Poverty in the enlarged European Union. A discussion about definitions and reference groups

The enlargement of the EU has stirred discussion about the relevance of the traditional EU poverty indicator. This indicator measures poverty in relative and national terms. As a result, the poor in the least wealthy EU member states have very different living conditions from those in more wealthy member states. Consequently, some authors have argued for alternative or additional poverty measures. One line of thought is that the reference groups people use for evaluating their living standard are significantly Europeanised and that a Europeanised poverty measure should incorporate this evolution. With this article, we aim to embed this debate into a proper conceptual framework. Therefore, we first review the literature on poverty definitions, and argue that despite diverging conceptualisations, scholars assume that somehow poverty is a relative concept. Second, we discuss the relevance of reference group theory for conceiving this relativity. We argue that a distinction must be made between privately-oriented reference groups and publicly-oriented reference groups. Only the latter offer a norm to define the minimum acceptable standard of living in society. Hence, poverty researchers should investigate publicly-oriented reference groups. Nevertheless, the discussion has largely focused on privately-oriented reference groups. We conclude that EU-wide research on budget standards in combination with survey-based approaches offer a promising way forward to construct poverty lines driven by publicly-oriented reference groups.