A new poverty measure for Europe

Researchers in Dublin have proposed a novel ‘multi-dimensional’ way to measure poverty in European countries. They say this approach offers more consistent results than using income poverty alone and improves on the ‘ad hoc’ basis used by the European Union for setting its poverty reduction target. The researchers base their analysis on newly available household data from the 2009 round of European Union Statistics on Income and Living Standards (EU-SILC). They identify four dimensions of poverty, apart from the conventional relative income poverty measure. They then define as multi-dimensionally poor those individuals who are above a specified threshold on at least two dimensions out of the four – in contrast to other approaches that count those above the threshold in either just one dimension or in all dimensions. In addition, they adopt an ‘adjusted headcount’ technique that excludes data relating to households that are not deprived. The four deprivation dimensions used are:

  • Basic deprivation: enforced absence of items such as a meal, clothes/shoes, a leisure activity, a holiday and adequate home heating.
  • Consumption deprivation: comprising three items relating to a personal computer, an internet connection and a car.
  • Health: captured by self-assessed health status, restrictions on current activity and the presence of a chronic illness.
  • Neighbourhood environment: the quality of the neighbourhood as reflected in reported levels of litter, damaged public amenities, pollution, crime/violence/vandalism and noise.

Key results

  • The multi-dimensional approach reveals systematic variation across countries, associated with national average income levels. In the less affluent countries basic and consumption deprivation play a more prominent role, while in their more affluent counterparts relative income poverty and health are key.
  • The basic deprivation dimension shows the highest correlations with national and household income, the remaining deprivation dimensions, and economic stress.
  • Multi-dimensional poverty varies systematically by socio-economic group. The impact of key factors such as social class, education, labour force status and age are significantly stronger in low-income countries.

The researchers point out that, in setting a poverty reduction target for 2020, the European Union has adopted an approach combining three indicators (relative income poverty, material deprivation and household joblessness). They argue, however, that a more structured approach using a multi-dimensional analysis would have clear advantages.

Source: Christopher Whelan, Brian Nolan and Bertrand Maître, Multidimensional Poverty Measurement in Europe: An Application of the Adjusted Headcount Approach, WP2012/11, Geary Institute, University College Dublin

Link: Paper