/ Economic inequality

The poverty deficit: A new way to improve poverty measurement and policy

• Antonia Stutter, Christine Sheppard, Jesse Rosenberg and Kwame McKenzie
A close up of a person opening an empty wallet

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Background

Poverty is an important determinant of health. Eleven per cent of people live below the poverty line in Canada. Beyond the human, health and social costs of poverty, there are also economic costs and impacts on public finances. In 2019, poverty was estimated to cost the Ontario provincial government between $27 and $33 billion in crime, healthcare costs, and forgone and lost income.

Accurate measurement of poverty is vital to help both build strategies and gauge the effectiveness of public policy.

This policy brief argues we need to measure the depth of poverty, not just the percentage of people living below the poverty line.

It discusses a new concept – the “poverty deficit” – that measures the cumulative depth of poverty.

Poverty deficit findings

Drawing on data from Statistics Canada, this brief examines not only the number of households under the poverty line but how far they are from the poverty line to calculate the amount of money which would be needed to end poverty in a jurisdiction by simple cash transfers.

The cumulative poverty deficit in Ontario in 2023 was $14.3 billion. That’s just 7.5 per cent of the Ontario government’s program spending, and only 1.2 per cent of Ontario’s GDP.

The poverty deficit in Toronto in 2023 was $841 million; only 3.91 per cent of the City’s combined operating and capital budget of $21.5 billion.

Policy recommendations

The challenge of eliminating poverty is not insurmountable.

Understanding the poverty deficit, alongside the poverty rate, will help us to understand better the trajectory of poverty in Canada, the impact of anti-poverty initiatives and the scale of resources which may be needed to end poverty in a jurisdiction.

Wellesley Institute recommends policymakers use the lens of the “poverty deficit” in future poverty reduction strategies at all levels of government.

Update

Since this report was developed, Statistics Canada have updated their Market Basket Measure methodology and have made poverty deficit data, at the provincial level, available online. 

Poverty Deficit a new way to improve policy measurement and policyDownload the policy brief
Antonia Stutter

Antonia Stutter

Antonia Stutter was a Policy Officer at Wellesley Institute. Prior to joining the organization, she served as a Senior Advisor to the Chief Executive of the National Health Service in the United Kingdom. Prior to that she spent four years working across housing and local government financial policy in the British civil service. She has a Masters in Chemistry from Oxford University. 

Christine Sheppard

Christine Sheppard

Dr. Christine L. Sheppard holds a Master’s in Social Work, specializing in gerontology, from the University of Toronto, and a PhD in Health Studies and Gerontology, with a focus on aging, health and well-being, also from the University of Toronto. Prior to starting at Wellesley Institute, she was a CIHR-funded post-doctoral fellow at Sunnybrook Research Institute, specializing in knowledge translation in urban housing and health.

Jesse Rosenberg

Jesse Rosenberg

Jesse Rosenberg was the Director of Policy at Wellesley Institute from 2020 to 2026. He is a legal and policy professional with political and policy experience in the fields of health, labour and justice. Prior to joining Wellesley Institute, Jesse held leadership roles with the government of Ontario and the Ontario College of Trades. He has extensive experience and expertise in stakeholder relations and legislative and regulatory development and analysis. He holds a Bachelor of Humanities from Carleton University and a Juris Doctor from Osgoode Hall.

Kwame McKenzie

Kwame McKenzie

Dr. Kwame McKenzie is CEO of Wellesley Institute, which works in research and policy to improve health and health equity in the Greater Toronto Area. A practicing psychiatrist, he also holds positions as a full Professor at the University of Toronto and as the Director of Health Equity at the Centre for Addiction and Mental Health (CAMH). As an international expert on the social causes of illness and the development of equitable social policy and health systems, Dr. McKenzie has advised health, housing, education and social services ministers in Canada and the U.K. and has authored more than 280 peer reviewed papers and six books. He is a member of the National Advisory Council on Poverty, and recently co-chaired Canada’s Expert Task Force on Substance Use. He has also worked as a consultant to the World Health Organization. Dr. McKenzie has been a columnist for The Guardian and The Times and a presenter for BBC Radio, and he is regularly published in the Toronto Star.