The policy relevance of cross-nationally comparable reference budgets in Europe Tess Penne, Tim Goedemé, Bérénice Storms Herman Deleeck Centre for Social Policy University of Antwerp YERUN, Brussels, 7 November 2017

Human dignity is inviolable. It must be respected and protected. (Article 1, Charter of Fundamental Rights of the European Union) Article 1 of the EU charter of fundamental rights: “human dignity…”

What do we need to live a life in human dignity?

Need for a benchmark …that can be used by many NGOs, judges, social policy makers, organisations To evaluate living situations in relation to human dignity To identify priorities, to know how to move forward Role for scientists Bringing together existing knowledge Assessing a more robust, objective benchmark of what a decent income means

What are reference budgets? Reference budgets (RBs) = priced baskets of goods and services that illustrate what specific household types need at the minimum in order to participate adequately in society Exist in nearly all EU Member states using different methods for a variety of purposes => Not comparable across countries ImPRovE project: first attempt for cross-country comparable budgets (theory, methods, results) Aim: Substantive comparability: needs are satisfied at a similar level and sensitive to the national context

What are reference budgets? Common theoretical and methodological framework – specific household types Start from the same list of goods and services Adaptations to the national context (quantity, quality, life span): Various information sources (mixed-method) Limited to cross-national variations in institutional context; climate and geographical conditions; culture; and in the availability and price of goods and services Common pricing procedure Goedemé, T., et al (2015). Towards cross-country comparable reference budgets in Europe: First results of a concerted effort. European Journal of Social Security, 17(1): 3-30

Why comparable reference budgets? Facilitate the Commission’s task of monitoring and assessing the adequacy of income support in Europe Facilitate mutual learning and identification of best practices in the fight against poverty Contextualise other social indicators, and policies

Illustration: policy use of comparable RBs

Conclusion Even though with non-negligible limitations… ... comparable reference budgets can provide important additional and policy-relevant information

Thank you for your attention! tess.penne@uantwerpen.be referencebudgets.eu

What are reference budgets: household types single/couple without and with 1 or 2 children children of primary and secondary school-age good health, well-informed, normal competences big city (Antwerp, Athens, Barcelona, Budapest, Helsinki, Milan) Assumptions because needs vary largely across households + We choose to focus on MINIMAL needs, of course many families who are not in a good health,.. Will need more. We look for the bottom line under which no one can go

Illustration: policy use of comparable RBs Goedemé, T., Penne, T., et al. (2017), What does it mean to live on the poverty threshold? Lessons from reference budget research, CSB Working Paper series.

Illustration: policy use of comparable RBs Penne, et al. (forthcoming) To what extent do welfare states compensate for the cost of raising teenagers? A hypothetical household approach to policy evaluations.

Illustration: policy use of comparable RBs Note: 95% confidence intervals, sample design taken into account We show the number of people with a net disposable income below the threshold for Belgium, Finland and Spain; and how this compares to the usual poverty estimates on the basis of the at-risk-of-poverty indicator. The figure is diversified according to different age groups (<18y, 18-65y, >65y). Estimations are based on representative income data available in the EU-SILC for the year 2012, restricting the sample to densely populated areas (given that the reference budgets were developed for large cities). Poverty thresholds based on reference budgets reflect policy efforts on affordability essential goods and services (housing policy!) RBs and AROP: Differing variation in distribution of poverty among social groups overall poverty rates increase in Spain compared to the at-risk-of-poverty rate, while they decrease slightly or remain constant in Belgium and Finland. Indeed, as already illustrated in the previous section, the at-risk-of-poverty threshold does not represent the same level of living standard across different EU member states. Looking at differences across age groups, we can generally say that young people are relatively worse off when poverty is measured with the reference budget indicator compared to the at-risk-of-poverty rate. In Belgium and Finland at-risk-of-poverty rates are significantly higher for elderly, resulting in an (almost) reverse picture compared to the RB indicator. This is most likely primarily the result of taking housing costs into account: many elderly have a relatively low income (at least in Belgium and Finland), but at the same time they have a higher likelihood of low housing costs due to full ownership of the house. As a result, they do rather poorly when housing costs are ignored, and relatively well if housing costs are taken into account for everyone. Penne, T., Cussó Parcerisas, I., Mäkinen, L., Storms, B. & Goedemé, T. (2016). Can reference budgets be used as a poverty line? ImPRovE Working Papers N°16/05.

Illustration: policy use of comparable RBs

Illustration: policy use of comparable RBs