Time and income poverty: Definitions, thresholds and tradeoffs

A comprehensive understanding of economic deprivation requires examining income, the value of unpaid household services, and leisure. These concepts can be understood either through subjective utility or objective indicators such as measurable expenditures and time use, and much depends on how they are theorized. Divergent economic theories lead to different methods for estimating the market value of non-market work, which significantly impacts the definitions of household income and time poverty. Most empirical studies of time and income poverty identify deprivation by measuring shortfalls in unpaid household work once minimum thresholds for leisure and paid work are set. These approaches, however, primarily reflect household budget constraints rather than the combined bundle of time and income needed to sustain a standard of living above poverty. To advance poverty measurement, it is essential to examine time and income jointly and recognize their interdependence, as money can buy time, and time can save money. This paper examines the conceptual challenges involved in integrating time and income into a unified framework, including the evaluation of thresholds, the substitutability between time and income, and the valuation of unpaid work. Addressing these issues clarifies how integrated measures of time and income poverty can more accurately capture the resources required for the development of human capabilities.