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

Author

Listed:
  • 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
  • Bérénice Storms
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.

Suggested Citation

  • Tim Goedemé & Tess Penne & Tine Hufkens & Alexandros Karakitsios & Anikó Bernát & Bori Simonovits & Elena Carillo Alvarez & Eleni Kanavitsa & Irene Cussó Parcerisas & Jordi Riera Romaní & Lauri Mäkine, 2017. "What Does It Mean To Live on the Poverty Threshold? Lessons From Reference Budgets," Working Papers 1707, Herman Deleeck Centre for Social Policy, University of Antwerp.
    • Handle: RePEc:hdl:wpaper:1707
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    References listed on IDEAS

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    Cited by:

    1. Tim Goedemé & Tess Penne & Otto Swedrup & Karel Van den Bosch & Bérénice Storms, 2019. "Exploring common ground for defining adequate social participation in 24 EU capital cities," Working Papers 1912, Herman Deleeck Centre for Social Policy, University of Antwerp.
    2. Tine Hufkens & Tim Goedemé & Katrin Gasior & Chrysa Leventi & Kostas Manios & Olga Rastrigina & Pasquale Recchia & Holly Sutherland & Natascha Van Mechelen & Gerlinde Verbist, 2019. "The Hypothetical Household Tool (HHoT) in EUROMOD: a new instrument for comparative research on tax-benefit policies in Europe," International Journal of Microsimulation, International Microsimulation Association, vol. 12(3), pages 68-85.
    3. Bedük, Selçuk, 2018. "Identifying people in poverty: a multidimensional deprivation measure for the EU," SocArXiv 7prxq, Center for Open Science.
    4. Angela Daley & Thesia Garner & Shelley Phipps & Eva Sierminska, 2020. "Differences across countries and time in household expenditure patterns: implications for the estimation of equivalence scales," International Review of Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 734-757, November.
    5. Elena Carrillo-Álvarez & Júlia Muñoz-Martínez & Blanca Salinas-Roca & Irene Cussó-Parcerisas, 2021. "Estimating the Cost of the Spanish Sustainable Food Basket through the Reference Budgets Approach," Sustainability, MDPI, vol. 13(16), pages 1-18, August.
    6. Johanna Greiss & Bea Cantillon & Sarah Marchal & Tess Penne, 2019. "Europe as agent that fills the gaps? The case of FEAD," Working Papers 1903, Herman Deleeck Centre for Social Policy, University of Antwerp.
    7. Tess Penne & Ilse Cornelis & Bérénice Storms, 2020. "All we need is…," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(3), pages 991-1013, February.
    8. Alexandros Karakitsios & Manos Matsaganis, 2018. "Minimum Wage Effects on Poverty and Inequality," DEOS Working Papers 1801, Athens University of Economics and Business.
    9. Sarah Marchal & Linus Sióland, 2019. "A safety net that holds? Tracking minimum income protection adequacy for the elderly, the working and the non-working of active age," Working Papers 1909, Herman Deleeck Centre for Social Policy, University of Antwerp.
    10. Goedemé, Tim & Decerf, Benoit & Van den Bosch, Karel, 2020. "A new poverty indicator for Europe: the extended headcount ratio," INET Oxford Working Papers 2020-26, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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