INEQUALITY ACROSS THE EU : C OMPLEMENTING INCOME INDICATORS WITH MATERIAL DEPRIVATION MEASURES A-C GUIO, CEPS/INSTEAD R ESEARCH I NSTITUTE (L UX ) OECD - 27 J UNE 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.

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

4 (S EVERE ) 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.

5 R EVISION 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.

6 C ONCEPTUAL 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 Townsends theory of relative deprivation and with the 1985 EU Council definition) Focus: enforced lacks, i.e. lacks due to insufficient resources AND NOT to choices. Importance of participation in the society to which the person belongs: our proposed MD indicators include items that measuresocial 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

7 A NALYTICAL 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 significant 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 suffering from more severe MD than someone with a score of 1, i.e. that the MD index components add up.

8 V ALIDITY – I LLUSTRATION % 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 Deprivations No hot running water (M) Shortage of space Darkness Leaky roof, damp, etc. No toilet No bath Overcrowding High housing costs Local Environment Deprivations Litter 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 Deprivations Incapacity to keep home warm Arrears Incapacity to face unexp. expenses Lack of meat, chicken, fish Lack of Holiday Enforced lack of : Telephone Colour TV Washing machine Car Internet (M) & Computer Worn-out furniture (M) E U-SILC: 50 potential indicators of MD (M=module items)

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 Deprivations No hot running water (M) Shortage of space Darkness Leaky roof, damp, etc. No toilet No bath Overcrowding High housing costs Local Environment Deprivations Litter 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 Deprivations Incapacity to keep home warm Arrears Incapacity to face unexp. expenses Lack of meat, chicken, fish Lack of Holiday Enforced lack of : Telephone Colour TV Washing machine Car Internet (M) & Computer Worn-out furniture (M) E U-SILC: 50 potential indicators of MD (M=module items) Current MD indicators

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 Deprivations No hot running water (M) Shortage of space Darkness Leaky roof, damp, etc. No toilet No bath Overcrowding High housing costs Local Environment Deprivations Litter 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 Deprivations Incapacity to keep home warm Arrears Incapacity to face unexp. expenses Lack of meat, chicken, fish Lack of Holiday Enforced lack of : Telephone Colour TV Washing machine Car Internet (M) & Computer Worn-out furniture (M) E U-SILC: 50 potential indicators of MD (M=module items) Revised MD indicators

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 Deprivations No hot running water (M) Shortage of space Darkness Leaky roof, damp, etc. No toilet No bath Overcrowding High housing costs Local Environment Deprivations Litter 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 Deprivations Incapacity to keep home warm Arrears Incapacity to face unexp. expenses Lack of meat, chicken, fish Lack of Holiday Enforced lack of : Telephone Colour TV Washing machine Car Internet (M) & Computer Worn-out furniture (M) E U-SILC: 50 potential indicators of MD (M=module items) New Child MD indicators

13 MD RATES ACCORDING TO THE DIFFERENT THRESHOLDS, EU-27 MD5+/C URRENT MD AND MD7+/ CURRENT SMD CLOSE AT EU LEVEL Source: EU-SILC 2009 cross-sectional data-files, version UDB August 2011, authors computation.

14 P ROPOSED MD5+ (5+/13) AND C URRENT MD (3+/9) ( RANKED ACCORDING TO PROPOSED INDICATOR ) Source: EU-SILC 2009 cross-sectional data-files, version UDB August 2011, authors computation.

15 S OME 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).

I F QUESTIONS …

17 P ROPOSED MD7+ (7+/13) AND C URRENT SMD (4+/9) ( RANKED ACCORDING TO PROPOSED INDICATOR ) Source: EU-SILC 2009 cross-sectional data-files, version UDB August 2011, authors computation.

18 Whole population: ITEMS WHICH PASSED THE TESTS - 13 ITEMS (*) = INCLUDED IN THE CURRENT EU MD INDICATORS Adult: Some new clothes (enforced lack) - NEW Adult: Two pairs of shoes (enforced lack) - NEW Adult: Some money for oneself (enforced lack) - NEW Adult: Leisure activities (enforced lack) - NEW Adult: Drink/meal monthly (enforced lack) - NEW Household: Replace worn-out furniture (enforced lack) - NEW Household: Meat, chicken, fish (or vegetarian equivalent) * Household: Unexpected expenses * Household: Holiday * Household: Arrears * Household: Computer & Internet (enforced lack) - NEW Household: Home adequately warm * Household: Car *

19 C HILDREN POPULATION : ITEMS WHICH PASSED THE TESTS - 18 ITEMS (13 CHILD ITEMS AND 5 HHD ITEMS ) Child: Some new clothes - NEW Child: Two pairs of shoes - NEW Child: Fresh fruits & veg. daily - NEW Child: Meat, chicken, fish daily - NEW Child: Suitable books - NEW Child: Outdoor leisure equipment - NEW Child: Indoor games - NEW Child: Place to do homework Child: Leisure activities - NEW Child: Celebrations - NEW Child: To invite friends - NEW Child: School trips - NEW Child: Holiday - NEW Household: Worn-out furniture (enforced lack) - NEW Household: Home adequately warm * Household: Arrears * Household: Computer/internet (enforced lack) - NEW Household: Car (enforced lack)*

20 Incidence, risk ratios – Whole population BGROLVHULTPTPLSKELMTEESICYCZDEFRITIEBEESUKATFIDKNLLUSE Clothes Furniture Inadequate warmth Computer & internet Arrears Car Meat… Holidays Unexpected expenses Pocket money Leisure activity Drink/meal Shoes

21 O VERLAP WITH THE CURRENT EU MD INDICATORS Both (1) None (2) EU (S)MD only (3) New (S)MD only (4) 5+ items items