Wednesday, March 11, 2015

Where is the best place to be at-risk-of-poverty?

The at-risk-of-poverty measure defined as 60 per cent of the median income gets a significant amount of attention.  It is a far from perfect measure but useful for what it does – provide relative information on the lower end of the income distribution.


The at-risk-of-poverty measure is limited to disposable income.  However Eurostat provide other measures of the circumstances of people who are in this group.  We will consider ten of these measures across deprivation, durables, economic strain, housing, and environment and combine with two measures of the bottom income quintile on consumption expenditure and unmet health needs to come up with a crude aggregate measure. 

  • Inability to keep home adequately warm
  • Inability to afford a meal with meat, chicken, fish (or vegetarian equivalent) every second day
  • Enforced lack of a computer
  • Enforced lack of a personal car
  • Household overcrowding rate – excluding single-person households
  • Housing cost overburden rate
  • Share of population having neither a bath, nor a shower, nor indoor flushing toilet in their household
  • Share of population living in a dwelling with a leaking roof, damp walls, floors or foundation, or rot in window frames of floor
  • Pollution, grime or other environmental problems
  • Crime, violence or vandalism in the area

The following two measures are not provided for the group who are at-risk-of-poverty but for the first quintile (bottom 20 per cent) of equivalised disposable income.  There is obviously significant overlap between the two groups.

  • Self-reported unmet needs for medical examination (reason: too expensive)
  • Mean consumption expenditure per adult equivalent (in purchasing power standard)

We will take them in pairs.  First ability to keep home adequately warm and ability to afford a meal with meat every second day.  The percentages measure the proportion of people at-risk-of-poverty in each country who experience each measure.


Next we have the enforced lack of a computer and the enforced lack of a personal car.


Next are the household overcrowding rate (definition) and the housing cost overburden rate (definition).


Next we have the proportion living of those at-risk-of-poverty in a dwelling without a bath, shower or flushing toilet and the proportion living in a leaky or damp dwelling.


Finally for the at-risk-of-poverty group we have those living in areas that suffer from grime and those that suffer from crime.


The  final two measures are for the first quintile of equivalised disposable income.  These are self-reported unmet medical examination needs by reason of being too expensive and mean consumption expenditure per equivalised adult.


Data on consumption expenditure is not available by quintile for Luxembourg and Italy.  For the entire population Luxembourg comes first and Italy tenth.  These rankings are used below.

The last thing we’ll do is construct a crude aggregate measure using the above 12 components.  We will assign a score of 1 to the country that fares best under each measure, 2 for the next best, all the way down to 15 for the bottom-ranking country.  The 12 measures across deprivation, housing, economic strain, environment and consumption are equally weighted. Only the ordinal ranking from each measure is used so the composite measure is by no means perfect but it is not without its merits.  The best score is 12 and the worst is 180.

Anyway here is the picture:


So there it is.  The best country in the EU15 in which to be at-risk-of-poverty is Sweden.

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