Financial and Multidimensional Poverty in European Countries: can the former be used as a proxy of the latter?
In recent years, European policy has come to include the fight against poverty and social exclusion. In the context of the Open Method of Coordination, common indicators of poverty were developed. Often, these indicators are a function of household income. In the scientific literature, by contrast, the multidimensional measurement of poverty has taken on a new lease of life. This paper aims at bridging this gap between science and policy. Can the financial measure of poverty be taken as a proxy of a multidimensional measure of poverty? The answer to this question is found in several steps. First of all, an alternative multidimensional measure of poverty is presented and applied to the data of the ECHP of various European countries. Next, the results of this measure are compared with those of financial poverty. More specifically, the causes of multidimensional and financial poverty and those individuals at risk of multidimensional and financial poverty, are compared. The broad conclusions are, first of all, that financial poverty rates often are higher than multidimensional poverty rates. Secondly, the results of both measures of poverty very seldom contradict, so financial poverty can indeed be used as a proxy of multidimensional poverty. However, and that is the third conclusion: the position of some groups in terms of their risk of poverty is underestimated by the financial poverty measure: this is notably the case for those who are single with children, and those with a precarious health situation.
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- Kai-yuen Tsui, 2002. "Multidimensional poverty indices," Social Choice and Welfare, Springer, vol. 19(1), pages 69-93.
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- Bengt Muthén & Anders Christoffersson, 1981. "Simultaneous factor analysis of dichotomous variables in several groups," Psychometrika, Springer, vol. 46(4), pages 407-419, December.
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