This report presents the results of research relating to the consequences of the methodology conventionally used to measure the extent of poverty in the UK for older people. Put briefly, there has been concern (Evason et al, 2004/5) that this methodology disadvantages persons with disability who are likely to be older people.

The methodology used can be broadly summarised as follows:

The first stage is to identify and aggregate household income which will include earnings and all benefits. The second stage is to adjust/equivalise income and compare this with whatever poverty line is being used. The purpose of  quivalisation is to reflect the fact that a couple with a weekly income of £400 with no dependent children will have a higher standard of living than a couple with the same income with, for example, two dependent children. The process is, therefore, balanced so that benefits payable in respect of dependent children are taken into account in stage one and the costs of dependent children are reflected in the stage two adjustment. There is no such balance, however, with regard to the costs of disability. Disability Living Allowance (DLA) and Attendance Allowance (AA) are counted in full in the calculation of income in stage one but there is no adjustment to reflect the costs of disability in stage two. The result of this imbalance is that the living standards of persons with disability will be overstated and the volume of poverty understated.