Eirini Andriopoulou

Council of Economic Advisors, Ministry of Finance

Apostolos Fasianos

Council of Economic Advisors, Ministry of Finance

Athanassios Petralias

Bank of Greece



The aim of this study is to present the underlying methodology behind the estimation of the Adequate Living Expenses (ALE) Threshold for the Greek population. The ALE threshold was first introduced in 2014 by the Greek authorities as a benchmark, mainly for protecting over-indebted mortgage holders from foreclosure of the primary residence. In this manuscript, we present alternative methodological approaches and specifications considered to estimate this threshold and we report updated estimates for the year 2017. The ALE threshold is defined through expenditure for the purchase of goods and services and interpreted as the income level that the household should possess in order to cover the level of acceptable living expenses, following the median expenditure pattern of Greek households. By taking into consideration the main categories of the Greek Household Budget Survey, we examined different expenditure specifications, based on the necessity of the needs covered by gradually excluding items that could be considered as “luxury” items (four scenarios were developed). Quantile regression and linear robust regression accounting for the presence of outliers was applied and various model specifications were tested. Our results control for household structure, degree of urbanization and mortgage holding, and interactions among them. In 2017, for a family with two children ALE threshold ranged from 1,196€ to 1,497€ per month, reduced by approximately 11.5% compared to 2012, depending on the expenditure specification. The estimated ALE threshold lies considerably above the poverty line in all cases.


Keywords: Mortgage, household budget, insolvency, reference budget, foreclosures. 

JEL Classification: G18, G21


Acknowledgments: The Adequate Living Expenses threshold in Greece was first estimated in 2014, based on 2012 Household Budget Survey data, by a team consisting of Eirini Andriopoulou, Athanassios Petralias and Ioannis Vintzilaios, under the auspices of the Council of Economic Advisors of the Ministry of Finance and the General Consumers Secretariat of the Ministry for Development and Competitiveness. We are thankful to Chrysa Leventi, De Wilde Marjolijn, Tess Penne, and the participants of the Council of Economic Advisors research seminar in March 2019 for their useful comments. The methodology applied was agreed with the IMF, ECB and European Commission, in the framework of the second economic adjustment programme and was officially approved by the Governmental Council of Private Debt Management. All the remaining errors are the responsibility of the authors. The views expressed in the article are those of the authors and should not be attributed neither to the Council of Economic Advisors nor to the Bank of Greece or the Eurosystem.



Athanasios Petralias

Department of Statistics

Bank of Greece

21 El. Venizelos Av., 10250 Athens, Greece

Email: apetralias@bankofgreece.gr


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