Thursday, 12 November 2009

The Procrustean bed of statistics

Michael Taft: In Greek mythology the rogue Procrustes had an iron bed in which guests were invited to rest on. He would then hold them down and, if they were too large he would lop off their limbs; if they were too small he would stretch them. The last place you want to be is on Procrustes’ iron bed, especially if you don’t fit.

Suzanne Kelly brings the spirit of Procrustes’ iron bed to her table of statistics in today's Irish Times. She took households with a couple with two children and compared their net incomes in three different situations:

PAYE employee: €36,078
Self-employed: €35,159
Unemployed: €40,261

Wow. It would appear that if a below-average worker loses his or her job, or the self-employed see their business go down the tubes, they shouldn’t despair. They should celebrate their big income increase. These ‘facts’ led Suzanne to comment:

‘A social welfare package where the cash and benefits exceed wages will stop potential staff from returning to work when the economy lifts.’

Maybe. Except that Suzanne has put this set of statistics on a Procrustean bed where she has pulled and chopped them to fit her argument.

To arrive at the income for the unemployed scenario she includes Rent Supplement. This is a big item. It makes up €12,168, or over 30 percent of the total. Without this supplement, the couple would be on an income considerably below both the PAYE employee and the self-employed.

So how valid is it to put this Rent Supplement figure into the total for the unemployed? Not very. Not very at all.

The 2008 Social Affairs Annual Statistical Report shows that 95 percent of all those on Jobseekers Benefit do not receive Rent Supplement. When you add up all those on some form of unemployment payment (benefit and allowance), 90 percent do not receive Rent Supplement.

But for that small minority who do qualify, would they get this amount? €12,168? On average, no. In fact, they would get half that amount. The 2008 Social Welfare report, again, shows the 74,000 recipients of Rent Supplement receiving on average €5,953 a year (there is no breakdown by welfare payment). The reason why this is so much lower than the headline maximum rate is that Rent Supplement is rigorously means-tested.

So, we have a table that includes an item which only a very small minority of unemployed obtain and of those who did get it, on average they receive less than half the amount as the table states.

If Suzanne had included these caveats it wouldn’t have supported here statement. But, hey, if the facts don’t fit – just chop and stretch until they do, just like Procrustes. Of course, not many of his ‘guests’ survived the ordeal.


Michael Burke said...

Where are you now Jonathan Swift when we need you?

Proposition Joe said...

If memory serves, the amount Ms. Kelly factored in for GP visits and prescription medicinces also seemed artificially high.

However in her defence, I don't think your figure of 95% is reflective of the reality for the particular type of case she was writing about, specifically families where the sole earner has lost their job.

If one factors out the huge swathe of young singles who may live with relatives, and also the massive numbers of formerly dual-income families where one partner has lost their job, I'd suspect a much higher percentage would be in receipt of Rent Allowance.

And to be totally accurate, one would also have to include those in receipt of Mortgage Interested Supplement, as this benefit is effectively just a modified form of Rent Allowance.

Michael Taft said...

Proposition Joe - I suspect that the overwhelming majority of the unemployed in receipt of Rent Allowance are single (since nearly 80% of all unemployment recipients are single in any event). I would be surprised if you found that many couples with two children in the private rented sector, especially as the private rented sector here is not terribly family-friendly. But all this to make the point - Suzanne took this particular cohort and made an assumption that they would be paid rent allowance. She went further and assigned this couple over €12,000 - the theoretical maximum. But the average payment is half that amount.

I think your point re: mortgage interest supplement, is more valid for this cohort - I'd imagine there is a hiigher proportion with a mortgage. However, there are only 2,000 recipients of mortgage supplement among Jobseekers' Benefit. And remember, this benefit runs out in 9-12 months (depending on your contributions). Then you move on to Allowance - and hardly any recipients of allowance get mortgage supplement (less than 1 percent). If Suzanne had used mortgage interst supplement in her table, she would have had to point out that its, therefore, temporary, and in any event, the average payment is €3,600 per year. That wouldn't have supported her point, either.

Mack said...

Michael the link to the article in the Irish Times is broken.

I'm not sure your counter argument is water tight. If a Dublin couple with the household incomes mentioned above, two kids both lose their jobs, then even with savings and their own home their going to wind up on welfare. They will very likely get the full rent supplement available to them, once they've disposed of their family home / run down their savings. If they don't get jobs - this is what will happen. How else can the sustain paying a mortgage? They'd then be in the perverse situation where their income was higher than when they were working.

I agree the rental sector is not particularly family friendly. Personally I think there is a degree of market failure in that regard (& I wonder is allowing furniture etc to be written of against tax isn't contributing to it), speaking as a renter with a family..