inequality across the eu : c omplementing income indicators with material deprivation measures a-c...

INEQUALITY ACROSS THE EU : COMPLEMENTING INCOME INDICATORS WITH MATERIAL DEPRIVATION MEASURES

A-C GUIO, CEPS / INSTEAD RESEARCH INST ITUTE (LUX)

OECD - 27 JUNE 2012

• Income poverty in the EU: relative national approach (poor if equivalised household income < 60% national median equivalised income).

need to complement income poverty rates with material deprivation (MD) indicators to better reflect differences in actual standards of living across the EU.

CZ NL SK AT HU SI SE FI DK FR LU BEM

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Income poverty rate Income poverty threshold

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• Income poverty in the EU: relative national approach (poor if equivalised household income < 60% national median equivalised income).

need to complement income poverty rates with material deprivation (MD) indicators to better reflect differences in actual standards of living across the EU

CZ NL SK AT HU SI SE FI DK FR LU BEM

T DE CY EE IE UK PL PT IT GR LT ES BG RO LV0

10

20

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50

60

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Income poverty rate MD Income poverty threshold

%% PPP

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(SEVERE) MATERIAL DEPRIVATION (MD AND SMD)

MD persons are persons living in hhds experiencing at least 3 out of 9 material living conditions problems.

SMD persons: same list of 9 items, but they experience at least 4 problems This indicator is one of the 3 components of the EU social inclusion target of the Europe 2020 Strategy for “smart, sustainable and inclusive growth” adopted by the EU in June 2010: “To reduce by at least 20 million the number of people in the EU who are “at risk of poverty or social exclusion” i.e. people at risk of poverty and/or severely deprived and and/or living in household with very low work intensity.

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REVISION OF EU MD INDICATORS

Why ? Weaknesses of the current EU MD indicators the small number of items they are based on (due to

small number of relevant items included in the core part of EU-SILC)

the weak reliability of some of these items.

How ?

- Collect of additional MD data in the 2009 thematic EU-SILC module on MD;

- In-depth analysis of all MD items available in the 2009 wave of EU-SILC (core variables + module) by Guio, Gordon and Marlier (2012);

- Proposed revised indicator & new items to include in the future core EU-SILC surveys (as from 2013) in view of the 2015 mid-term review of the Europe 2020 Strategy.

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CONCEPTUAL FRAMEWORK

• Approach followed: both theory and data driven. • Leads to MD indicators covering some key aspects of

living conditions that are customary in the society and from which some people are excluded due to a lack of resources (concept consistent with Townsend’s theory of relative deprivation and with the 1985 EU Council definition)

• Focus: “enforced lacks”, i.e. lacks due to insuffi cient resources AND NOT to choices.

• Importance of participation in the society to which the person belongs: our proposed MD indicators include items that measure “social deprivation” (leisure, contacts with friends, holidays...).

• Essential interest not so much in individual items per se as in the underlying situation of more generalised deprivation that they can help to capture

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ANALYTICAL FRAMEWORK – SELECTION OF ITEMS

Step by step, systematic item by item analysis at both EU and individual MS level of:

• The suitability of each MD item, by looking at the extent to which people want/do not want a given item test of homogeneity of preferences between countries and within each country.

• The validity of each MD item, by ensuring that they all exhibit statistically signifi cant relations with variables known to be correlated with MD (income/subjective poverty and health).

• The reliability of the scale (to assess the internal consistency of the scale as a whole) and that of each individual item in the scale.

• The additivity of MD items, by checking that someone say with an MD index score of 2 is in reality suff ering from more severe MD than someone with a score of 1, i.e. that the MD index components add up.

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VALIDITY – ILLUSTRATION % ENFORCED LACK OF HOLIDAYS ACCORDING TO SUBJECTIVE POVERTY, BY COUNTRY

Source: EU-SILC 2009 cross-sectional data-files, version UDB August 2011, authors’ computation.

Child Deprivations Some new clothes (M)Two pairs of shoes (M)Fresh fruits & vegetables daily (M)Three meals a day (M)Meat, chicken, fish daily (M)Suitable books (M)Outdoor leisure equipment (M)Indoor games (M)Place to do homework (M)Dentist when needed (M - optional)GP when needed (M - optional)Leisure activities (M)Celebrations (M)To invite friends (M)School trips (M)Outdoor space to play (M) Holiday (M - optional)Housing DeprivationsNo hot running water (M)Shortage of spaceDarknessLeaky roof, damp, etc.No toiletNo bathOvercrowdingHigh housing costs

Local Environment DeprivationsLitter lying around (M)Vandalism (M)Diff access to public transport (M)Diff access to post, banks (M)Noise Pollution Crime Adult Deprivations (enforced lack)Some new Clothes (M)Two pairs of shoes (M)Some money for oneself (M) Mobile phone (M) Drink/meal monthly (M)Leisure activities (M)Household DeprivationsIncapacity to keep home warmArrearsIncapacity to face unexp. expensesLack of meat, chicken, fishLack of Holiday

Enforced lack of :Telephone Colour TV Washing machine Car Internet (M) & Computer Worn-out furniture (M)

EU-SILC: 50 potential indicators of MD (M=module items)





Current MD indicators





Revised MD indicators





New Child MD

indicators

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MD RATES ACCORDING TO THE DIFFERENT THRESHOLDS, EU-27

MD5+/CURRENT MD AND MD7+/CURRENT SMD CLOSE AT EU LEVEL


MD 1+ MD 2+ MD 3+ MD 4+ MD 5+ MD 6+ MD 7+ MD 8+ MD 9+ MD 10+ MD 11+ MD 12+ EU MD EU SMD

MD 57.4 43.1 32.5 24.1 17.7241 13.0655 9.1546 6.1514 3.8418 1.7 0.7 0.2 NaN 17.0982 8.0902

5

15

25

35

45

55

65

+ High reliability (Cronbach’s Alpha 0.85 at EU level (min 0.75-max 0.86))

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PROPOSED MD5+ (5+/13) AND CURRENT MD (3+/9)(RANKED ACCORDING TO PROPOSED INDICATOR)


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SOME CONCLUSIONS…

• In terms of national and EU reporting: complementarity of income poverty and MD measures• but need to revise/strengthen the current MD indicator

• Our analysis have demonstrated the success of the 2009 wave of EU-SILC in collecting new MD items (also for children)

• Broad range of statistical techniques have also demonstrated that our proposed 13-item MD indicators produce very reliable and precise measurements of MD (see our paper)

• Need to assess how our proposed indicators evolve over time (new items already included in 2013 EU-SILC wave, available end-2014, revision of Europe 2020 social target in 2015).

IF QUESTIONS…

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PROPOSED MD7+ (7+/13) AND CURRENT SMD (4+/9)(RANKED ACCORDING TO PROPOSED INDICATOR)


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Whole population: ITEMS WHICH PASSED THE TESTS - 13 ITEMS(*) = INCLUDED IN THE CURRENT EU MD INDICATORS

Adult: Some new clothes (enforced lack) - NEWAdult: Two pairs of shoes (enforced lack) - NEWAdult: Some money for oneself (enforced lack) - NEWAdult: Leisure activities (enforced lack) - NEWAdult: Drink/meal monthly (enforced lack) - NEWHousehold: Replace worn-out furniture (enforced lack) -

NEWHousehold: Meat, chicken, fi sh (or vegetarian

equivalent) *Household: Unexpected expenses *Household: Holiday *Household: Arrears *Household: Computer & Internet (enforced lack) - NEWHousehold: Home adequately warm *Household: Car *

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CHILDREN POPULATION: ITEMS WHICH PASSED THE TESTS - 18 ITEMS(13 CHILD ITEMS AND 5 HHD ITEMS)

Child: Some new clothes - NEWChild: Two pairs of shoes - NEWChild: Fresh fruits & veg. daily - NEW Child: Meat, chicken, fi sh daily - NEW Child: Suitable books - NEWChild: Outdoor leisure equipment - NEWChild: Indoor games - NEWChild: Place to do homework Child: Leisure activities - NEW Child: Celebrations - NEWChild: To invite friends - NEWChild: School trips - NEWChild: Holiday - NEW

Household: Worn-out furniture (enforced lack) - NEW

Household: Home adequately warm *

Household: Arrears *Household: Computer/internet

(enforced lack) - NEWHousehold: Car (enforced

lack)*

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Incidence, risk ratios – Whole population

BG RO LV HU LT PT PL SK EL MT EE SI CY CZ DE FR IT IE BE ES UK AT FI DK NL LU SE

Clothes5.4 3.3 3.3 3.1 2.3 2.0 1.5 1.0 1.0 1.6 0.9 1.3 0.6 0.5 0.7 0.8 0.8 0.5 0.6 0.3 0.6 0.6 0.6 0.6 0.2 0.4 0.2

Furniture2.9 2.6 2.3 2.1 1.7 2.0 1.3 1.5 1.7 1.7 1.6 1.3 1.7 1.7 0.7 1.2 0.1 0.6 0.7 1.3 0.5 0.4 0.4 0.4 0.7 0.5 0.2

Inadequate warmth7.1 2.4 1.8 1.0 2.7 3.2 1.8 0.4 1.8 1.2 0.2 0.6 2.1 0.6 0.6 0.7 1.2 0.4 0.6 0.7 0.7 0.3 0.1 0.1 0.1 0.0 0.1

Computer & internet4.6 3.8 1.4 1.8 1.8 1.6 2.0 2.0 2.2 0.2 1.2 0.6 0.4 1.4 0.4 0.8 1.0 0.8 1.0 0.8 0.4 0.8 0.6 0.2 0.2 0.2 0.0

Arrears3.2 2.5 2.0 2.0 0.9 0.8 1.3 1.2 2.6 0.7 1.1 1.6 1.9 0.5 0.5 1.0 1.2 1.3 0.6 0.8 0.4 0.6 1.0 0.5 0.4 0.4 0.6

Car2.8 5.2 2.9 2.3 1.7 1.1 1.6 2.1 0.9 0.2 2.0 0.3 0.1 1.1 0.7 0.4 0.2 1.0 0.8 0.4 0.6 0.6 0.9 0.9 0.4 0.2 0.2

Meat…4.1 2.7 2.6 3.0 2.2 0.4 1.9 2.7 0.9 1.1 0.8 1.2 0.4 1.1 1.0 0.8 0.7 0.2 0.6 0.2 0.4 1.1 0.3 0.1 0.2 0.1 0.1

Holidays1.6 2.1 1.6 1.8 1.0 1.7 1.6 1.5 1.2 1.7 1.3 0.8 1.1 1.1 0.6 0.8 1.1 1.1 0.7 1.1 0.7 0.7 0.4 0.3 0.4 0.4 0.2

Unexpected expenses1.7 1.2 2.0 2.1 1.5 0.8 1.4 1.0 0.8 0.8 0.9 1.2 1.1 1.1 1.0 0.9 0.9 1.4 0.7 0.9 0.9 0.7 0.8 0.7 0.5 0.7 0.5

Pocket money2.8 2.9 1.9 2.1 1.9 1.4 1.2 1.1 0.6 0.8 0.7 0.6 0.3 0.7 0.8 0.8 1.0 0.8 0.6 0.6 1.0 0.7 0.1 0.3 0.3 0.4 0.2

Leisure activity2.5 3.2 1.9 1.8 2.0 1.4 1.4 0.6 1.1 0.9 0.5 0.9 0.4 0.4 1.1 0.6 0.9 0.4 0.7 0.5 0.8 0.8 0.2 0.2 0.4 0.3 0.2

Drink/meal3.0 3.8 1.6 2.6 1.7 1.5 0.9 0.6 0.4 1.3 0.6 0.4 0.3 0.2 1.5 0.4 0.7 0.6 0.7 0.5 0.7 0.5 0.1 0.1 0.1 0.3 0.5

Shoes3.7 3.0 3.3 1.0 0.7 2.3 1.0 1.0 0.3 0.3 0.7 0.7 0.3 0.3 1.0 1.3 0.7 0.7 0.3 0.3 0.7 0.3 0.3 0.3 0.3 0.3 0.0

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OVERLAP WITH THE CURRENT EU MD INDICATORS

Both(1)

None(2)

EU (S)MD “only”

(3)

New (S)MD “only”

(4)5+ items 13.1 78.3 4.0 4.6

7+ items 5.3 89 2.8 2.9

inequality across the eu : c omplementing income indicators with material deprivation measures a-c...

Documents

eu slide

current eu md indicators

wave of eu

r evision of eu md indicators

md items available

proposed md indicators

smd md persons

thematic eusilc module