Poverty reduction can be made more effective with data analysis

Multi party computation
Privacy enhancing technologies
18 October 2022

With historically high inflation and rising energy bills, poverty reduction is more relevant than ever. Multi-Party Computation can help implementing authorities to get in touch with members of the general public who are entitled to additional support.

Insights needed for poverty reduction in the Netherlands

The August estimate by the Netherlands Bureau for Economic Policy Analysis (CPB) shows that the total number of poor people will rise from over 1.1 million (6.7% of the population) in 2022 to almost 1.3 million (7.5%) next year. With measures such as the energy cap and increases in minimum wage and benefits, the government hopes to protect a growing group of vulnerable households.

Effective poverty policies require a better understanding of the many dimensions of poverty. Kerstel Nijland, project manager at the Social Insurance Bank (SVB): ‘Poverty is not only related to lack of financial resources; it also has a dimension related to well-being, health, and inequality of opportunity. This makes poverty an important indicator of both quality of life and quality of society. Preventing and fighting poverty is therefore more than just a matter of more money.’

For an implementing organisation like the SVB, it is important to be able to take into account and understand these dimensions in its implementation. Data analysis by municipalities and implementing authorities can help to recognise signals in time, make referrals, and provide tailor-made services. Technology can help obtain these insights. But how do you ensure that citizens' privacy is safeguarded?

Solution to the data paradox

New technologies such as Multi-Party Computation (MPC) offer a solution. Alex Sangers, Project Manager Privacy Enhancing Technologies at TNO, explains how it works: ‘If you are trying to identify a particular target group, you would prefer to access a lot of data to recognise that target group. At the same time, you want to share and use as little data as possible.

MPC helps with this paradox. It allows you to extract insights from data without having to access the data yourself. This technology uses advanced cryptography, which is normally used for storing or sending data securely. MPC involves using cryptography to securely encrypt data being processed. During that process, the data is not accessible.’

MPC assists senior citizens

But how can Multi-Party Computation contribute to poverty reduction in a concrete way? To find out, TNO will work with the SVB and the Employee Insurance Agency (UWV) to set up an initial pilot for the Supplementary Provision of Income for the Elderly (Aanvullende Inkomensvoorziening Ouderen, AIO).

This scheme is designed for elderly people who do not have enough income or assets to make ends meet. For example, they have not accumulated sufficient state pension because they came to live in the Netherlands at a later age. If their family income is below the income threshold, they are entitled to AIO.

Kerstel Nijland: ‘In that case, the AIO supplements the state pension benefit up to social assistance level, making it an important tool to protect this target group from debt and poverty. A substantial group, estimated at around 30%, are not yet using the scheme, but the SVB is not allowed to simply enquire about family income.’

Technology with great potential

This is where MPC offers a solution, explains Alex Sangers: ‘This technology allows us to process data securely without having to access it, enabling us to see exactly who may be entitled to AIO.’

Multi-Party Computation technology could eventually mean a big difference for many elderly people balancing on the poverty line.

Kerstel Nijland: ‘The AIO scheme does not apply retroactively. So, if you have a gap in your state pension, you could potentially miss out on income for an extended period. The AIO pilot makes it clear that the potential of MPC in poverty reduction is great, as several schemes have to be applied for by the person in question. For example, the supplementary student grant to which some young people are entitled.’

Future with MPC for more proactive services

Finally, what are the wishes and expectations for the future of MPC? Alex Sangers: ‘My hope for this technology is that it will enable the government to make a tangible social contribution by designing its services to be more proactive and providing the general public with more customised services.’

Kerstel Nijland: ‘I fully concur with that, with the caveat that technology should never be the goal in itself. That's why we are also using this pilot to scrutinise our process and better understand why people have not yet taken advantage of the scheme. What is the underlying problem?’

Alex Sangers: ‘Agreed, you should only use this technology where it’s needed. On the other hand, as we gain more experience with MPC, it is also becoming more accessible and usable.’

Want to learn more?

Read the 12 frequently asked questions on poverty reduction using technology.