Introduction to UK Household Income and Poverty Analysis

This presentation provides an in-depth analysis of household income distribution and related economic factors in the United Kingdom. The presentation begins by defining household income and its significance as an economic indicator, differentiating between mean and median income as key measurement tools. It explores changes in average incomes over time, highlighting adjustments made to historical data for inflation and household composition. The presentation then delves into income inequality, comparing the UK's standing with other developed countries and examining the spread of income across different regions. A significant portion is dedicated to poverty, including working poverty, child poverty, and the impact of tax and benefits. It presents statistical data on households below the poverty line and employees in poverty, along with the impact of poverty on pensioners. The presentation concludes by synthesizing the findings and emphasizing the complex relationship between employment, income, and poverty reduction, stressing the uneven distribution of income in the UK and the increasing child poverty levels. The presentation uses various graphs and statistical data to support the analysis, providing insights into the economic landscape of the UK.

Introduction to research in buisness
economics

Introduction
Household income is defined as
the total income
It is comprised by all individuals
who lives in a particular
household
Income deals with benefits as
well as salaries (Dynan,
Elmendorf and Sichel, 2012)
It is also referred to as economic
indicator
It is referred to as an economic
measure that is mostly applied on
a single household across a large
group of a population

Household Income
According to Sareen et al.
(2011), households deals with
more disposal income as
compared to any previous time
The author stated that
disposable incomes of the
poorest households has
increased as compared to pre-
downturn levels
The author stated that
disposable incomes of the
richest households has
decreased as compared to pre-
downturn levels

Disposable Income
Disposable income is regarded as a
widely used household income
measure
It is regarded as the total amount of
money that is available to the
households
They use the amount to invest as well
as save after deduction of direct taxes
The direct taxes include Income Tax,
National Insurance as well as Council
Tax (Blundell and Etheridge, 2010)
It also deals with earnings that are
earned by employers, individuals
through private pensions as well as
cash benefits that are provided by the
State

Comparison and Statistical Importance
According to Brewer and Wren‐Lewis (2016), the major
estimates of household income as well as inequality has altered over
time
The historic data have been adjusted in order to make robust
comparisons
The adjustments are majorly made to deal with the impacts of inflation
They are also equivalised to regard the changes in household
composition
The statistical importance indicates that whether a reported alteration
is likely to take place by chance (Fräßdorf, Grabka and Schwarze,
2011)
Any type of alteration is described as important that is at 95% level
This indicates that the difference that has taken place by chance is low

Household Income in the UK
It has been stated that income inequality in the
UK has decreased over the last decade
The United Kingdom has been regarded as a
wealthy country in terms of worldwide poverty
criteria
The individuals earn approximately £4 every
day (Anders, 2012)
The two major measures of average household
income includes median as well as mean

Household Income in the UK
The figure reflects on the distribution of
equivalized disposable income for the
financial year of 2017
The diagram clearly indicates the
distribution skewness
It shows that the mean income level is
£32,700
It shows that the median level is £27,300
This indicates that the mean income
level is greater as compared to the
median level
It shows that the greatest household
range belongs to the bracket from
£17,000 to £18,000.
It indicates the third decile of the
distribution

Growth of median and mean Household
Income in the UK
In the UK, the median
equivalised household disposable
income has been £27,300
The median disposable income
has however raised over time
during the financial year 2016,
after considering changes in
household structures as well as
regarding the inflation
It showed that the disposable
income has been £1600 more as
compared to the year 2008 that
witnessed economic downturn

Growth of median and mean Household
Income in the UK
The GDP per head in the UK has been adjusted for
inflation by making use of National Accounts
The median as well as mean time series has been adjusted
for inflation by making use of the customer price index
The index includes housing costs of the proprietors as well
as occupiers
The growth of GDP has been equivalised with the increase
in median household income (Thomas and Evans, 2010)
It increased during the period of economic development
however, decreased immediately after the downturn

Effect of The Economic Downturn
 The effect of economic downturn in the UK has been delayed on
median household incomes relative to the decrease in GDP per
head
 Since the year 2008, the average income of the poorest
households has increased by £1800
 The households in the UK ranked by their equivalised disposable
incomes, using the modified OECD scale
 The increase in the reported real terms has been estimated for early
years that has been adjusted to regard the inflation account

Income inequality in the UK
The scale of income inequality
In comparison to other developed
countries, the UK has a very high
income inequality level
The average disposable income of
households in the bottom 10% of the
population has been £9,644
The income deals with wags as well
as cash benefits (Blundell and
Etheridge, 2010)
The average disposable income of
households in the top 10% of the
population has been £83,875
In the UK, inequality is
greater among individuals
with original incomes as
compared to those with
disposable income
The poorest households have
an average of £4,436 on
original income
The richest households have
24 times more approximately
on original income

Spread of Income in the UK
The graph shows that top
1% have incomes that
greater than the individuals
who belongs to the rest 10%
It shows that in the year
2015, the average income of
the top 1% has been
£253,927 (Payne and Abel,
2012)
The average income of the
top 0.1% has been £919,882

The way income is spread across the UK
The graph shows that income
is spread unevenly across the
multiple areas across the UK
It shows that the average
household income in London
has been considerably more
as compared to those living
in the North East (Payne and
Abel, 2012)
The total income that is
comprised by the poorest
society is approximately 8
percent of the total income

Poverty in the UK
It has been reported that
approximately 500,000 employees
in the UK has been delved into
working poverty
The graph shows that the
individuals living below the
breadline with a job has raised
rapidly as compared to employment
In the UK, the relation between
entering work as well as making
ends meet has turned out to be
fayed (Liddell et al., 2012)
The graph shows that more than 50
percent of the children has been
trapped in poverty over the past five
years

Poverty in the UK
The UK has witnessed an increasing tide of child poverty
The parents are not able to meet ends requirement of the children
The UK Poverty 2018 reflects on the fact that the total children
who has been delved into poverty from a working family has
increased rapidly as compared to the past 20 years
The parents who has been stuck in low-paid job has been
considered as the drivers for increase in poverty (Roberts, Vera-
Toscano and Phimister, 2015)
The poverty line in the UK is defined when households earn less
than 60 percent of the median income
The average median income for the UK households has been
£425 every week as per the year 2016 and 2017

Impact of Tax on Poverty
The profit for working families
have been outweighed from the
increasing national living wage
This has been outweighed by
changes that has taken place in
benefits as well as tax credits that
has been intended to top up low
wages
In the year 2016, the living wage in
the UK has increased from £7.20
an hour to £7.83 an hour (Roberts,
Vera-Toscano and Phimister, 2015)
A four-year freeze on benefits has
been introduced by the UK
government

Households below the poverty line
The graph shows that more
than 14 million individuals in
the UK has been struggling
due to poverty
The individuals belonging to
below poverty line includes
4.1 million children as well as
1.9 million pensioners
(Jenkins, 2016)
The individuals who lives in a
family where at least one
individual works includes a
total of 8 million

Employees in Poverty
In the UK, the in-work poverty has been higher over the
last 20 years
The rate of employment has been at a record level
however, this did not delivered lower poverty
In the UK, the poverty rate among the employees has
increased considerably over the last five years
There are a total of 4 million employees in poverty in the
UK (Tinson et al., 2016)
The increase in in-work poverty over the last five years
has been caused almost completely by the rise in the
poverty rate of working parents

Pensioners in poverty
The increase in poverty of pensioners took
place during the year 2007
It increased by 31 percent during the year
2012
Since the year 2013, the total pensioners in
poverty increased to a total of 330,000
The weekly cost of the pensioners during
the year 2016 has been £50
There has been a rise in the ratio of the
individuals retiring with a private pension

The Impact of Poverty
The wellbeing of the individuals
has been affected due to poverty
This has led to poorer physical
health among the individuals
dealing lower income levels
The pressure under poverty has led
to considerable stress
This has been mostly linked with
poorer mental health
The individuals in the UK has also
been deprived thus leading a lower
than expectancy lifestyle
The individuals living in poverty
are less likely to create savings

Conclusion
It could be concluded that increasing employment is not
the individual reason that has been reducing poverty
The households in the UK are ranked by their
equivalised disposable income
 The parents who has been stuck in low-paid job has
been considered as the drivers for increase in poverty
The UK has an uneven income distribution as compared
to other OECD countries
Child poverty in the UK has increased by a
considerable higher level

References
Anders, J., 2012. The link between household income, university applications and
university attendance. Fiscal Studies, 33(2), pp.185-210.
Blundell, R. and Etheridge, B., 2010. Consumption, income and earnings inequality in
Britain. Review of Economic Dynamics, 13(1), pp.76-102.
Brewer, M. and Wren‐Lewis, L., 2016. Accounting for changes in income inequality:
decomposition analyses for the UK, 1978–2008. Oxford Bulletin of Economics and
Statistics, 78(3), pp.289-322.
Dynan, K., Elmendorf, D. and Sichel, D., 2012. The evolution of household income
volatility. The BE Journal of Economic Analysis & Policy, 12(2).
Fräßdorf, A., Grabka, M.M. and Schwarze, J., 2011. The impact of household capital
income on income inequality—a factor decomposition analysis for the UK, Germany
and the USA. The Journal of Economic Inequality, 9(1), pp.35-56.
Jenkins, S.P., 2016. The Income Distribution in the UK. Social Advantage and
Disadvantage, ed. by H. Dean, and L. Platt, pp.135-160.
Liddell, C., Morris, C., McKenzie, S.J.P. and Rae, G., 2012. Measuring and monitoring
fuel poverty in the UK: National and regional perspectives. Energy Policy, 49, pp.27-32.

References contd….
Payne, R.A. and Abel, G.A., 2012. UK indices of multiple deprivation-a
way to make comparisons across constituent countries easier. Health
Statistics Quarterly, (53), p.22.
Roberts, D., Vera-Toscano, E. and Phimister, E., 2015. Fuel poverty in the
UK: Is there a difference between rural and urban areas? Energy policy, 87,
pp.216-223.
Sareen, J., Afifi, T.O., McMillan, K.A. and Asmundson, G.J., 2011.
Relationship between household income and mental disorders: findings
from a population-based longitudinal study. Archives of general
psychiatry, 68(4), pp.419-427.
Thomas, J. and Evans, J., 2010. There's more to life than GDP but how can
we measure it? Economic & Labour Market Review, 4(9), pp.29-36.
Tinson, A., Ayrton, C., Barker, K., Born, T.B., Aldridge, H. and Kenway, P.,
2016. Monitoring poverty and social exclusion 2016. Children, 3, pp.3-7.