What Does It Mean To Live on the Poverty Threshold? Lessons From Reference Budgets

Tim Goedemé, Tess Penne, Tine Hufkens, Alexandros Karakitsios, Anikó Bernát, Bori Simonovits, Elena Carillo Alvarez, Eleni Kanavitsa, Irene Cussó Parcerisas, Jordi Riera Romaní, Lauri Mäkinen, Manos Matsaganis, Marco Arlotti, Marianna Kopasz, Péter Szivós, Veli-Matti Ritakallio, Yuri Kazepov, Karel Van den Bosch and Bérénice Storms

No 1707, Working Papers from Herman Deleeck Centre for Social Policy, University of Antwerp

Abstract: Over the past 20 years the use of the at-risk-of-poverty threshold has become increasingly widespread. However, as is well known, the indicator builds on a number of assumptions and simplifications that have given rise to several criticisms. In this paper we illustrate how reference budgets can help to ‘contextualise’ the weaknesses of the at-risk-of-poverty threshold by generating more insight into the kind of living standard that can be afforded with an income at the level of the threshold in different countries. This provides essential background information for those using the indicator. More in particular, we make use of the first effort to construct cross-country comparable reference budgets in Europe to show what the strong cross-national differences in living standards imply in practice for the adequacy of incomes at the level of the at-risk-of-poverty threshold. The budgets show that in the poorest EU Member States, even adequate food and housing are barely affordable at the level of the threshold, whereas a decent living standard is much more in reach for those living on the threshold in the richer EU Member States. The reference budgets also suggest that the poverty risk of some groups (for instance children) is underestimated relative to that of other age groups, while the poverty risk of homeowners is probably relatively overestimated.

Date: 2017-04
New Economics Papers: this item is included in nep-agr and nep-eur
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Citations: View citations in EconPapers (11)

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