Trends in Poverty Phenomenon in Russia

Beginning with the mid-nineties VCIOM specialists’ team headed by M.D. Krasilnikova has been conducting Russia’s poverty level measurement surveys.
Levada-Centre continues this work based on the subjective approach to measuring this socio-economic phenomenon. The basis of the method is the analysis of the population’s subjective evaluations of different levels of incomes.
Based on the survey of a sample of households, the income size which is a borderline between poor people and people who are not poor is established, i.e. the family’s income size below which, according to the population, the family may be considered “poor”. These sample surveys are conducted by Levada-Centre six times a year – every odd month. The sample of the survey is representative for the urban and rural population of the country aged 16+. The total number of the people interviewed is 2 400 respondents.
Two parameters characterizing the problem of poverty are regularly measured in the Levada-Centre data. First, a kind of a “public expert estimation” of the minimal standard of living is done – subjective estimations of its size are determined, and, second, subjective estimations of the level of poverty are studied – i.e. the level of money income below which the family can be called poor is defined.

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On average, the population’s subjective estimations of the cost of living are 1.5 times higher than the official calculations (see Fig.1). The research shows that most people (i.e. three fourths of the adult population) believe that the cost of living should ensure not only physical survival but also a more or less decent existence in a society with its current social norms.
The population does not associate the cost of living with the term “poverty”: on average, the level of poverty is 1.5 times lower than the cost of living. It testifies to the fact that:

- the majority of the population is very poor and is prepared to put up with many asperities;
- the population understands the term “cost of living” as the average standard of living, which is also an indication of the general poverty of the population;
- the structure of the consumption of the poor population is characterized by a considerable shift towards natural consumption. This fact is quite correctly not taken into consideration by the official calculations of the cost of living; however, it is present in the minds of the people and has an impact on the formation of the monetary estimations of the poverty level. The actual widespread non-payment for quite a few services (first of all, for the housing, communal services and transport) results in underestimation of the amount of money a poor family can live on.

Based on the subjective estimations of the level of poverty and the actual current money incomes of the respondents, Levada-Centre calculates the share of the poor population, i.e. the factual share of the population with current money incomes that are lower than their own estimations of the level of poverty. According to these subjective estimations, at present about 40% of the population of Russia are poor. Levada-Centre began regular measurements of this index in 1996. Since then the maximum level of poverty (up to a half of the country’s population) was registered in 1998, as a result of the financial crisis.
The level of poverty calculated in this way directly depends both on the level of the subjective estimations of poverty and on the level of actual incomes reported by the population during the survey. The level of the subjective estimations of poverty goes up with the growth of the respondents’ incomes; however, it is but a slight growth (about 20 kopeks per every ruble of the actual income growth).
To understand the nature of poverty, it is important to single out groups of the poor differing in the relative level of subjective estimations. If we define the group of the poorest as people whose subjective estimations of poverty are not higher than the average level defined by the whole of the population, we will see that they constitute about a third of all the poor. The financial situation of this group of the poorest families is miserable. The other groups of the poor are closer to the middle strata of the population.

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The subjective estimations of poverty, according to the data of Levada-Centre, are considerably higher than the RF Goskomstat official calculations, first of all in the parameter “number of people with money incomes below the cost of living”. However, both the Levada-Centre calculations and the Goskomstat data indicate the same trend. They register an upsurge of poverty in 1998-1999 as a result of the 1998 financial crisis. After this, there has been a considerable reduction in the share of poor families up to the present. The rate of this reduction is about the same: the index “number of people with money incomes below the cost of living” calculated by the Goskomstat is 24% times lower in the fourth quarter of 2002 than  in 1998, the share of the poor population calculated by Levada-Centre reduced by 20% in the same period.