Income Research Paper Series – Research Paper
Low Income Lines, 2008-2009
Market Basket Measure (2008 base)
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What is the MBM?
The Market Basket Measure (MBM) is based on the cost of a specific basket of goods and services representing a modest, basic standard of living. It includes the costs of food, clothing, footwear, transportation, shelter and other expenses for a reference family of two adults aged 25 to 49 and two children (aged 9 and 13). It provides thresholds for a finer geographic level than the low income cut-off (LICO), allowing, for example, different costs for rural areas in the different provinces. These thresholds are compared to disposable income of families to determine low income status. Disposable income is defined as the sum remaining after deducting the following from total family income: total income taxes paid; the personal portion of payroll taxes; other mandatory payroll deductions such as contributions to employer-sponsored pension plans, supplementary health plans, and union dues; child support and alimony payments made to another family; out-of-pocket spending on child care; and non-insured but medically prescribed health-related expenses such as dental and vision care, prescription drugs, and aids for persons with disabilities.
The MBM and the MBM disposable income were designed by a working group of Federal, Provincial and Territorial officials, led by Human Resources Development Canada (HRSDC) between 1997 and 1999 (Hatfield, 2002; Michaud, Cotton and Bishop 2004). During 2009 and early 2010, it underwent a comprehensive review of both content and methodology (HRSDC 2010). The consultation process, led by HRSDC, involved officials from Provincial and Territorial governments, other federal governments and agencies including Statistics Canada and a panel of experts in low income measurement. This review process led to a rebased series of thresholds (MBM 2008 base), revised historically to 2000, the beginning of the MBM time series.
How are MBM thresholds calculated?
The MBM thresholds are calculated as the cost of purchasing the following items:
- A nutritious diet as specified in the 2008 National Nutritious Food Basket.
- A basket of clothing and footwear required by a family of two adults and two children.
- Shelter cost as the median cost of a two- or three-bedroom units including electricity, heat, water and appliances.
- Transportation costs, using public transit where available or costs associated with owning and operating a modest vehicle where public transit is not available.
- Other necessary goods and services.