Threshold sensitivity of income poverty measures for EU social targets

In 2010, the Europe 2020 strategy set a social inclusion target of reducing the number of people who are AROPE by at least 20 million by 2020 (Frazer et al., 2010; Chapter 1 in this volume). The AROPE indicator counts all people suffering from deprivation in at least one of three dimensions: household income, material endowment and work intensity.
Apart from identifying these relevant dimensions, this indicator has two distinctive features. First, it is a ‘head count’ measure: in each dimension, it relies on the arbitrary choice of a threshold (e.g. 60 % of the median equivalised disposable income) and ignores the severity of individual conditions relative to the threshold (Sen, 1976). Second, it is a ‘union- type multidimensional’ measure: it reflects the spreading of hardship but is insensitive to the number of deprivations suffered by each individual and their cumulative effects (Atkinson, 2003; Aaberge
and Brandolini, 2015).