# EU statistics on income and living conditions (EU-SILC) methodology - Europe 2020 target on poverty and social exclusion

This article is part of a set of articles describing the methodology applied for the computation of the statistical indicator pertinent to the subject area of Europe 2020 target on poverty and social exclusion (ilc_peps) within the overall domain of Income and living conditions. For this statistical indicator, namely people at risk of poverty or social exclusion, the article provides a methodological and practical framework of reference. Moreover, since the statistical indicator is of multidimensional structure and can be analysed simultaneously along several dimensions, the separate datasets providing this indicator along with different combinations of dimensions are also presented.

### Statistical population

The statistical population consists of all persons living in private households. Persons living in collective households and in institutions are generally excluded from the target population.

However, the indicator covers subsets of population when presented along with different dimensions. More specifically, it covers the population aged 18 and over when broken down by the following dimensions: level of education, broad group of citizenship, broad group of country of birth.

Specifically when broken down by most frequent activity status, it refers to the population aged 18 and over living in private households, excluding those with less than 7 months declared in the calendar of activities.

Additionally, when calculated for children (i.e. children at risk of poverty or social exclusion), it refers to the population aged 0 to 17 living in private households.

In any case, people with missing values for equivalised income and for any of the different dimensions that the indicator is presented, are excluded from the calculation.

### Reference period

The indicator is collected and disseminated on an annual basis and refers to the survey year.

The reference period for all dimensions along with the indicators is disseminated as well as variables related to the materially deprived items in question is the survey year, except for age, income, variables on arrears, work intensity of the household, country of birth and activity status. As far as age is concerned, it refers to the age of the respondent at the end of the income reference period. For income, the income reference period is a fixed 12-month period (such as the previous calendar or tax year) for all countries except the United Kingdom, for which the income reference period is the current year, and Ireland, for which the survey is continuous and income is collected for the last twelve months. Variables on arrears refer to the last 12 months, while work intensity of the household refers to the number of months that all working age household members have been working during the income reference year. For activity status, the reference year is the year previous to survey year and for the country of birth is constant.

### Unit of measurement

The number of persons at risk of poverty or social exclusion (in thousands) is provided. The indicator is also made available as a percentage of total population.

### Dimensions

Each dataset provides the indicator along with the Geopolitical entity and time dimensions and the dimensions listed below:

The indicator is broken down in the following dimension, when calculated for children (i.e. children at risk of poverty or social exclusion):

### Calculation method

At-risk-of-poverty or social exclusion rate (AROPE) presented along with the dimensions (k) $(AROPE_{at\_k})$ is calculated as the percentage of people (or thousands of people) in each k dimension who are at-risk-of-poverty (EQ_INC20<ARPT60) or severely deprived (SEV_DEP) or living in a household with very low work intensity (WI<0.2) over the total population in that dimension.

The weight variable used is the Adjusted Cross Sectional Weight (RB050a).

$AROPE_{at\_k}=\frac{\sum\limits_{i=j\_at\_k}\;RB050a_{i}}{\sum\limits_{i\_at\_k}\;RB050a_{i}}\times 100$

$AROPE_{at\_k}=\frac{\sum\limits_{i=j\_at\_k}\;RB050a_{i}}{1000}$

where j denotes the population, or subset of population, who is at risk of poverty (EQ_INC20<ARPT60) or severely deprived (SEV_DEP) or living in a household with very low work intensity (WI<0.2).

With regard to the calculation of the indicators, the following methodological issues should taken into consideration:

• Unless specified, at-risk-of-poverty rates are assumed to be ‘after social transfers’ (i.e. they include social benefits such as pensions and unemployment benefits).
• Unless specified, at-risk-of-poverty rates relate to the at-risk-of-poverty threshold that is calculated for the total population of a member state at 60 % median equivalised disposable income level. The severe deprivation threshold is set  to four and the very low work intensity threshold is 20 %. The choice of these cut-off thresholds is arbitrary; Eurostat calculates a range of complementary poverty rates according to different thresholds.
• Income poverty risk at a given point in time may not necessarily imply low living standards in the short term, for example if the persons at risk have access to savings, to credit, to private insurance, tax credits, to financial assistance from friends and relatives etc. In particular, the cumulative impact of extended periods at risk is to be further assessed.
• Measuring incomes at the level of private households may have certain implications. The exclusion of collective households might lead to an underrepresentation of certain groups (e.g. the elderly, persons with disabilities).

Moreover, there are some methodological limitations that pertain to the following dimensions accompanying the indicator: Age, Activity status, Citizenship, Country of birth, Degree of urbanisation, Educational level, Highest educational level of parents, Household type, NUTS region, Tenure status.

### Main concepts used

Additional information for the computation of relevant indicators to the subject area of Europe 2020 target on poverty and social exclusion can be found below.

### SAS program files

SAS programming routines developed for the computation of the EU-SILC datasets providing the Europe 2020 target on poverty and social exclusion along with the different dimensions are listed below.

Dataset SAS program file
People at risk of poverty or social exclusion by age and sex (ilc_peps01) peps01.sas
People at risk of poverty or social exclusion by most frequent activity status (population aged 18 and over) (ilc_peps02) peps02.sas
People at risk of poverty or social exclusion by quintile and household type (ilc_peps03) peps03.sas
People at risk of poverty or social exclusion by educational attainment level (population aged 18 and over) (ilc_peps04) peps04.sas
People at risk of poverty or social exclusion by broad group of citizenship (population aged 18 and over) (ilc_peps05) peps05.sas
People at risk of poverty or social exclusion by broad group of country of birth (population aged 18 and over) (ilc_peps06) peps06.sas
People at-risk-of poverty or social exclusion by tenure status (ilc_peps07) peps07.sas
People at risk of poverty or social exclusion by NUTS region (ilc_peps11) peps11.sas
People at risk of poverty or social exclusion by degree of urbanisation (ilc_peps13) _peps13.sas
Children at risk of poverty or social exclusion by educational attainment level of their parents (population aged 0 to 17 years)(ilc_peps60) peps60.sas
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