How to measure poverty: General ideas
It is necessary to recognise that poverty is a blanket term for a number of different sorts of deprivation stemming from low or no income. Any assessment of the depth of poverty of a household must therefore be needs-based and take into account the financial and health status of the individual members as well as their needs and obligations. At the same time, it would be neither reasonable nor practical to track all Singaporeans at too detailed a level of resolution.
A reasonable compromise would be to use coarse-grained information such as household income and the number of members of that household (and their ages) to compute estimates of the deficit between income and the cost of a "required standard of living". For the young, this standard might be pegged to a level that permits them to escape poverty by dint of hard work, while for the older and middle-aged, it could be pegged to a level commensurate with leading a decent life. The deficit as a percentage of the total required, the "income-needs deficit”, might be used as a coarse measure of the extent to which a household is "poor".
Example:
Suppose a household with two 30-year-old adults and a 10-year old child has a monthly household income of $1,000, and a "required standard of living" is estimated to cost $500 for each 30-year-old adult and $400 for a 10-year-old child. Then there is a $400 deficit (out of $1,400) or an income-needs deficit of 28.6%.
Example:
Suppose a household with two 73-year-old adults has no formal monthly household income but a monthly payment from their CPF accounts of $700, and a "required standard of living" is estimated to cost $450 for each 73 year old adult. Then there is a $200 deficit (out of $900) or an income-needs deficit of 22.2%.
Naturally, there are flaws associated with such a coarse-grained approach. For instance, a household saddled with massive medical bills may have a zero income-needs deficit, yet struggle to meet basic needs. Handling exceptions like this on a case-by-case basis leads to overwhelming administrative burden.
Instead, a policy solution should be in place for every large class of problems. For instance, the affordability of medical care might be addressed by a policy suite like the SDP National Healthcare Plan, and housing affordability and related issues might be addressed through policies like those proposed in the Singapore Democratic Party’s (SDP) proposals for public housing.
Once large classes of exceptions are addressed, a case-by-case approach then becomes a reasonable way to consider the tens of cases that fall through the policy cracks, requiring the household needs of only the few to be evaluated.