Measurement of absolute poverty in Italy: an empirical analysis

Abstract

Absolute poverty is a socio-economic measure based on the monetary evaluation of a basket of goods and services, considered essential to avoid serious forms of social exclusion. Absolute poverty has been estimated in Italy since 2005 by the Italian Institute of Statistics, with reference to household consumption, using data from the Household Budget Survey (HBS), comparing the expenditure of Italian households with the absolute poverty thresholds. The reference unit is the household, considered in relation to the characteristics of the individual components, their specific needs (nutritional, for instance) and any scale or forms of savings that can be achieved when the family composition varies. Essential needs have been identified in adequate nutrition, in the availability of a dwelling - equipped with necessary goods and services according to the needs of the household - and in the minimum necessary to dress, communicate, get informed, move in the territory, educate and maintain good health. Consequently, the basket is composed of three macro components - food, housing, residual - whose monetary valuation was not carried out at the absolute minimum price, but at the minimum price accessible to all households taking into account the different distribution channels. The monetary value of the total basket was obtained from direct sum of the various components and corresponds to the household absolute poverty threshold. Monthly expenditure used to purchase goods and services exclusively devoted to meet the households needs (including presents purchased), is compared with the value of the poverty threshold, in order to classify a household as absolutely poor or non-poor. After a methodological revision in 2022, the poverty threshold is now defined by the combination of the household type, the region and the municipality of residence. As a consequence, it is possible to identify as many absolute poverty lines as many combinations exist between the elements mentioned before. The methodology revision has allowed the release of more punctual data, capturing the heterogeneity of the expenditure for the different household types in the different areas/territories of the Country. Then, in this paper we briefly show the main changes in the methodology for the measurement of absolute poverty and we present some descriptive analysis on the poverty thresholds calculated for the period of 2014-2022.