What is a low income household?

What is a low income household?

Low income definition

The Community framework for action in the fight against social exclusion has made it possible to develop indicators that make it possible to measure inequality in income distribution, poverty rates before and after taking into account social transfers and poverty persistence rates, with a high degree of comparability that make it possible to delimit the progress achieved in this sector in the Member States of the European Union.

The poverty threshold depends on the distribution of income per unit of consumption of individuals, hence the term relative poverty, which takes into account the situation of the population to which one belongs. The poverty threshold is established in euros.

In the 2013 Living Conditions Survey, a new methodology was adopted in the calculation of data relating to household income, combining the information provided by the informant with administrative files. In addition, retrospective income estimates have been made since the 2008 survey and are comparable with the 2020 data.

Low-income housing plan

Economics is a science that incorporates a vast amount of specialized terminology. Terms such as per capita income, GDP, inflation, deficit or minimum wage are concepts that are essential to understand the economic reality of a country. One of these concepts is household income.

It is an economic value that initially serves to quantify the purchasing power of families. Family income (also called household income) is the total earnings or income of a family. The totality includes wages, extraordinary income and even earnings in kind.

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The total amount of the family income must be reduced by the corresponding taxes, as well as a series of contracted obligations (pension plans or loan repayments, for example). The resulting amount will be another economic value, the family disposable income. The resulting amount will be destined to consumption and savings, two other key indexes to understand the economic reality.


It is defined as the insufficiency of monetary resources to acquire a socially acceptable minimum consumption basket. For this purpose, a welfare indicator (per capita expenditure) and socially acceptable parameters (total poverty lines in the case of total consumption and extreme poverty line in the case of food) are chosen:

This method focuses its attention on the economic dimension of poverty and uses income or consumption expenditure as measures of well-being. In determining poverty levels, the per capita value of household income or expenditure is compared with the value of a minimum basket called the poverty line.

The line indicator is a method for determining conjunctural poverty based on the purchasing power of households in a given period. When the consumption-based poverty line method is used, it incorporates the value of all goods and services consumed by the household, regardless of how they are acquired or obtained.

The use of consumption expenditure has the advantage that it is the best indicator for measuring well-being, because it refers to what a household actually consumes and not to what it can potentially consume when measured by income. Another favorable aspect is that consumption is a more stable variable than income, which allows for a better measurement of the poverty level trend.

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Causes of low income

The Energy Assistance Program Rate (EAPR) offers discounts on monthly bills. Customers with the lowest household income, according to the Federal Poverty Level, will receive the largest discounts. EAPR customers with household income between 0% and 100% of the Federal Poverty Level (FPL) would receive the largest monthly discounts. EAPR clients with household income between 100% and 200% of the FPL would receive smaller discounts.

The amounts are based on how your income compares to the Federal Poverty Level and may include a discount on energy usage as well as a $10 System Infrastructure Fixed Charge discount.