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Methodological explanation for the news release:


Laeken poverty indicators


Definitions

Equivalent household size:
In order to reflect differences in household size and composition, the income figures are given per equivalent adult.
This means that the total household income is divided by its equivalent size using the so-called modified OECD equivalence scale, which gives a weight of:
- 1.0 to the first adult;
- 0.5 to any other household member aged 14 or over;
- 0.3 to each child below age 14.

At-risk-of-poverty threshold:
Referred to as the at-risk-of-poverty line. This is equivalent to 60 percent of the median national equivalised income of the persons living in households.

At-risk-of-poverty rate:
This indicator reflects the percentage of persons with an equivalised disposable income below the at-risk-of-poverty threshold.
The “at-risk-of-poverty rate before social transfers” shows the percentage of persons with an equivalised disposable income before social transfers excluding also old-age benefits below the “at-risk-of-poverty threshold”.

Most frequent activity status:
The most frequent activity status is defined as the status that individuals declare to have occupied for more than half the number of months in the income reference year. The most frequent activity status groups are employment, unemployment, retirement and other inactive persons.

S80/S20 ratio:
The ratio between the sums of the highest and lowest 20 percent equivalised incomes of persons within the households.

Gini coefficient:
The Gini coefficient measures the inequality among values of a frequency distribution of income. In theory, the Gini coefficient of zero expresses perfect equality of income distribution, (for example, where everyone has the same income), while the Gini coefficient of one (or 100%) expresses maximal inequality among values (for example, where only one person has all the income).

Households with very low work intensity:
For each household the work intensity is calculated by dividing the sum of all the months actually worked by the working age members of the household (i.e. persons aged 18-59 who do not fall under the definition of dependant children), by the sum of the workable months in the household – i.e., number of months that could theoretically be worked within the household. Individuals are classified into work intensity categories that range from WI=0 (jobless household) to WI=1 (full work intensity, i.e. all working age household members worked during the income reference year). Work intensity equal or inferior to 0.20 is considered as very low.

Severe material deprivation rate:
The severe material deprivation rate is defined as the percentage of the population with an enforced lack of at least four out of nine material deprivation items in the “economic strain and durables” dimension. The nine items considered are: 1) arrears on mortgage or rent payments, utility bills, hire purchase instalments or other loan payments; 2) capacity to afford paying for one week's annual holiday away from home; 3) capacity to afford a meal with meat, chicken, fish (or vegetarian equivalent) every second day; 4) capacity to face unexpected financial expenses; 5) household cannot afford a telephone (including mobile phone); 6) household cannot afford a colour TV; 7) household cannot afford a washing machine; 8) household cannot afford a car and 9) ability of the household to pay for keeping its home adequately warm.

People at-risk-of-poverty rate or social exclusion, (AROPE) indicator:
This indicator reflects the share of the population, which is either at risk of poverty, or severely materially deprived or lives in a household with very low work intensity.



Last updated: 03.01.2014


   

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