Revealing a Hidden Cost: determining the public service cost of poverty in Ireland

Living life on a poverty income is common in Irish society. Between 2010-20, on average one in seven people lived on an income below the poverty line – approximately 720,000 individuals. By necessity living life on such a low-income imposes costs on these individuals and families. Making ends meet involves personal sacrifices, restricts options and limits opportunities; and for many it is not always possible to find ways to make ends meet. These individual costs of poverty are large scale and leave effects that last years and at times generations. Alongside these individual costs, poverty is responsible for other costs. In particular, the presence of poverty in a society triggers demands on the public purse. These costs derive from the identification of poverty as a determining factor in the need for, and demand for, a wide range of public services and policies ranging across almost all areas of public policy. Building on past literature from the UK, USA, Canada and New Zealand this study attempts to establish a heretofore absent benchmark for the recurring annual costs to the state of poverty in Ireland. In doing so it adopts a different approach to the existing literature, drawing from experiences in the economic evaluation literature, to determine a range of costs rather than just one figure. These range from a conservative ‘low estimate’ to an upper-limit ‘high estimate’ with a ‘main estimate’ reflecting the most probable annual cost. The analysis is based on a review of €27.9 billion of annual public service expenditure and highlight for all members of society, whether above or below the poverty line, the recurring public expenditure costs incurred by society as a result of poverty.