Poverty in the Enlarged European Union. A Discussion about Definitions and Reference Groups

The enlargement of the European Union (EU) has stirred discussion about the relevance of the traditional EU poverty indicator which measures poverty in relative and national terms. As a result of diverging living conditions of the poor in the old and new member states, some authors have argued in favour of alternative poverty measures. One line of thought is that the reference groups people use for evaluating their living standard have Europeanised and that a poverty measure should incorporate this evolution. Bowing on the rich literature on the conceptualisation of poverty and reference group theory, we argue that a distinction must be made between privately oriented reference groups and publicly oriented reference groups. Although research has mainly focused on the former type of reference groups, only the latter offers a norm to define the poverty threshold. We conclude with a research proposal to construct poverty lines driven by publicly oriented reference groups.