Different Methods, Different Standards? A Comparison of Two Finnish Reference Budgets

According to Principle 14 of the European Pillar of Social Rights, everyone should have the right to adequate minimum income benefits that ensure a life in dignity. Reference budgets have been proposed to monitor this principle. Reference budgets are priced baskets of goods and services that represent a given living standard. At the moment, no common methodology for constructing reference budgets exists; instead, different methods are used to construct them. This study sought to compare the approaches and results of two Finnish reference budgets: one created by the Centre for Consumer Society Research (CCSR), and the second by the ImPRovE project. The purpose of the article is to respond to a gap in existing literature around how different methods for constructing reference budgets impact their outcomes. The two reference budgets offer a strong basis for comparison because they both sought to capture the same living standard in the same context for similar household types (single woman, single man, heterosexual couple, and heterosexual couple with two children), while using different approaches. The results suggest that the two reference budgets arrive at different estimates of what is needed for social participation. Ultimately, we found that the most significant differences between the budgets were housing and mobility costs for the couple with two children due to differences in information bases, selection criteria, evaluators, and pricing. The study makes a significant contribution to the literature because it is one of the first to explore how different approaches to constructing reference budgets affect their outcomes. The results suggest that clear criteria for constructing reference budgets are needed to monitor Principle 14 of the European Pillar of Social Rights.

Estimating the Cost of the Spanish Sustainable Food Basket through the Reference Budgets Approach

Reference budgets (RB) are illustrative priced baskets containing the minimum goods and services necessary for well-described types of families to have adequate social participation. Cross-country comparable food RB with the minimum cost were previously developed in 26 EU countries. However, sustainability was not considered. The aim of this paper is to present the development of healthy and sustainable food baskets for Spanish adults. This work follows the steps proposed in previous European projects to build RB: (1) revision of guidelines on healthy and sustainable eating and expert consultations, (2) translation into a concrete list of foods, (3) pricing. The results indicate that a sustainable diet can be cheaper than current recommendations when only the dietary content is considered, representing monthly savings of about EUR 7.27. This is mainly explained by the shift towards more plant-based proteins. Adding constraints on origin, packaging and seasonality increases the overall cost of the food basket by EUR 12.22/month compared with current recommendations. The Spanish Sustainable Food Reference Budget illustrates the cost of applying different criteria to improve dietary sustainability in the Spanish context, and can be useful to support the ecological transition, since providing different levels of adherence to a sustainable dietary pattern can ease its access across socioeconomic groups.

The steep and winding road to comparable reference budgets in Europe

This chapter discusses Tim Goedemé's cross-national research work in order to establish reference budgets for EU member states and facilitate the European Commission's (EC) task of monitoring income adequacy in Europe. It focuses on the “Improving Poverty Reduction in Europe” (ImPRovE) project that worked closely with six country teams based in Antwerp, Athens, Barcelona, Budapest, Helsinki and Milan. It also looks into the development of more comprehensive reference budgets that span all expenditures needs in both food and non-food. The chapter reflects on the key lessons and contributions from the ImPRovE project and discusses some of the issues on establishing a common language and “standardized” approach. It suggests how approaches on reference budgets strengthen EU social protection systems and social indicators and provide new sociological insights into European societies and public attitudes.

The Slovenian experience with three methods for defining the minimum income

This chapter examines the Slovenian experience with three methods for defining minimum income standards. It suggests that all three approaches were expert-led, normative, and were intended to cover “basic needs.” It also talks about the approach on developing basic needs for reference budgets from the late 1970s and early 1980s, which was based on expert deliberations and analysis of family expenditure surveys that indicate consumptions patterns. The chapter explains how the food basket was determined by nutrition experts while a normative approach was adopted for heating and lighting, clothing and footwear, home appliances and furniture, and leisure. It discusses the “food-share” method, which is based on the cost calculations for a minimal diet with a proportion added for other non-food necessities.

Minimum budgets for Danish families

This chapter reports on minimum reference budgets for Danish families. It discusses the first versions of the Danish minimum reference budgets that were produced in the 1990s and followed the Low Cost but Acceptable (LCA) approach. It also explains the Danish reference budgets that represent consumption expenditures associated with a modest but still healthy and basic social life for different families and households. The chapter looks into the deliberations of expert groups in order to define the necessary requirements for living a modest but still healthy life, and reference budgets that cover ten different family or household groups. It compares the Danish reference budgets against the Norwegian reference budgets as both follow similar expert-led procedures.

Measuring poverty in the Netherlands: the generalised reference budget approach

This chapter looks into generalised two reference budgets for measuring poverty in the Netherlands. The first, a “basic needs” budget, is based on the expenses that can be regarded as the minimum necessary standard in the Netherlands. The second is a Modest but Adequate (MBA) reference budget, which is more generous and takes into account the minimum cost of recreation and social participation. The chapter clarifies how the both the budgets are first determined for a single household and then derived for other household types by applying equivalence scales. It also explains that the reference budgets are based on the deliberations of experts, informed by administrative data, and national expenditure surveys.