Drawing the optimal monetary poverty lines based on empirical data: an application to Spain

This study incorporates revealed severe material deprivation in the determination of the at-risk-of monetary poverty lines from the perspective of equivalent income. In this way, two poverty perspectives which were previously seen as independent, and to some extent mutually exclusive, are brought together. A harmonized procedure based on receiver operating curves to determine the percentage p in relation to the median is applied; this percentage determines whether or not a person is at-risk-of poverty − 60% in the EU but 50% in the UN and OECD. In these two cases the percentage is always constant in all countries over the time by convention. Unlike the classical approach, our study identifies different thresholds for each reality (space and time), that are checked firstly using criteria for sensitivity, specificity, accuracy and the predictive values, secondly, by correlation between the improved indicator and the severe material deprivation rate, and finally, using an exogenous contrast variable.