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Material deprivation and household income levels across countries
While there is little relationship between rates of material deprivation and relative poverty rates across the EU, there is a relationship between rates of deprivation and the average level of household income. In general, the proportion of people who are materially deprived on this measure varies inversely with the median level of household income in the country. The most prosperous country in these terms, Luxembourg, therefore, has the smallest proportion of people who are materially deprived, while the two countries with the lowest level of income, Bulgaria and Romania, have the largest proportions. Moreover, the relationship seems to be an exponential one, in the sense that the rate of material deprivation tends to rise faster as the level of income declines (Figure 2).
Figure 2: Relationship between median household income and the proportion of the population materially deprived, 2008 income year
It should be noted that three countries with above-average levels of disposable income have rates of material deprivation significantly below what would be expected, given the average relationship between the two. These are Denmark, Finland and Sweden, all of which have a well-developed social support system, which - to a greater extent than in other countries - provides universal access to essential services either free of charge or at a heavily subsidised rate. Such benefits in kind (services) are not included as part of income as usually defined (and as defined here), even though they mean that people in these countries have more to spend on other things than people in other countries. Income as measured, therefore, tends to understate the purchasing power that people have in the three countries concerned, relative to elsewhere, and this is reflected in the rates of material deprivation which are, accordingly, reduced as a result.
