Measuring poverty in the EU

Observed patterns of poverty in Europe are strongly affected by the way they are measured, says a new paper from an EU-funded research project. The authors look at different poverty measures, including those applied in the EU's social strategy, and how they affect the results derived for poverty between 2005 and 2009.

Key points

  • Three key issues need to be addressed: determining how to measure individual well-being; establishing a cut-off value or threshold under which people are considered to be poor; and deciding how to build up a poverty figure for society as a whole.
  • The EU's 'at-risk-of-poverty' measure reflects one answer to these three questions. Although the measure is easy to interpret and communicate, it should be used with care. As a policy target, it provides incentives to focus on the richest among those in poverty.
  • The at-risk-of-poverty measure can also show a decrease in poverty in a situation where a deterioration in living standards specifically affects the median of the distribution.
  • Rather than relying on a single poverty indicator, the paper concludes, a broad portfolio of poverty measures should be used, along with robustness and sensitivity checks.
  • Some recent progress has been made on poverty measurement by using multi-dimensional techniques that encompass a wide range of factors.
  • Further improvements in the EU Statistics on Income and Living Conditions (EU-SILC) will help to improve the measurement and understanding of European poverty – such as broadening the portfolio of indicators of human well-being (expenditures, objective health characteristics, subjective well-being and life satisfaction) and larger sample sizes.

Source: Koen Decancq, Tim Goedeme, Karel Van den Bosch and Josefine Vanhille, The Evolution of Poverty in the European Union: Concepts, Measurement and Data, ImPRovE Methodological Paper 13/01, Poverty Reduction in Europe: Social Policy and Innovation (Amsterdam)