Summary - The SCP method for measuring poverty

Original title: De SCP-methode voor het meten van armoede

SCP has been using its current method for measuring poverty since 2007. To ensure the quality of the data, the poverty threshold is periodically recalibrated and the method used to measure poverty reviewed and adjusted where necessary. This report describes the second such recalibration and review. The recalibration has led to a higher poverty threshold: according to the ‘modest but adequate’ criterion, the threshold for a single person in 2017 now stands at 1,135 euros per month. The review has led to a number of changes in the way disposable income is calculated. In addition to the recent review of the income statistics published by CBS, these changes include a different treatment of rent benefit, a clearer reflection of differences in people’s non-reimbursed medical expenses and the deduction of net childcare costs from income. The cumulative net effect of the recalibration and review on measured poverty in 2014 is negative: according to the modest but adequate criterion, the reported poverty rate falls from 7.6% to 7.0%. Although the recalibration and review have a downward effect on the measured poverty rate, they have no significant impact on the trend over time. After carrying out the review, the measured poverty rate continues to fall after 2013 thanks to the improving economy. The most recent figures available date from 2016; according to the modest but adequate criterion, the number of people living in poverty in the Netherlands in that year was just over 980,000 (6.0%). To supplement these figures, SCP also intends to report on poverty rates which take people’s assets and liabilities into account in addition to their income. Finally, as part of this recalibration and review, the possibilities were explored for reporting different poverty criteria in addition to the percentage of people in poverty and the median shortfall.