Consumption Poverty in Canada, 1969 to 1998


Krishna Pendakur


Simon Fraser University




In this paper, I estimate the poverty rate as the proportion of individuals who have consumption — rather
than income — lower than an absolute poverty line. The absolute poverty line used is based on the expenditure
necessary to achieve a minimum level of material well-being. It does not change over time with changing
social values as do relative poverty lines. Consumption is used because consumption levels are chosen by
households with some knowledge of future and past incomes, and may thus be a better indicator of material
well-being than income. Here, consumption is adjusted for differences in the prices faced by, and demographic
characteristics of, different households.

The story told by consumption poverty measures is mixed. As with income poverty measures, the consumption
poverty rate declined over the 1970s and 1980s — all boats rose in the rising tide. However, the
1990s tell a different story. The consumption poverty rate increased by more than half between 1992 and
1998. Outcomes for children were even worse. The rate of consumption poverty among children more than
doubled between 1992 and 1998.

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Department of Economics
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Source: Consumer Policy Research Database

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