It could be argued that relative income poverty lines were never intended to capture cross-country differences in living standards and that the purely national perspective is entirely consistent with the limiting character of the EC’s social policy remit. However, both the development of a broader EC social policy remit to include a common set of indicators of social exclusion that are monitored through national action plans for social inclusion, and the concerns encapsulated in the regional perspective, point to the need for a consideration of a wider range of indicators of economic and social circumstances 23 .
In this context it seems unlikely that at-risk-of poverty rates that appear to be counter intuitive are likely to be taken seriously, as a basis for evaluating the comparative impact of policy interventions, unless an explicit rationale justifying the basis of such comparison is developed. Similarly, if the promotion of social cohesion is a primary objective, then it would seem necessary to look beyond GDP levels and take into account the distributional concomitants of trends in economic development.
The rationale underlying the use of relative income lines is that those falling more than a certain ‘distance’ below average income are unlikely to be able to participate fully in the life of the community. However, it has been recognised for some time (Ringen 1987, 1988) that low income may be an unreliable indicator of poverty in this sense.. This has been demonstrated in a variety of studies of different industrialised countries employing non-monetary indicators of deprivation. 24 Analysis of data from the ECHP reveals that the degree of overlap between income and an appropriate measure of life-style deprivation ranges from one third to less than a half (Whelan et al 2001).
It is worth teasing out why one might actually expect current income to have serious limitations in capturing poverty. Both the theoretical concepts of resources versus 23
See Atkinson et al (2002) and Ferrera et al (2002) and for more recent discussion based on the European Quality of Life Survey Fahey (forthcoming) Whelan and Maître (forthcoming). 24 These include Townsend (1979), Mack and Lansley (1985), Gordon et al (1995), Gordon et al (2000) and Bradshaw and Finch (2001), Bertoud et al (2004), McKay (2004) with British data, Mayer and Jencks (1988) for the USA, Callan, Nolan and Whelan (1993) and Nolan and Whelan (1996) with Irish data, Muffels (1993) and Muffels and Dirven (1998) with Dutch data, Hallerod (1996) for Sweden, Kangas and Ritakallio (1998) for Finland, Bohnke and Delhey (1999) for Germany, Tsakloglou and Panopoulou (1998) for Greece, Bray (2001) for Australia, and Jensen et al (2002) and Krishnan et al (2002) for New Zealand.
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