A Hidden Cost: Estimating the Public Service Cost of Poverty in Ireland

Abstract

Living life on a poverty income remains commonplace in most modern welfare states. A growing literature highlights the impact on individuals, families, and communities of poverty, costs that are both current to the experience and reflecting its scarring effects. A further cost, one that is frequently hidden, is the cumulative and recurring public expenditure associated with policy responses to poverty. 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. Estimating the nominal value of these costs, based on an assessment of public expenditure in one EU-15 state, Ireland, is the focus of this article. The findings establish annual costs of between €3bn-€7bn 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.