MIS

(MIS Japan Team)M.Iwata, A. Abe, R.Iwanaga,Y.Uzuki, J.Shigekawa, A.YamadaApplying MIS (Minimum Income Standard) in JapanUK-Japan State of the Art Measurement of Poverty Seminar (Jan.6,2012) IPSS, TokyoIn my presentation, I would like to explain the context why we need MIS in Japan, and report the main results of Japans MIS trial. Following my presentation, Uzuki san will provide very interesting pictures, which compare the British MIS with Japans MIS. 1

Public Assistance (PA) Standard in JapanIn the absence of official poverty line in Japan, Public Assistance Standard (Seikatsu Hogo Standard) served de-facto poverty line. Public Assistance Standard= income threshold & amount of cash assistance

Cash assistancePA StandardIncome of RecipientPA StandardPA standard is used as an income threshold for checking eligibility of public assistance benefit and it is also used for deciding benefit amount.2Historical Development of Public Assistance (PA) Standard31948-1960 Market Basket Approach1961-1964 Engel Approach1965-1983 Convergent Level Approach1984-present Equilibrium Level Approach

Current Approach: the PA for standard family (family of 4) is set at 60% of the average consumption level of the public (But it is now reaching at 70%).From 1, standard is divided into 2 categories (family part and individual part).For every household, a formula depending on A) family part which depends on family size, and B) individual part which depends on how many individuals are in each age category is used to calculate the PA level.

Four approaches are distinct in PA standard development. 3Background of MIS-Japan4There has been much debate on whether the PA standard is appropriate or too high.Full benefit amount of 1st tier public pension (individual) is lower than PA Standard for single person (elderly).In some prefectures, working at minimum wage for full time does not earn income higher than PA standard.In 2009, The Minister of Health, Labor and Welfare Nagatsuma (at the time) convenes National Minimum Study Group in which he approached Prof. Iwata to investigate new market basket approach.To serve as a reference, MIS-Japan was tried.4Japan-MIS (2010-2012) Case StudiesGeographical Set-upMitaka-City, Tokyo Prefecture (a suburb of Tokyo metropolitan area, about 30 minutes from the center)(2010Working age (32 yrs old) Single MaleWorking age (32 yrs old) Single FemaleChildren(5, 11, 15)(2011) In progressElder (71 yrs old) Single MaleElder (71 yrs old) Single FemaleParents of Children (5, 11, 15) We outsourced recruiting of participants (participants were chosen from registered monitors from survey company)55Some Problems in Implementation of MISRegarding participants and set-upMitaka may not have been the representative of All JapanSlight mismatch of participants and the case (e.g. Mother of children where the case study was working mother, but participants were mostly non-working mothers)

Regarding Definition Some participants had hard time grasping definition of Minimum Income Standard Gap between their own living standard and MIS Where participants clearly had higher living standard than MISWhere participants clearly had lower living standard than MISHad hard time actualizing needs of special days Had hard time separating needs of an individual from that of a household (eg. Needs of child and parent)

6Results[Single Working-age M&F, Children)77Definition of MIS The minimally required basic living in modern Japan means living standard which is sanitary and healthy, and also stable and secure (*). It includes not only food, clothing and accommodation, but also access to required information, human relationships, recreation, appropriate working style, education, and prospects for future. Participants were presented with the Constitution of Japan, UN Child Human rights laws, and UK MIS definition, and discussed what the minimally acceptable standard of living would constitute of.8MIS definition of Accommodation for working age male & femaleAt least 6 tatami of living space + kitchen + toilet + bathShould have some storage spaceAt least big enough kitchen for a fridgeSeparate toilet and bathBig enough porch to dry laundry and futonOne-room flat9Case: Young person living aloneHealthy 32 year old man and woman living alone in Mitaka City. Working status was not provided.MISSingle-Household 32 yr old man\193,810Single-Household 32 yr old woman\183,235/month10

MIS Costs by Category (Young single-person)7.8%M Food, Recreation and Social expenses are higher than Women F Clothing, Other expenses are higher than Man23.9%20.8%39.1%7.1%40.4%M&F Rent + Food exceeds 60%3.7%11.7%8.3%4.5%Rent11

Comparing to Consumption Datavs.ConsVs. HH90%99%87%94%68%71%74%66%Except for MIS (M) vs. HH, MIS estimates are about 90% of national averageExcluding housing, MIS estimates are about 70% of national average.Cons=National Consumption Survey HH=National Household Expenditure SurveyMISMIS12

Comparison with average by categoryItems necessary for ordinary life such as Food, Utility, Household items - close to population average, Selective items such as transportation/communication, education/recreation, other about 40 to 80% of average13Childrens MISCases: 5yr old, 11 yr old boy & girl, 15 yr old boy and girl who live in Mitaka City11 yr olds go to public primary and 15 yr olds go to secondary school5 yr old child goes to kindergarden (yochien) decided in the 1st group sessionParents : no information given (either one or two parent family, no information on mothers working status) even tho by deciding the 5 yr old goes to yochien, the case strongly implies non-working mother14MIS Results for Children (5, 11, 15 yr olds)% of food5 yr olds and 15 yr girl=30%11 yr boy & girl, 15 yr boy=40%Non-FoodFoodtotal5 year oldBoy & Girl\41,897\19,147\61,04411 yr oldsBoy\33,969\23,409\57,378Girl\34,201\23,409\57,61015 yr oldsBoy\57,464\38,309\95,773Girl\57,681\25,498\83,17915

Breakdown by category: % as a total MIS for children (excluding food)65385554Other than food, education takes up the bulk10,000Yen16Comparing out-of-school educational costs : with National Education SurveyData: Ministry of Education Survey of Education Costs of Children, 2008.As in the case of single-person households, discretionary costs by MIS tend to be much lower to the national average.MISM.Edu. DataaverageMIS/M.edu (%)11 yr olds\6,494\17,94336%15 yr olds\15,321\33,53646%17Comparison with Other minimum income estimates1818Other recent minimum income estimates in Japan 1)Kanazawa, S. & Labor Research Institute. 2008. Market Basket Approach estimates of minimum income using a list of items considered necessary by experts (using item by item propagation rates of general population). Estimates for single-person household of 20-29 year olds. 2)Iwata, M., Murakami, E. et al. 2008-2009. Using actual consumption data (receipts) of low-income (single-person household) individuals aged 20 to 40, for one month. Sample size = XX.3) Iwata, M., Murakami, E. et al. 2004. By compiling national consumption data for Year 2004, of single-person household individuals, aged 20 to 40. Sample size = XX. 4)Yamada, A., Shikata, M. et al. 2009. By using internet survey data of minimum income questions (K) For household like yourself, what is the bear minimum income you need to survive, (T) For household like yourself, what is the minimum income you need in order to live modestly but without shame. sample size=1,500

19minimum income by Various ApproachesNational Consumption Data (*3)Market Basket (*1)MIS maleMIS femaleConsumption Data of poor (*2)The difference of our MIS estimate mainly comes from the expensive housing costs in Mitaka. Additionally, Food and recreation expense for Male MIS and clothing expense for Female MIS is higher than the other estimates.

We compares our MIS estimate with other minimum income estimates. Obviously, our estimate is bit higher than the other estimate. The difference of our MIS estimate mainly come from the expensive housing costs in Mitaka. Additionally, Food and recreation expense for Male MIS and clothing expense for Female MIS is higher than other estimates.20Comparing with Public Assistance However, Yamada & Shikata estimates do not include yearly expenses for A. For B and C, yearly expenses are included.

PA Standard is the lowest.In last table, we compare various MIS with PA standard. It clearly suggests PA standard is the lowest amongst these estimates including our MIS.21Comparison of the MIS between Japan and the UK22Comparing the minimum acceptable standard of livingNo significant gap in the definitions of minimum standard between Japan and the UK despite some differences in phraseology. In both countries:The minimum necessary goods and services for everyone include those that make social participation possible as well as clothing, food and housing.Where actually to spend money is left to individual values.$2010 % to AWJPNUKJPNUKTotal* Excluding rent, council tax, medical expenses and private health insurances2332413629MIS budgets for a single working-age adultNotes:Weekly budgets adjusted for Purchasing Power ParitiesAW: Average WageAssessing social assistance and minimum wage levels against the MIS JPNUK pw pwMIS Excluding rent etc.a26339161.41Social assistance levelb1959465.45Social assistance income as a percentage of MIS b/a*1007441MIS Including rent etc.43388227.97Gross earnings required51052276.85Hourly wage ratec13627.38Minimum waged8215.80 Minimum wage as a percentage of hourly wage required to meet MISd/c*10060 79 Key findingsThe MIS budget in 2010 comes out at very similar levels in Japan (Mitaka) and the UK. (excluding rents, medical expenses and other items that are not comparable)

The shares of individual items in the cost of living differ between the two countries.

Social assistance and minimum wage levels fall far short of levels that guarantee the MIS budgets in both countries.

Directions for future workCheck sensitivity to methods of defining and calculating minimum housing costs.

Systematic understanding of what cause differences in budgets. - differences in prices? - differences in minimum necessary items?Sheet1VVAB:ACB17440639564541676552388175482465182141827323742174406173477119310s16803739592.05528301895461962782526.47245283026243.19113207555776.077169811326500.907169811315868.057358490610633.5662264151s168037162260.922830189107641.922830189156123.03286666732463.911111111162522.64827777787998.27551666672719.69001666677735.75061666673290.896266666713768.99872222229699.829255555615923.0330833333156123.032866667152832.136690309.4883222222MIS 193810462247575085004710719447866592274621549K(142000)161000102000MIS183235381647404286004107143181206120451308817665T(178000)21100014600010.22684999370.31057991120.03756751490.02225267480.04327832760.01413368810.10443448050.10477277160.1361306377MIS 193810191628115878s10.23561464610.32504087660.03736074670.01503518590.03715359710.03437377440.15770845490.09443174120.0632809771MIS18323518080010675810.21645943170.41497652790.05199045190.01597520670.04100710610.0206390340.08410579480.0602987380.094547709113883985139MIS 10.23850162530.39084670550.04385738610.02430215160.03711882770.0024663330.03435839220.11736236520.1111862133MIS10.2082789860.40408218950.04693426470.02241384020.07814009330.0065817120.0657352580.0714274020.0964062543BC

Sheet2156123.03286666732463.911111111162522.64827777787998.27551666672719.69001666677735.75061666673290.896266666713768.99872222229699.829255555615923.0330833333s16803739592.05528301895461962782526.47245283026243.19113207555776.077169811326500.907169811315868.057358490610633.566226415117440639564541676552388175482465182141827323742MIS183235381647404286004107143181206120451308817665MIS 193810462247575085004710719447866592274621549A: minimum income (/month)B:A minus medical fees and insurance premiumsCB minus housing costKanazawa, et al. (*1)174,406173,477119,310113883985139Iwata, Murakami, et al. (*3)168,037162,261107,642152832.136690309.4883222222Iwata, Murakami, et al. (*2)156,123152,83290,309K161000102000Yamada & Shikata (K)(142000)161,000102,000s162260.922830189107641.922830189Yamada & Shikata (T)(178000)211,000146,000173477119310MIS male193,810191,628115,878MIS180800106758MIS female183,235180,800106,758MIS 191628115878Public Assistance138,83985,139T211000146000