LISER proposed a new indicator which has been endorsed at the EU level: Material and social deprivation rate

Material and social deprivation is an alternative measure of poverty, based on the material and social living conditions of households and not directly on their income. While 15% of Luxembourgers are income poor, 5% suffer from material and social deprivation.

Indicator created by LISER and adopted at the European level

After a thorough robustness analysis of all the material deprivation items available in the EU-SILC survey, LISER’s researchers (in collaboration with Bristol University) have identified an optimal set of 13 deprivation items (seven household items and six adult items) to replace the current set of items used so far for measuring “standard” material deprivation in the EU. This revised indicator was endorsed at the EU level in March 2017 and will now be used in all EU countries.

Luxembourg is ranked third, behind Sweden and Finland

In 2015, 5% of the Luxembourg population suffered from material and social deprivation, i.e. one of the best performances in the EU league. This indicator shows the large diversity of living conditions in the EU: indeed, one out of two people in Bulgaria lack at least 5 out of the 13 retained items, whereas in Sweden this proportion reaches only 2%.

Since 2000, EU cooperation in the field of social policy has been organised around a set of key objectives commonly agreed by all Member States and the European Commission. In order to monitor progress towards these EU social objectives, EU Heads of State and Government endorsed a number of EU social indicators. One of these commonly agreed indicators is the “standard” material deprivation (MD) indicator, endorsed in 2009 on the basis of the work of one of LISER’s researchers (Guio (2009)) and computed from nine items. Since June 2010, the importance of MD indicators has grown significantly as a result of the adoption of the “Europe 2020 Strategy” on smart, sustainable and inclusive growth, with its five “headline targets” to be achieved by 2020. In the context of this strategy, a measure of “severe” MD based on the same 9-item list was adopted in 2010.

The main limitations of the “standard” and “severe” MD indicators are the small number of items (nine) on which they rely and the weak reliability of some of these items. Guio, Gordon and Marlier (Guio et al, 2012) and Guio et al (forthcoming) analysed the robustness of all MD items available in the EU-SILC survey (including new items collected via an ad-hoc module) and identified an optimal set of 13 deprivation items - six are already part of the current 9-item EU MD indicators and seven are new but are now included in the core questionnaire of EU-SILC.

These items are the inability for a household to:

1. face unexpected expenses;
2. afford a one week annual holiday away from home;
3. avoid arrears (in mortgage or rent, utility bills or hire purchase instalments);
4. afford a meal with meat, chicken or fish every second day;
5. afford keeping the home adequately warm; and
6. have access to a car/van for personal use.
7. replace worn-out furniture.

And the inability for a person to:

1. replace worn-out clothes with some new ones;
2. have two pairs of properly fitting shoes;
3. spend a small amount of money each week on him/herself;
4. have regular leisure activities;
5. get together with friends/family for a drink/meal at least monthly;
6. have an internet connection.

Compared with the 9-item MD indicator adopted in 2009, the new indicator also includes items related to social activities (leisure, internet, get together with friends/family, pocket money). It is therefore rather a measure of “material and social deprivation”. Since March 2017, this new indicator replaces the “standard” MD indicator adopted in 2009.

The figure presents for each EU country the proportion of people lacking at least five items out of the 13 above items. Material and social deprivation was suffered by 5% of the population in Luxembourg. In international comparisons, the figure shows that Luxembourg is one of the best performers in the EU.

These good results contrast with the Luxembourgish performances with respect to income poverty. Indeed, more than 15% of the total population in Luxembourg is income poor, i.e. live in a household whose income is lower than 60% of the median national income (21.200 euros/year for a single person in 2015). The income poverty approach at the EU level is relative, i.e. the threshold varies with the national median income. The deprivation approach is more absolute and the set of items is common to all countries. Although both approaches are closely linked, they are complementary. There may be situations where poor people manage to avoid deprivation due to a high general standard of living in the country, high in-kind social benefits and available savings. Conversely, there are situations where non-poor people suffer from deprivation due to high personal costs (housing, education, mobility, health) or accumulated debt.

References:

Guio, A.-C., Gordon, D., Najera, H. and Pomati, M. (forthcoming), “Revising the EU material deprivation variables”, Eurostat Methodologies and Working Papers. Luxembourg: Office for Official Publications of the European Communities (OPOCE).

Guio, A.-C., Gordon, D. and Marlier, E. (2012) ‘Measuring Material Deprivation in the EU: Indicators for the Whole Population and Child-Specific Indicators’, Eurostat Methodologies and Working Papers. Luxembourg: Office for Official Publications of the European Communities (OPOCE).

Guio, A.-C. (2009). 'What can be learned from deprivation indicators in Europe?', Eurostat Methodologies and Working Papers. Luxembourg: Office for Official Publications of the European Communities (OPOCE).