Income and Poverty

The cost of living and poverty

  • Published 5th Nov 2014
  • Authors: Adam Tinson, , Peter Kenway, , , , Tom MacInnes,
  • Category: Income and Poverty

This literature review examines evidence for links between poverty and the cost of living. It looks at how this relationship differs between types of goods, markets and population groups, and  considers some policy options.

Key points

  • JRF’s Minimum Income Standard, which calculates the cost of goods and services considered essential to meet basic needs and participate in society, represents a greater proportion of the budgets of households in poverty than it does for average/high-income households.
  • Low-income households are disadvantaged by having less access to ‘enabling goods’ such as the internet, a bank account or a car that would increase their ability to reduce costs.
  • Termed ‘the poverty premium’, this effect is examined in relation to groups facing both specific and enhanced additional costs, such as the disabled or people living in remote areas.
  • The concept of ‘consumer vulnerability’ in respect of an anti-poverty strategy proves useful in describing individuals or groups who cannot participate fully in today’s competitive marketplace.
  • Third-sector organisations have a role in responding to markets that disadvantage certain groups, for example by developing new products or by targeting support.
  • The report finds that public policy, and in particular its expression through regulation, has a direct bearing on the cost of living.
  • Factors such as regulated fares, the management of competition and the imposition of universal service obligations on suppliers can reduce or compensate for the poverty premium.

About this report
This report was funded by the Joseph Rowntree Foundation (JRF) and written by Adam Tinson, Peter Kenway, Sabrina Bushe and Tom MacInnes of the New Policy Institute. The facts presented and views expressed in this report are those of the authors and not necessarily those of JRF.