Risk of poverty

The income method is the most widely used method of measuring the risk of poverty and making international comparisons.

Calculation of risk of poverty

It is based on a calculation of disposable household income as an indicator of the household’s level of welfare. Traditionally, the Nordic countries have based these comparisons on 50 per cent of the median equivalent disposable income, whereas the EU’s analyses traditionally have been based on 60 per cent.

Measuring the risk of poverty by means of the income method has its challenges. The main finding is that some families have lower incomes than others. However, this does not indicate whether families living below the poverty–risk level has a reasonable standard of living, nor does the calculation take into account the value of debt and property.

Identifying groups in society

Identifying families in risk of poverty in the Nordic countries is an effective way of identifying vulnerable groups of families that are eligible for financial support. With a few exceptions, the number of families in risk of poverty is lower than the EU average among all family groups.

The risk of poverty is generally higher for single people compared to couples. All Nordic countries have a relatively small number of households consisting of couples with a low income.