickly herecessio s hit a d took a lo g time to recover. Follo i g the1990-92 recessio , poverty rates co ti ed to climb a d evei a very stro g eco omy, as Ca ada had starti g i the late1990s, poverty rates decli ed grad ally til recessio hit agaii late 2008. This i dicates that, hile the eco omy alo e is likelyto provide the a s ers to poverty, it is ecessary to dersta di ge eral terms ho the eco omy a d poverty co ect.

    0%

    10%

    20%

    30%

    1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

    Povertyrate (%)*

    Recessionof 1990-92

    Strongeconomic growth

    Recessionof 1981-82

    Recessionof 2008-09

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    The e t sectio s co sider the market eco omy, the o -marketeco omy a d their implicatio s for poverty. The market eco omyi cl des the employme t that provides most of s ith o r i come.The o -market eco omy i cl des the ork of raisi g childrea d cari g for elderly pare ts, as ell as la dry, clea i g a dother ecessities of daily life. Everyo e has the same 24 ho rsi a day to accomplish their ork, as ell as to eat, sleep,lear a d hopef lly have some leis re. Some people, ho ever,have very high dema ds o their time that ca limit hom ch i come they ca ear . That p ts them at greater risk ofpoverty unless appropriate investments are made to supportthe ho sehold as ell as the market eco omy.

    T e Ma ket Econom

    The market eco omy is co cer ed ith market prod ctioa d is most commo ly meas red si g Gross Domestic Prod ct(GDP). GDP is part of the u ited natio s system of atio alacco ts a d per capita GDP is sed freq e tly to comparelivi g sta dards amo g co tries. GDP q a ti es econom cact v t n t e o mal econom n dolla te m . The importa ceof the market eco omy for the problem of poverty ca ot be

    derestimated. Gro th i the market eco omy co trib tes to

    the ability of societies to afford a good sta dard of livi g. GDPis th s sed idely by gover me ts a d reported i mai streammedia as a pri cipal i dicator of progress.

    Several st dies o the affordability of poverty that eree ami ed for this report calc lated the costs of poverty i termsof a perce tage of GDP. These st dies make a importa tco trib tio by sho i g the size of povertys costs a d the largeopport ities for savi gs.

    The formal or market eco omy is ot the hole eco omy,ho ever, a d si g GDP as a i dicator of progress o its oca be misleadi g. A larger vie of the eco omy a d other i dicators is eeded to get a more complete pict re ofeco omic ellbei g.

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    T e Non-Ma ket/hou e old Econom

    The other major, b t ofte overlooked, part of the eco omyis made up of wo k o econom c value p ma l o ou ownand ou am l need and is thus often called the householdeco omy. work is classi ed this ay if the goods a d servicesare marketable, mea i g they co ld be bo ght a d sold othe market. Gro i g tomatoes a d herbs a d maki g spaghettisa ce are e amples of ork of eco omic val e. The sameactivity, ho ever, ca have t o desti atio s. If the spaghettisa ce is sold at a local bistro or s permarket i the formaleco omy, it ill be co ted i GDP. If it feeds yo r o family,it ill co trib te to tritio a d ellbei g b t it ill ot be

    co ted i GDP. Similarly, yo co ld yo r o car or c t yo r o hair, or yo co ld pay someo e else to do those thi gs. 6

    It is especially importa t to dersta d that the ork of raisi gchildre a d cari g for ad lts ho are ill, elderly or havedisabilities, altho gh i dispe sable to society a d the eco omy,is ot co ted i GDP. nor is it co ted i a other comparable,reg larly sed meas re, eve tho gh itho t it, the rest of theeco omy o ld collapse. u til the late 1980s, o -market ork

    as statistically i visible almost every here. 7 Canada and mostother developed co tries c rre tly do gather statistics o ho

    m ch time people spe d i o -market ork, b t they arecollected less freq e tly, a d there is ot yet o e i ter atio allyaccepted method that is commo to all co tries. 8, 9

    no -market ork is ofte referred to as paid ork beca seit does ot prod ce a i come. I theory, ho ever, it cabe compe sated a d there are e amples i practice. Somep blic policies, like mater ity a d pare tal be e ts for e ample,allo pare ts ho meet certai co ditio s to receive i come

    hile they are a ay from their paid job a d orki g to carefor e bor or e ly adopted childre . Vol teer ork, hich

    i volves a greater eleme t of choice, is also co ted as o -market ork.

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    T e ea on t e non-ma ket econom and n o mat on on owpeople pend t e t me mpo tant ecau e ot mone andt me a e valua le econom c e ou ce . Compari g i comes iso e ay to tell ho ell off e are, a d the differe ce bet eetop a d bottom i come levels ca be large. I co trast, time isthe reso rce that everyo e has i commo o a daily basis 24 ho rsto allocate to paid ork, perso al eeds like sleepi ga d eati g, care for others, a d leis re or free time. The aypeople spe d their time a d the time co strai ts they face,therefore, serve as a very good meas re of ellbei g.

    no -market ork is a very large part of the eco omy, a d itsbe e ts go as m ch or more to society a d the eco omy atlarge as to the i divid als doi g the ork. This is especially thecase i cari g for childre . Childre are the e t ge eratio of

    orkers, ta payers a d citize s,a d their co trib tio ill be e tothers far beyo d a y be e t tothe pare ts ho raised them.

    I 1998, the most rece t year for hich g res are available, the

    time spe t i o -market ork (30.4 billio ho rs), co verted i todollar val e, as the eq ivale tof $297.3 billio or 33% of GDP.11 Are ectio of this val e i atio alacco ti g co ld improve o r dersta di g of the ellbei gof o r society. If i comes are i creasi g o ly beca se peopleare spe di g more time i paid ork, rather tha i creasi gthro gh higher ages or greater prod ctivity, e may ot reallybe better off. 12

    I Ca ada, he the dollar estimates of the val e of o -market ork ere calc lated, Ca adia s ere spe di g moretime i that part of the eco omy tha i the paid eco omy.More rece t time- se s rveys reveal that time spe t i marketactivity has o s rpassed o -market activity. 13 Ho this tre dis affecti g overall societal ellbei g a d ho it is affecti gparticular individuals and families is very important to the studyof the eco omy a d poverty. There are sig i ca t differe cesi patter s of time se related to ge der a d family stat s, a d

    Value o Non-Ma ket Wo k (1998, n ll on )

    Ho sehold $279.7Vol teer/comm ity $17.6

    Total (33% o gDP) $297.3

    Hamdad (2003) 10

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    other factors like race, ed catio a d immigra t stat s may alsoplay a role. There are certai ly importa t differe ces i time seas people move thro gh differe t stages of their lives.

    The data that Canada and other countries collect and thei -depth research co d cted o o -market ork make aimporta t, vastly der tilized, co trib tio to dersta di g

    ellbei g a d poverty. 14

    Poverty

    Beca se a day is o ly 24 ho rs lo g for everyo e, i divid alsith high dema ds o their paid time are goi g to have

    greater dif c lty maki g trade-offs bet ee the marketeco omy a d the ho sehold eco omy. They ill also be athigher risk of poverty, especially if the time available for paid

    ork is too limited or their ho rly ages are lo , or both.

    Pare ts of pre-school childre have very high care dema ds,i cl di g legal obligatio s that make them respo sible 24 ho rsa day, 7 days a eek. 15 The respo sibilities i volve direct care,the eed to be there eve he childre are sleepi g a d the

    eed to leave paid ork he a child is ill. Ad lts ho providecare to older childre , or to ad lts ho are ill or elderly or have

    disabilities, ca also have high dema ds. Ad lts ith disabilitiesor other limiti g physical or me tal health co ditio s ca alsobe i the high care dema d category. They may be q ite ableto ork at a paid job b t req ire additio al time for cooki ga d perso al care, for e ample, or physically getti g from o elocatio to a other a d developi g e skills.

    T o-ad lt ho seholds have less risk of poverty. They havegreater ear i g capacity a d more e ibility i j ggli g jobs,child reari g, cooki g, clea i g a d other tasks. Lo e pare tsare especially at risk of both i come a d time poverty beca se

    they have to j ggle all those i come a d family dema ds alo ei the same 24-ho r day. 16 I the ecessary trade-offs, somethi gimporta t almost al ays gets sacri cedi come, time for childre , s pportive social et orks, eve sleep. I divid alsare also at high risk he they have lo ear i gs, fe be e tsa d o other ho sehold or family members to c shio a cialshocks d e to factors s ch as re t i creases, red ced ork ho rsor ill ess.

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    I additio , o ce people become impoverished, they have littleaccess to the time-savi g goods a d services, s ch as ashi gmachi es, prepared food or clea i g services, available tobetter-off i divid als ho ca afford to b y them. That i creasesdema ds o their paid time.

    Social assista ce recipie ts, i partic lar, face high time dema dsrelated to depth of poverty a d the ma y r les a d reg latio sthat have to be follo ed. These r les ca i cl de lo assetlimits that mean applicants must be almost destitute before theyca q alify for be e ts. F rther, lo ear i gs e emptio s meathat people ofte ca t get ahead if they have employme t. 17 Beca se most social assista ce rates are far belo the povertyli e, ma y recipie ts rely o freq e t trips to food ba ks a d other age cies to meet basic eeds. They m st also comply ith aarray of r les a d reg latio s that ca be very time-co s mi g. 18 These additional time demands leave less time for more valuable

    o -market ork, trai i g a d ed catio a d/or better i come-ear i g opport ities that co ld lead o t of poverty.

    Gender and Poverty

    T e e a ve clea ende and pove t l nk n t e d v on oma ket and non-ma ket wo k. wome spe d almost t o-thirdsof their total orki g time i o -market ork a d me spe dro ghly o e-third. There hasbee a very grad al tre dto ard bala ce as this ork becomes better shared. 20 All alo g the age spectr m,

    ome provide more carea d daily ho sehold ork thado me . Beyo d the average

    mbers, ho ever, there are

    large differe ces i time se.wome ith yo g childreperform the vast majority of

    ork related to childre a dhave very high total orkloads.

    T me spent Ca n oC ld en 0-4 yea (2010)

    Pare ts ith f ll-time ork wome : 5 ho rs 13 mi tes per day Me : 2 ho rs 59 mi tes per day

    Pare ts ith part-time ork wome : 6 ho rs 43 mi tes per day Me : 2 ho rs 41 mi tes per day

    Statistics Ca ada 2011 19

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    The risk of poverty is clear: as lo g as ome perform themajority of child care a d daily ho sehold ork, the time a de ergy they have available to ear i come is limited. while lo epare ts are especially v l erable to poverty, t o-pare t familiesthat req ire t o i comes to make e ds meet are also at risk

    he mothers paid ork is limited.

    The risk of poverty ca be red ced he p blic policy helpsshare the cost of val able o -market ork that be e tssociety, so that pare ts, especially mothers, do ot have tocarry so m ch of the cost themselves. The p blic policy thatbest provides some i come i recog itio of o -market ork i Ca ada is mater ity a d pare tal be e ts. B t be e ts arestill tied to the market eco omy, beca se they are based oemployme t history a d level of prior employme t ear i gs.Therefore, lo -i come mothers ho eed the s pport the mostofte have the greatest dif c lty q alifyi g for be e ts. P bliclyf ded child care is a other ay that the ork a d cost ofraisi g childre ca be shared more eq itably.

    A mber of factors ofte combi e to p t a great deal of eco omicstress o families a d make ome at higher risk of poverty thame , especially if they live alo e or if families break p.

    T o factors are especially otable. First, there is a p ard

    tre d i higher ed catio for ome . That is positive for themarket as ell as for ome a d their childre . Post-seco daryed catio costs are gro i g too, ho ever, a d ma y omei prime child-beari g years are carryi g the a cial b rde ofst de t debt repayme t. 21

    Seco dly, ome still ear less tha a ma s dollar. O e key factor that e plai s the gap is that jobs that are similar to ome straditio al paid ork te d to be derval ed i the market.Co ti g o -market ork i atio al acco ts, maki g it morevisible, a d taki g it i to acco t more co siste tly i p blic

    policy may be a ay to also help i crease its market val e. 22

    Econom c Well e n

    As o tli ed above, beca se the hole eco omy is larger thathe market eco omy, it req ires meas res beyo d GDP to

    dersta d ho ell e are doi g.

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    M ch of the gro th i GDP i the last fe decades is d e too r b yi g hat e sed to do or make at home. we are

    ot ecessarily prepari g more meals, doi g more repairs or providi g more care for childre o , b t e are more oftepayi g other people for those tasks. This is largely a tra sfer fromthe ho sehold eco omy to the formal market eco omy a d iCa ada it re ects a combi atio of choice, eco omic ecessitya d p blic policy that has te ded to privilege the market. 23

    Determi i g ho ell e are doi g depe ds o hat mattersto s hat e val e. Some people mai tai that GDP is ameas reme t tool a d it as ever mea t to address val es.From a other va tage poi t, a y decisio abo t hat is bei gmeas red is based o val es a d ass mptio s. I additio ,ma y people thi k that he gover me ts of cially adoptedGDP a d it became sed as a primary i dicator of progress, itbecame hat as most val ed. The term mo ey ill sio hasbee sed to describe the ass mptio that o ly goods a dservices ith a price tag o them affect eco omic elfare. 24 There is o do bt that this ki d of ass mptio has i e cedp blic policy to a very great e te t. For average Ca adia s, theco cept of ho ell e are doi g is more i cl sive a d thereare additio al i dicators that ca ll i the pict re.

    For e ample, as the chart at the begi i g of this chapter i dicates, activity i the market eco omy ca be volatile, ithperiodic recessio s ca si g major hardships for large portio sof the pop latio . Most people o ld agree that eco omic

    ellbei g o ld i cl de a degree of stability a d sec rity fromthe effects of eco omic shocks.

    The foc s of the market also te ds to be short term, ith coststhat affect lo g-term ellbei g ot ell capt red. nat ralreso rces are co sidered free, a d their depletio , or damageto ecosystems or to h ma health, does ot factor i as a cost.By ot co ti g the ork of creati g families, eighbo rhoodsa d comm ities o tli ed earlier, it also treats them as free,so that deterioratio of o r social fabric o ld ot sho pas a cost. Give that o r f t re depe ds o the health of o r e viro me t, h ma relatio ships a d ge eratio s to come,these o ld be co sidered importa t eleme ts i meas resof ellbei g.

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    I dicators of wellbei gFort ately, sig i ca t progress hasbeen made in Canada and aroundthe orld o a more i cl sive set ofi dicators of ellbei g. They e ableus to measure economic and socialo tcomes more comprehe sively. IFra ce, for e ample, the Commissioon the Measurement of EconomicPerforma ce a d Social Progressestablished i 2008 is led by t o

    orld-re o ed eco omists,

    Joseph E. Stiglitz a d Amartya Se .Its 2009 report recomme ds ays to better dersta d c rre tmeas res a d hats eeded for f t re meas res of ellbei ga d s stai ability.

    I Ca ada, A dre Sharpe a d Lars Osberg of the Ce tre for the St dy of Livi g Sta dards have developed a i de thatbri gs together several dime sio s of eco omic ellbei gfor the p rpose of i formi g p blic policy. The i de i cl desmeasures related to the environment and time use and itsdimensions of income distribution and economic security are

    partic larly importa t to solvi g poverty.The inde o Econom c Well- e n (IEwB) is premised o the

    dersta di g that the developme t of p blic policy i volvessocial choice a d that ratio al social choice req ires theorga izatio of i formatio i a mea i gf l ma er. The IEwBis i te ded to co trib te to the political process by e abli gcitize s to make more i formed decisio s. 26 It focuses attentiono fo r cr cial dime sio s of eco omic ellbei g: consumption ows;

    accumulation of wealth;

    income distribution; and

    econom c ecu t .Looki g eve more broadly to i dicators that re ect q ality oflife i areas s ch as perso al health, ed catio , c lt re a dthe health of o r comm ities, there has also bee sig i ca tdevelopme t over the years. The u ited natio s H maDevelopme t I de , hich i cl des ge der eq ality a dpoverty meas res i its ra ki gs of co tries, is a e ample. The

    GDP mainly measures marketproduction, though it has often beentreated as if it were a measure of economic well-being. Con ating thetwo can lead to misleading indicationsabout how well-off people are andentail the wrong policy decisions.

    Stiglitz, Se a d Fito ssi (2009)25

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    un System of natio al Acco ts also allo s for the prod ctio ofho sehold acco ts, like those Ca ada prod ced i the past.The Rede i g Progress p blic policy thi k ta k i the u itedStates has prod ced the Ge i e Progress I dicator, a d thene Eco omics Fo datio i the u ited Ki gdom has aproject called Meas ri g what Matters.

    I Ca ada, the I stit te of wellbei g has prod ced theCanad an inde o Well e n (CiW) . The CIw disti g ishesbet ee good o tcomes, s ch as good health, clea air a dtr st, a d bad o tcomes, s ch as sick ess a d time cr ch.There are eight domai s: L v n standa d

    healt Populat on Commun t V tal t

    C v c En a ement

    A t , Cultu e and rec eat on

    Educat on Env onment

    T me U e

    Fig res available from the CIw (2010) s ggest e have madesome gai s b t are ot movi g i the right directio o allfro ts.27 For e ample, it otes that i eq ality i creased as therich got richer a d the poor stayed poor, a tre d of gro i gco cer to Ca adia s. 28 The CIw also sho ed that visiblemi orities, o average, have poorer health, lo er i comes a dhigher rates of poverty, a d that the portio of me a d omee perie ci g high levels of time cr ch gre from 16.4% i1992 to 19.6% i 2005.29

    Meas ri g ellbei g i this more comprehe sive ay req iressi g a variety of i dicators ot easily red ced to o e commo

    de omi ator. That makes it more challe gi g to develop a setof measures that can be formally adopted and produced morefreq e tly. The importa ce of this ork, ho ever, ca otbe derestimated.

    W t t mo e complete v ew o well e n t at nclude a an eof indicators, the ne t chapter turns more speci cally to the

    oc etal a pect o well e n and t e elat on p to pove t .

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    3sOCiETy AND POVErTy

    soc etal Well e n

    Advances in health and other indicators mentioned in theprevious chapter have improved the ability to compare patternsof ellbei g across societies. A mber of st dies have foc sedo the li kages amo g ealth, stat s, i eq ality, material

    ellbei g a d other social factors that affect ellbei g a dhave implicatio s for poverty.

    Richard wilki so a d Kate Pickett i The Spirit Level: WhyEquality is Better for Everyone (2010) detail ho greater eq alityco trib tes to the health a d ellbei g of societies. 31 Their e te sive i ter atio al evide celi ks i eq ality to a ide ra ge ofsocial iss es, i cl di g me tal a dphysical health, dr g se, obesity,ed catio al performa ce, tee agebirths, viole ce, impriso me t a dsocial mobility. It compares diffe-re ces amo g co tries, a d ithico tries amo g regio s a d cities,

    ith res lts sho i g similar patter s.

    It demo strates that societies ith the greatest i eq alities ii come a d ealth are those most af icted by serio s social ills.T e eate t e nequal t e , t e eate t e t e on people allalon t e ncome pect um, and t e wo e t e outcome a e

    o a oc et ove all, not ju t o t o e at t e ottom o t encome ladde .

    F rther, the compariso s amo g co tries ith differe t levelsof per capita GDP sho that ow n wealt doe not, n

    t el , tackle oc al ll and that a concerted effort to reducei eq ality i all its forms is req ired. The u ited States is a keye ampleit is o e of the ealthiest co tries b t it has a very

    there is a very strong tendency for ill-health and social problems to occur lessfrequently in the more equal countries.

    wilki so a d Pickett (2010)30

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    Canada

    Income inequalities

    More

    More

    Less

    Less

    USA

    Sweden

    UK

    Australia

    Japan

    Portugal

    SwitzerlandNetherlands

    Spain

    Italy

    New Zealand

    NorwayFinland

    BelgiumDenmark Austria

    GermanyFrance

    IrelandGreece

    Index ofhealth andsocialproblems

    O wilki so a d Picketts i ter atio al compariso s, Ca adas ally falls i the middle. This i dicates, optimistically, thate are doi g some thi gs ell. A mber of rece t st dies,

    ho ever, i dicate that e are slippi g i some areas. Ochild material ellbei g for e ample, rece t g res sho theCa adia sit atio is goi g back ards. 32 Movi g people o tof poverty o ld certai ly improve Ca adas ra ki g. For

    ellbei g to sig i ca tly improve i Ca ada, e ill eed tolear from a d b ild o the policies that are achievi ggood o tcomes.

    great dista ce bet ee the top a d bottom of the i comeladder. The uS has m ch higher rates of crime, viole ce, teebirths, health problems a d poverty tha less ealthy atio s.O most meas res, the uS is at the very high e d o the socialproblem bei g meas red. Most other ealthy atio s i cl di gthe nordic co tries, Fra ce, Germa y a d Japa are ge erallycloser together ith less i eq ality a d fe er social ills.

    So rce: wilki so a d Pickett, Eq ality Tr st Fo datio (obtai ed April 11th, 2011)

    Chart 3.1: I eq ality a d social ills

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    soc etal st uctu e and Well e n

    This is a other area here there is sig i ca t e research thatca co trib te to greater social a d eco omic ellbei g. Itprovides a key to dersta di g hat h ma bei gs eed,beyo d mo ey a d material ellbei g, to live healthy lives.whe those eeds are ot met, poor me tal a d physicalhealth are predictable o tcomes. This goes a lo g ay toe plai i g ho i direct costs to health care systems, remedialed catio , a d other social programs gro . It also offersi sights i to hy approaches to i come assista ce that arei tr sive a d stigmatizi g ca ork agai st ellbei g.

    For e ample, i Successful Societies:How Institutions and Culture AffectHealth (2009), edited by Peter A. Halla d Michle Lamo t, a thors fromdiverse disciplines address the issueof hy some societies are better tha others at promoti g i divid ala d collective ellbei g. This ork looks deeper i to the str ct re ofsocieties to e plai differe ces i ellbei g that material

    factors alo e, like i come i eq ality, ca ot. It also s ggeststhere is more tha o e path to s ccess, a d that is importa tfor policy makers.

    Successful Societies sho s that the str ct re of social relatio s hase ormo s impact o ellbei g. It e plores the importa ce ofiss es s ch as social hierarchies a d the obligatio s that ordi arypeople feel to ards their frie ds a d eighbo rs that establisha se se of tr st. it t e e t e c t cal mpo tance o t e p c olo cal

    en e o cont ol people need, omet n t at o ten taken awaom people w o mu t el on la t e o t ncome p o am n

    Canada . It highlights the val e of vario s social co ectio s thathelp people ma age daily life, from i timate et orks of familya d frie ds ho ill care for yo thro gh a serio s ill ess, to larger acq ai ta ce-based et orks that are more effective for helpi g d a e job.

    of cials think about the economy asa structured set of market relations .By contrast, policy makers are lessaccustomed to thinking about societyas a structure of social relations.

    Hall a d Taylor (2009)33

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    The research talks abo t the ear a d tear of daily life peopleface, a d the problems that arise if there are more challe gestha capacities to meet them. with too m ch ear a d tear of daily life a d too fe social s pports, stressors ca b ild a dca literally get der the ski . They cha ge o r chemistry, cadamage o r brai s a d o r bodies, a d make s less ableto cope ith e stressors. This e plai s ho positive socialrelatio s ca have a greater impact i improvi g health thaadva ces i the health care system. 34

    Accordi g to specialized scie ce o the h ma brai , s rvivi gis ot j st somethi g e do i the prese ce of a ild beast.Social sit atio s are ofte s rvival e co ters.35 The faster heart rate, i creased blood press re a d other aspects of a

    ght or ight respo se kick i . The brai is also affected. Mildstress ca be a good thi g b t if stress persists too lo g, for e ample, the hippocamp s (the regio of the brai that is veryimporta t to the ability to lear a d remember) begi s to falter in its ability to control the release of stress hormones and toperform its ro ti e f ctio s.36 Beca se some cha ges ca otbe reversed, o r ellbei g is best served by preve ti g stressoverload herever possible.

    The supports and resources that people have to promoteellbei g a d cope ith stressf l eve ts are ot j st perso al.

    Eco omic a d social reso rces provided by i stit tio s, ipartic lar thro gh p blic policy, ca shape ellbei g i ma y

    ays. 37 P blic schools a d st de t loa s are e amples of ays ihich ed catio policy is a social reso rce. Those p blic policies

    e able st de ts from ma y differe t backgro ds to i teracta d develop ide social et orks.

    C lt ral ide tity a d repertoires ca also shape ellbei g. C lt ralrepertoires i cl de the frame orks that determi e hat is thi kablea d hat strategies a d tools for actio are available. Somepeople gro p ith more adva tages i the form of ide social

    et orks, ma y possibilities that are thi kable, a d ma y toolsthat ca help them get ahead.

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    The mea i g of c lt re

    C lt re i the co te t of societal str ct re refers to all the eleme ts that go i tode i g ide tity a d social membership, s ch as the bo daries bet ee hois co sidered to belo g to yo r gro p, ho is ot, a d hat is yo r o placei yo r gro p.

    For e ample, thi ki g that becomi g a doctor or la yer ispossible is i e ced by hether other members of yo r socialgro p have ever bee i those professio s. O a practicallevel, applyi g to iversity is easier if yo k o others hohave do e it. If yo r frames a d tools are very limited, as they

    are for ma y people livi g i poverty, especially i the case ofi terge eratio al poverty, yo ill have a m ch more dif c lttime maki g importa t life decisio s. re l ence, nclud n t ea l t to cope w t t e t ma o pove t , can al o va ac od e ent cultu al epe to e . T elp e pla n w ome peoplecan mo e ea l and qu ckl ove come pe od o a d pt an ot e .

    soc etal st uctu e and Pove t

    At least as far back as Adam Smith, poverty has beerecog ized as a iss e of social stat s a d h ma dig ity asm ch as a eco omic iss e. O e of the reaso s hy e may

    ot al ays see poverty i o r midst is d e to the efforts thatpeople make to avoid the stigmatizi g label of poverty. Peoplemay eve sacri ce food a d other basic eeds that they cakeep private i order to b y a cellpho e or bra d ame r i g shoesthat give them stat s i p blic.

    I a 2010 article o Reconsidering

    Culture and Poverty , Small, Hardi ga d Lamo t re ect e researchthat has emerged over the last30 years. A more i terdiscipli aryapproach is developi g, i cl di gamo g eco omists ho dra ocultural concepts to better understandho people make eco omic decisio s.

    Ultimately, the greatest barrier tomiddle-class status among the poor

    is sustained material deprivationitself. But there is signi cant variationin behavior, decision making, andoutcomes among people living in

    seemingly identical structural conditions.

    Small, Hardi g a d Lamo t (2010)38

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    This is good e s for efforts to solve poverty. A thors highlight,for e ample, that:

    Strategies that ork for the middle-class to ma age theear a d tear of daily life do t ecessarily ork the same

    ay for people livi g i poverty. I a st dy from the u ited States, the iss e of hether

    lo -i come si gle mothers derval ed marriage asdiscovered to be the reversema y held marriage i veryhigh esteem b t had little co de ce their part ers o ldever become marriage material a d aiti g p t them athigh risk of ever becomi g a mother.

    somet me t e tool to cope w t pove t and t e tool toescape poverty con ict. For e ample, some lo -i comepeople adopt more middle-class behavio rs, from differe t

    ays of speaki g to choices abo t dress a d ho theyassociate ith, i a effort to help them get o t of poverty.B t i ide tifyi g ith a higher i come gro p, they ca appear to be rejecti g their o comm ity. They ca face criticisma d loss of s pport from family a d social et orks, so thatcopi g ith daily life becomes more dif c lt a d stressf l.

    People ho ca ma age to cross c lt res, ho ever, mea i gthey ca t ell i a variety of social setti gs, ofte do ell.

    Research s ch as this o societal str ct re, ellbei g a d povertyca be very importa t to di g better ro tes o t of poverty that

    eed to be ope ed p. It s ggests that p blic policy is more likelyto be s ccessf l by red ci g stigma, fosteri g a to omy, val i gthe goals, skills a d k o ledge people already have, a d b ildi gcapacity to meet the real challe ges they face.

    T e ove v ew o oc etal well e n ow t at t e oc al

    a pect o ou l ve matte a muc a econom c one . it al ol t t at nve tment to uppo t po t ve oc al t uctu e

    and relationships can have a signi cant impact in reducingt e nd ect and oc etal co t o pove t cau ed oc al

    t e . T e ne t c apte look at e o t to e nte ate oc al andeconom c p e e and at t e c allen e to t n t e conte t o

    nequal t , n ecu t and pove t n Canada.

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    4sOCiAL ANDECONOMiC rELATiONshiPs

    O e of the challe ges ith meas ri g the cost of poverty,dersta di g its i direct impacts, a d movi g to a approach

    that ca get a better ret r o i vestme t, is that eco omicand social policy have historically developed on separatetracks. F rther, the social track has bee co sidered lessimporta t, ith co seq e ces i i eq ality, i sec rity a dpoverty. This is cha gi g a d offers pote tial for better sol tio sto poverty.

    soc al/Econom c inte dependence

    A gro i g mber of i e tialeco omists a d orga izatio s are

    ide i g their frame of refere cebeyo d traditio al market-basedeco omics to i cl de a ra geof social a d eco omic i terde-pe de cies. Developme ts imeas ri g ellbei g co trib teto a better dersta di g ofthese relatio ships.

    One study of economic andsocial interactions comes from the

    Employme t, Social Affairs a d Eq al Opport ities Directorate-Ge eral of the E ropea Commissio prepared by Didier Fo arge.He e ami es the eco omic costs of ot havi g social policy a dreevaluates the traditional equity/ef ciency trade-off.

    It has ofte bee arg ed by eco omists that greater eq ity,thro gh a more redistrib tive gover me t, for e ample, p ts theef cie cy of the market i jeopardy. Optim m performa ceof the market is e pected to res lt i better f t re eq ity. I this

    the relationship between economicand social policy cannot be onewhere growth is given primacy over distribution, and where social policycomes to be understood merelyas a corrective for the undesirableconsequences of growth processes.

    u ited natio s (2010) 39

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    vie , yo ca ot have both, b t rather m st trade them offagai st each other a d accept the sacri ce it e tails. Fo argeco cl des differe tlythat good p blic policy ca achieveboth eq ity a d ef cie cy.

    A case for equity and ef ciency

    Fo arge e plai s that policies foc si g solely o ef cie cy leave i comeredistrib tio to market forces, hich history a d research reveal as i adeq ateto achieve eq ity. I his a alysis, [s]ocial policies based o i vestme ts i h maa d social capital are co d cive to higher eco omic ef cie cy for they improveprod ctivity a d the q ality of the labo r force. Social policy is therefore aprod ctive factor, eve tho gh its costs are ge erally visible i the short term

    hile its be e ts are ofte o ly appare t i the lo g term.40

    This st dy recog izes that o e of the obvio s costs of o -social policies is poverty.Fo arge is optimistic that econom c and oc al pe o mance a e nte elated

    n uc a wa t at t e potent al o w n-w n tuat on .41

    Costs of Non-Social Policy: Towards an Economic Framework Of Quality Social Policies AndT e Co t O Not hav n T em (2003). Fo arge

    Research by the Orga izatio of Eco omic Cooperatio a dDevelopme t (OECD) reaches similar co cl sio s, i st dies s chas F rceris 2009Stabilization Effects of Social Spending: EmpiricalEvidence from a Panel of OECD Countries and Adema andLadaiq es 2009 How Expensive is the Welfare State? Grossand Net Indicators in the OECD Social Expenditure Database (SOCX).

    Ca adia reports o the i terdepe de cies bet ee social a deconomic policy include: Prosperity, inequality, and poverty ,a 2007 orki g paper from the I stit te for Competitive ess &Prosperity; Linkages Between Economic Growth and Inequality (2003) by A dre Sharpe at the Ce tre for the St dy of Livi gStandards and Social Policy and Productivity Growth: What arethe Linkages (2002) by Richard G. Harris.

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    T e Canad an Conte t

    The c rre t reality i Ca ada is o e here there remai s a largedivide bet ee social a d eco omic policy that is re ected ithe patter s of i eq ality a d i sec rity that affect the middleclass as ell as people livi g i poverty. u dersta di g thosepatter s a d tre ds i Ca ada is importa t to di g thepolicies that ca achieve i - i sit atio s, s ch as less poverty,a higher q ality labo r force a d fe er social problems.

    I eq alityAs the di gs i the previo s chapter poi t o t, steep i comei eq alities are stro gly associated ith egative health a dother social co seq e ces for everyo e o the i come ladder.I Ca ada, the ladder is getti g steeper, a d rece t st dies re ectgro i g p blic co cer abo t the tre ds at the very top. 42

    Ca adia s holdi g o to m ddle-cla stat s are doi g so largelybeca se ome are spe di g more time i the paid labo r force. Thirty or forty years ago, f ll-time d al ear er co ples

    ere fe er a d ere s ally fo d q ite high p o the i comescale. what they lacked i time, they had the ability to make

    p for i p rchased goods a d services, like a additio al car,a a y a d resta ra t meals. Today, ma y more families havet o f ll-time ear ers a d they are fo d at lo er r gs o thei come ladder a d eve at the bottom. T e a e c unc ed o

    ot t me and mone .43

    Partic lar patter s of i eq ality i Ca ada sho other ca sesfor co cer o both eco omic a d social fro ts. For e ample,David H lcha ski has st died the cha gi g i come map ofToro to over several years. 44 That map sho s a i creasi gpolarizatio of eighbo rhoods. His i itial maps sho ed three

    cities ithi a city, o e ealthy, o e middle class, a d theother lo i come. I the most rece t map, the middle-classareas that o ce domi ated Toro to have lost gro d to moreimpoverished o es. Toro tos eighbo rhoods are also dividedby race a d immigra t stat s as ell as i come li es. Ma ycomm ities across the co try are str ggli g ith similar iss es.

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    Insecurity

    I sec rity is also a gro i g iss e for Ca ada a d it is a gro i gm ddle-cla p o lem . A agi g pop latio , the high costof ho si g, precario s jobs eve i higher payi g sectors,c tbacks to Employme t I s ra ce a d other programs, a drisi g i debted ess are amo g ma y reaso s hy Ca adia si come sec rity is fragile. For e ample, the average co s mer credit a d loa debt i creased 88% bet ee 1990 a d 2010.I additio , i the ake of the most rece t recessio boththe deli q e cy rate o credit cards a d the mber ofi solve cies i creased sig i ca tly.45

    I creasi gly, middle-class families are e perie ci g the ki dsof i sec rity a d a iety abo t job losses a d price i creases

    s ally associated ith lo er i come pop latio s. Also, therisks that come ith the part-time, precario s ork historicallyassociated ith ome are i creasi gly also bei g faced byme as fe er good-payi g, f ll-time jobs are available.

    A key reaso hy eco omic i sec rity is a gro i g co ceris the i creasi g depe de ce o the ear i gs of t o ad ltsas safety et. The steady decades-lo g i crease i the ho rsthat ome are spe di g i the paid labo r force has helpedho seholds ithsta d recessio s, program c tbacks, i creasi gprices a d other eco omic shocks. B t ith ome s labo r force patter s already becomi g very similar to me s, thatbasis of sec rity ca ot gro m ch f rther. It also does otaddress the i sec rity faced by i divid als ho have o ly their o ear i gs o hich to rely.

    Poverty

    Livi g i poverty is q alitatively differe t tha ot livi g i

    poverty a d it req ires speci c atte tio . Poverty is abo t m chmore tha i come as the previo s chapter sho ed, b t i comeplays a big part. Poverty mea s havi g too little i come to meetbasic eeds a d reaso ably participate i the society i hichyo live.46

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    The Poverty Escalator

    Imagi e bei g o the mai oor of a b ildi g here there is a escalator goi g p a d do . As soo as yo step o the p escalator it gets easier for yo to reach the e t level, the the e t. I real life the mai oor is the place

    here yo ca meet yo r basic eeds, save a bit a d are able to participateto a modest e te t i society. From the mai oor, yo might take a step pby accessi g credit hich allo s yo to b y a car, ith the car yo have

    ider job opport ities, ith a better job, yo might also get additio al healthcoverage a d yo r life gets better.

    If yo step o the do escalator, yo travel j st as fast. If yo o ly take o estep, yo might be able to q ickly j mp backperhaps yo lose yo r jobb t ith Employme t I s ra ce a d some savi gs yo get by til yo da e o e. B t if yo lose yo r job as ell as health coverage a d yo arediag osed ith a ill ess req iri g medicatio yo ca o lo ger afford, yo r circ msta ces co ti e to orse . At that poi t, yo are too far do to j mp back.

    what is orseo this lo er oor there is o p escalator. Ofte , each stepp gets yo o f rther ahead. As yo r health improves, yo may get a job

    but after child care and transportation costs you are barely further aheada d yo r health is at risk agai beca se of the stress of j ggli g ho se ork,raisi g yo r child a d bei g at yo r paid job. Ma y thi gs have to go right for yo to make the r p the do escalator.

    People i deepest poverty m st ofte j st co serve e ergy for s rvival.

    Poverty is differe t tha bei g at thebottom of the income ladder

    There is a differe ce bet ee havi g marks at the bottom ofyo r grade 4 class at school, a d faili g. I o e case yo moveo to grade 5, lear e thi gs a d yo might eve do better

    ith a e teacher. If yo fail, yo m st start all over agai a drepeat eve the s bjects yo ere good at. A other descriptioorigi ates ith people livi g i poverty, shared ith s by leCollectif po r Q bec sa s pa vret. 47

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    Ca ada has a mi ed record o povertyCa ada does ot have a of cial poverty li e, b t several

    meas res are sed by orga izatio s for differe t p rposes. Thefoc s i Chart 4.1 is o a partic lar patter over time. It sho sclearly that Ca ada has do e a far better job i red ci gpoverty amo g se iors tha i the rest of the pop latio .

    * usi g after-ta LICOs.So rce: Statistics Ca ada, Income in Canada 2009 , Table 2020-802

    Chart 4.1: Se iors poverty rates steadily decli e; povertyrates for other age gro ps ct ate

    Seniors 65+Children lessthan 18 yearsAdults 18-64 years

    0%

    10%

    20%

    30%

    40%

    1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

    Povertyrate (%)*

    Chapter 8 provides more detail o the se iors relatives ccess story. Si ce the late 1990s, childre s poverty startedtracki g more closely to that of orki g-age ad lts rather thaco siderably higher, a other policy story that ill be picked pi Chapter 8. The foc s here is o wo k n -a e adult .

    The major risks of poverty for orki g-age ad lts i Ca ada arerelated to the str ct re of the eco omy, lo e pare thood, bei gfemale, belo gi g to a racialized pop latio gro p, immigra tstat s, Aborigi al stat s, serio s physical or me tal health co ditio ,a d lo levels of literacy, ed catio a d skills. Note t at people

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    n t e e e -t an-ave a e k oup a e t e ve populat onupon w om Canada la ou o ce w ll nc ea n l el . Tmake olv n pove t o wo k n -a e adult even mo e c t cal.

    note also, ho ever, that a sizeable majority of people i higher-tha -average risk gro ps are, i fact, ot i poverty a d ma y aredoi g ell. This s ggests e m st be very ca tio s abo t overlytargeted programs that may ot be appropriate or effective.

    Poverty a d orki g-age ad ltsMo t adult l v n n pove t a e emplo ed. hav n a jo nott e an we to pove t jo a e low-pa n , p eca ou andhave few bene ts .48 For social assista ce recipie ts, there arema y people ho a t more employme t b t doi g so may

    ot p t them ahead if social assista ce cla s back m ch oftheir ear i gs, or if other be e ts li ked to elfare, s ch asho si g, health a d de tal be e ts, are lost.

    There still seems to be a p blic perceptio that people ill ottake jobs if i come s pports are too ge ero s, mea i g theyreach or e ceed the poverty li e, b t this is ot ell-fo ded.The evide ce s ggests that greater i come s pport ca act allybe the key that e ables people to overcome poverty a d prosper over the lo ger term. The e amples belo i dicate that e sho ldbe far less orried abo t greater i come s pport as a ork disi ce tive a d far more i terested i i vesti g i the social a deco omic be e ts e o ld all gaiby p tti g a e d to poverty.

    The theoretical ork of eco omistsis mi ed as to hether there is a

    ork disi ce tive iss e to orryabo t, ho large or small it mightbe, a d hat, if a ythi g, eedsto be do e abo t it.

    I practice, both i the u itedStates a d Ca ada i the 1970s,several e perime tal programsthat provided a g ara teeda al i come (GAI) ra over anumber of years in order to testthese ass mptio s. The GAI as

    Economic theory cannot on its ownfurnish accurate estimates of thework disincentive resulting from aGAIwhich is a main reason Canadaand Manitoba conducted Mincome. The reduction in work effort wasmodest, about one per cent for men,three per cent for wives, and ve per cent for unmarried women. These are

    small effects in absolute terms .

    H m a d Simpso (2001)49

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    provided based o a egative i come ta modelj stas the more mo ey yo make the more ta yo pay, this

    orks so that the less mo ey yo make, the more i come

    yo receive from a GAI to bri g yo r i come to a moreadeq ate level. The c rre t GST credit orks this ay o asmaller scale. The GAI that as tested th s did ot have ther les, restrictio s a d stigma of elfare. Overall, the ork disi ce tive evide ce as fo d to be relatively i sig i ca ti both co tries a d eve less so i Ca ada tha i the uS.

    Recent analysis of Canadian data indicates that some of thesmall red ctio i employme t ith the GAI as the res ltof yo g ad lts stayi g i school beyo d the ma datorymi im m age. 50 This is a stro g predictor of better f t reear i gs so that is a positive developme t. work red ctiorates ere a little higher for ome tha me as they mayhave temporarily spe t more time ith yo g childre ( otethis as before pare tal be e ts ere available).

    Co trary to the stereotypes of lo -i come Ca adia sas lacki g ork ethic or i itiative, they co trib te largeproportio s of time a d mo ey to help others. I 2007,people ith ho sehold i comes less tha $20,000 do ateda average of 1.6% of pre-ta i come to charitable or

    o -pro t orga izatio s, hile those ith over $100,000co trib ted j st 0.5%. The lo est i come gro p also had a

    31% rate of formal vol teeri g a d the highest averagea al vol teer ho rs at 200.51 work effort a d socialrespo sibility appear to be at least as stro g amo g those

    ith lo i come as those ho are better off.

    ne i sight i to povertyPhilosopher Charles Karelis, i The Persistence of Poverty: Whythe Economics of the Well-Off Cant Help the Poor (2007), sho sho a key theory of ratio al eco omic decisio -maki g asthe prod ct of middle-class thi kers hose basic eeds arealready met.

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    He adds a alter ative perspective to eco omic thi ki g thatass mes that as e get more of somethi g its val e dimi ishes the rst ice cream co e o a hot day is highly satisfyi g, theseco d less so, a d so o . This is based o the ass mptio that

    e are drive by o r prefere ces for hat gives s pleas re.For people i poverty this is ot the case. fo people w o e

    a c need a e not met, t u uall pa n avo dance t atd ve dec on-mak n . whe yo have seve bee sti gs,for e ample, it is ot the rst drop of oi tme t that is the mostval able b t rather the seve th beca se o ly that bri gs relieffrom pai . For people livi g i poverty, the bee sti gs might bediffere t matters, s ch as a health co ditio , a lost job, a lack ofskill i a e tech ology, a re t i crease a d a broke car. Themore that help ca impact all areas for the better, the greater the odds of escapi g poverty.

    Kareliss alter ative theory provides partic lar i sights i to theiss e of ork a d ork effort, as sho belo i a versio of aemployme t e ample he has sed. O r story is abo t Ja esattempt to take o a e job.

    Getti g to ork

    Ja e is o elfare a d she has discovered a job opport ity at a rm sevekilometres a ay. It does t pay m ch so tra sportatio costs are a barrier a dher health is ot the best. If she akes p very early a d alks, she ill arrivetired a d distracted, ith blisters a d sore feet. It ill get orse o the alk home. She ill ot last lo g at the job der those co ditio s a d shell q ickly

    ear o t her poor q ality shoes. She the lear s of a e e viro me tal b sprogram providi g a fe free kilometres of travel each day as a i ce tive totake p blic tra sportatio . This helps b t is still ot e o gh to offset the pai ,

    ear a d tear of the remai i g alk. If o ly her e employer co ld top pthe e viro me tal program, or raise her ages, or if she ere allo ed tokeep the b s pass she ca get he she is o elfare, she co ld take a d keepthe job. I this case, more is better beca se it removes a ork disi ce tive a d

    e ables her to stay employed.

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    Pa t One o t document a outl ned t e ma n oc al andeconom c acto t at a e d v n up t e co t o pove t , and

    ow e nte at n oc al and econom c pol c and c allen nold a umpt on can elp u et ette value o mone . Pa tTwo deta l ju t ow t e co t ave ecome and ow mucpotential there is for more bene cial investment.

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    5. COMPREHEnSIVE COST/BEnEFIT CALCuLATIOnS6. SPECIFIC COST/BEnEFIT ExAMPLES

    PART TWODOLLArs

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    5COMPrEhENsiVECOsT/bENEfiT CALCULATiONs

    There is i creasi g i terest i ter atio ally i estimati g thecosts of poverty. This chapter feat res st dies that are relativelycomprehe sive, ith calc latio s i dollars. The e amplesprovided are from st dies i the u ited States, the u itedKi gdom a d Ca ada, a d they all s ggest that a po t ve,and n ome ca e ve , etu n on nve tment po le

    el m nat n pove t . 52

    Calculat on n Dolla

    Investments to eliminate poverty in the United States

    This st dy calc lates the direct a d i direct costs of healthcare for the der- a di s red, social services s ch as shelter costs for homeless i divid als, costs d e

    to higher poverty-related crimes a d crime preve tio , a d red ced i come a dta es res lti g from der- a d employme t.

    It calc lates that i vesti g i the eradicatio of poverty i America o ld nc ea e t ee ou ce o eac Ame can ou e old an ave a e o mo e t an $18,000 a ea .53

    It adds that even ca ant to eve low- ncome ou e old to n all ncome toa m n mum m ddle- ncome level, alt ou e pen ve$397 ll on a ea would

    ave almo t ou t me t e co t a be e t:cost ratio of 3.75:1.

    The Economics of Poverty: How Investments to Eliminate PovertyBene t All Americans (2006). Oppe heim a d MacGregor

    The cost of child poverty in the United States

    Estimati g the cost of poverty related to crime a d poor health for every child livi gi poverty, this st dy co cl des that childhood poverty co t t e Us a total o a out$500 ll on annuall , t e equ valent o nea l 4% o gDP.

    The Economic Cost of Poverty in the United States: Subsequent Effects ofC ld en g ow n Up Poo (2007). Holzer et al.

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    Also o the i ter atio al stage, Hirsch a d colleag es from theJoseph Ro tree Fo datio , a i depe de t orga isatioi the u ited Ki gdom, have prod ced three reports foc sedo the eco omic costs of child poverty, especially i p blicspe di g elds s ch as social services, ed catio , a d policea d crimi al services. 54

    The cost of child poverty i the u ited Ki gdom

    The uK res lts poi t to co cl sio s similar to the America st dies.

    usi g ca tio s estimates for 2010, p blic spe di g for the fallo t of child povertyas estimated at 12 billio a year (almost $20 billio CDn) a d the cost of belo -

    average employme t rates a d lo er ear i g levels come p to 13 billio (a littleover $21 billio CDn) for a total of 25 ll on (a out $41 ll on CDN) .

    E t mat n t e Co t o C ld Pove t (2008). Hirsch

    I Ca ada, there are several comprehe sive st dies thatestimate the cost of poverty from a gover me t or ta payerspoi t of vie . O e e ample foc ses o O tario a d Ca ada,t o others look at nova Scotia a d Pri ce Ed ard Isla d,a d o e co ce trates o the city of Calgary. The res lts areco siste t ith the America di gs that it o ld be morecost-effective to close the poverty gap tha mai tai the stat s

    q o. For comparative p rposes, the Ca adia poverty gap isprese ted rst.

    The poverty gap i Ca adaThe nCw has for several years p blished the total poverty gap i Ca ada. The gapis the amo t of mo ey it o ld take to bri g everyo e livi g i poverty p to thepoverty li e ( si g after-ta LICOs). I 2008 it as$13.1 ll on.

    Survey of Labour and Income Dynamics (SLID) custom tabulations (2008).Statistics Canada

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    *The poverty gap cha ges ith the size of the pop latio a d thepoverty rate. usi g after ta Lo i come c t-offs (LICOs).

    So rce: Data for 1988-2007: Statistics Ca ada. Income Trends inCanada 1976-2007 , Table 202-0805. Catalog e o. 13F0022xIE.

    Data for 2008: Statistics Ca ada, Survey of Labour andIncome Dynamics 2008 c stom tab latio

    note: The data for 1988 to 2007 as co verted to 2008 co sta tdollars by the natio al Co cil of welfare.

    whe looki g at the i direct costs of poverty i Ca ada, it isimportant to note that even very conservative estimates aresig i ca tly higher tha the poverty gap. The follo i g st dy, for the O tario Associatio of Food Ba ks (OAFB), i dicates thatfor 2007, the lo -e d estimate of p blic cost for Ca ada as$24.4 billio . That as almost t ice the $12.3 billio poverty gapthat year.

    I other ords, e co ld have closed the poverty gap bypayi g the direct cost of poverty a d achieved very largei direct cost savi gs that o ld co ti e over the lo g term.

    Chart 5.1: Ca adas poverty gap i 2008 co sta tdollars 1988-2008*

    $16.9B

    $9.5B

    $13.1B

    PovertyLine

    1 9 8 8

    1 9 8 9

    1 9 9 0

    1 9 9 1

    1 9 9 2

    1 9 9 3

    1 9 9 4

    1 9 9 5

    1 9 9 6

    1 9 9 7

    1 9 9 8

    1 9 9 9

    2 0 0 0

    2 0 0 1

    2 0 0 2

    2 0 0 3

    2 0 0 4

    2 0 0 5

    2 0 0 6

    2 0 0 7

    2 0 0 8

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    The cost of poverty in Ontario and Canada

    I this OAFB st dy, three types of poverty costs are estimated: the remedialcost i c rred by treati g povertys symptoms related to health a d crime; thei terge eratio al cost of child poverty from lo er ed catio al attai me tres lti g i lo er ad lt ear i gs a d lost ta reve es; a d the opport ity cost ofprod ctivity a d ta reve es forego e beca se people are able to developa d tilize their pote tial. I additio to p blic costs, there are private costs to lo -i come Ca adia s that they bear themselves.

    The total pu l c co t n Canada pe ea at t e lowe end e t mate wa $24.4 ll on a d the total private cost that lo -i come Ca adia s bear as $48.1 billio .

    The total p blic cost i O tario per year as $10.4 billio a d the total privatecos