Living Conditions and Poverty in Andalucía Living Conditions and Poverty in Andalucía. A Research on Subjective Well-being Victoria Ateca Amestoy Institute for Advanced Social Studies of Andalucía - Higher Council of Scientific Research, Spain DIW-BERLIN, 10.08.05

Description of the Survey The dataset is derived from the Survey on Living Conditions and Poverty in Andalucía. surface: 87.268 km2 ; population 7.829.202 (Jan.2005) Household survey designed and conducted in 2003 by the Institute of Advanced Social Studies (IESA-CSIC) in Spain with funding from the Department of Social Affairs of the Andalucian Regional Government. The target population: all people living in Andalucía aged 18 and over to capture the well being of individuals and households Representative sample of approx. 6000 households. Overall 6393 respondents, providing information on a total of around 21 000 individuals. The sample is drawn using a stratified, multi-stage design, using probability sampling. The principal stratification: by poverty levels, gender and age. Primary sampling units: selected in different ways depending upon the relevant size of municipalities combined with census units.

Description of the dataset Information on housing conditions (area and dewling). General demographic and socio-economic variables: educational, sources of income, health status and occupation information on each household member. Health and social problems; social services usage. Income for each member, financial situation. Subjective variables on social situation, political variables, evaluation of public performance, social capital and satisfaction with life domains.

Overview of the satisfaction variables E11_1: Overall life (1-7 scale) E11_2: Family E11_3: Financial E11_4: Andalusian Government action E11_5: Personal happiness E11_6: Housing E11_7: Children realtionship E11_8: City Hall action E11_9: Leisure E11_10: National Government action E11_11: Purchasing capacity E11_12: Public services quality E11_13: Health status E11_14: Current job E11_15: Neighbourhood E11_16: Environmental quality E11_17: Friends relationships E12: Life opinion

Building Financial Satisfaction Esperanza Vera-Toscano, Victoria Ateca Amestoy & Rafael Serrano del Rosal

Motivation X Two-layer model: Empirical evidence: How important is financial satisfaction for general life satisfaction? Pratt index: + 0.639 Absolute correlation (Spearman’s Rho): 0.407 Partial correlation (Spearman’s Rho): 0.2382 Financial Satisfaction (0.639) Housing Satisfaction (0.198) Health Satisfaction (0.072) X General Satisfaction Leisure Satisfaction (0.056) Environmental Satisfaction (0.031) Job Satisfaction (0.0007)

Income by itself is hardly chosen as a source of individual utility Motivation Income by itself is hardly chosen as a source of individual utility We convert income in goods and services that we consume in order to fulfill needs and desires to make ourselves happier. Moreover, income has a temporal dimension through savings and investments. We can move our money through time. People preferences are interdependent For a given moment of time, depending on past experiences. For a given person, depending on others.

Aim Contribute further research on the conceptualization of individual financial satisfaction as a particular domain of satisfaction with life as a whole Providing empirical evidence to disentangle the effects of income and its attributes on this financial domain after accounting for personal heterogeneity 2003 Survey on Living Conditions and Poverty for Andalucía

What do people value when assessing their financial situation?: Framework What do people value when assessing their financial situation?: Income in absolute terms Personal aspirations as individual’s adaptation to previous and future income levels (intra-individual comparisons) Adequacy of income to expenditure and/or savings Income stability Short and long term expectations Social comparisons as individual’s concern for her peer’s income (inter-personal dependency) Endogenous and exogenous reference groups Internal norm External norm

Variables within the 2003 Survey on Living Conditions and Poverty Personal Variables: (Socio-demographic and socio-economic characteristics) Age Sex Household composition Education Occupation Income level: (Reported household income per month) lnY Internal norm: (Intra-individual comparison and valuation derived) Adequacy (measured as divergence between income and expenditure/needs) Steadiness Expectations: short as long term Other resources: health status and personal capital External norm: (Inter-individual comparison) Exogenously determined: Distance of individual income to certain central tendency measure Endogenously determined: Reported Subjective Social Class

Results: Ordered probit regression Relative Income I: Internal norm Income: No difference Adequacy: Non-linear, non-monotonic relationship Steadiness: Uncertainty of revenue brings dissatisfaction Expectations: A discount rate operates among individuals Health Status: Bad health brings dissatisfaction Social relations: More is better.

Results: Ordered probit regression Relative Income II: Internal and external norm Exogenous reference group by socio-geographic characteristics: Province*Group Endogenous reference group in terms of own class adscription ctm: The “modal” reference income is the best fit Exogenous reference group/objective adscription: larger distances to the “modal” reference income cause greater satisfaction/dissatisfaction Endogenous reference group/subjective adscription: Those feeling richer are happier and vice-versa

Results: Ordered probit regression Relative Income II: Internal and external norm Exogenous reference group by cohort: Age*Education Endogenous reference group in terms of own class adscription ctm: The “mean” reference income is the best fit Exogenous reference group: Rich people impose a negative externality on their poor counterparts, but at a decreasing rate. Endogenous reference group: same regularity

Results: Ordered probit regression Controlling for further individual heterogeneity: Age: U-shape Gender: No difference Household size: # of adults negative impact # of kids no effect Household type: Lone parents less satisfied than couple with no kids Education: No difference Occupation: Unemployed significantly less satisfied

Conclusions Individuals evaluate their financial situation assessing how adequate and stable that income is to satisfy their needs. Health status and social participation are individual economic assets which are also important determinants of FS. Short and long term expectations are significant determinants of FS, their importance decreases with time suggesting that a discount rate is operating in our agents. It is important to consider alternative central tendency measures when looking at the reference income of individuals' peers. In a cohort reference group (Education*Age) poorer individual’s FS is negatively influenced by the fact that their income is lower than the one of their reference group, while richer individuals do not get happier from having an income above either the mean or modal reference income. However, this degree of financial dissatisfaction is not so acute in the poorest suggesting that at that level conformity applies. In the socio-geographic reference group (Social Group*Province): “modal” reference income is the best fit for the model -potentially implying the importance for individuals of what is visible in their neighborhood-. Subjective social class (own adscription) determines FS

The Leisure Experience: me and the others Victoria Ateca Amestoy, Rafael Serrano del Rosal & Esperanza Vera-Toscano

Capture leisure experience heterogeneity: Aims Capture leisure experience heterogeneity: Boundaries definition (personal tastes): What is leisure? What is discretional and pleasant Skills and resource availability: private material resources, immaterial (relationships), public resources Valuation differences: aspirations, past experiences Determine how is individual leisure satisfaction built through an analytical approach: individual leisure experience valuation Explore leisure satisfaction determinants

X X Framework 2 layers model: Halpern & Donovan: General Satisfaction How relevant is leisure satisfaction in the determination of general satisfaction? General results on leisure satisfaction (+.4, +.2) Evidence from or data: (+.39, +.17) Financial Satisfaction (0.639) Housing Satisfaction (0.198) Health Satisfaction (0.072) X X General Satisfaction Leisure Satisfaction (0.056) Environmental Satisfaction (0.031) Job Satisfaction (0.0007)

Arbitrary list of commodities: individuals produce and consume Basic commodities Becker, G.S., (1965) Household production functions: production and consumption of commodities that fulfill human basic needs. Individual/family acts as a factory combining market goods and time. Gronau, R. & Hamermesh, D., (2003) Arbitrary list of commodities: individuals produce and consume Sleep Lodging Appearance Eating Childcare Health Travel Miscellaneous Leisure (The most time-intensive ) Residual time? No, discretional Limits between categories: cook a meal, go to the park with the children

Commodity production function and consumer’s problem Leisure experience production function Household manteinance production function Total income constraint

Variables from Survey on Living Conditions and Poverty The variable that we want to explain: leisure satisfaction Explanatory variables Variables related to productive factors: Related to time devoted to the production of leisure experience Related to goods and time available Variables that work as technological constraints in the production function Variables that influence valuation Functional form Subjective personal Objective personal Socio-economics Household composition Personal social capital Environmental characteristics

Hypotheses and regularities Variables that affect - optimal allocation subject to the time constraint Occupation Household composition Number of children Number of adults Elderly Handicapped Variables that affect x – optimal allocation of private goods and services Household income Leisure expenditure capacity Non basic goods Health status (affecting both, potentially) Sociability: Contacts with known people Participation in association Household type and marital status Individual heterogeneity sources: Age Sex Subjective Social Class Environmental constraints and conditions (supply side arguments) Type of habitat (population size)

Results Significant variables in the estimation of the ordered probit model for leisure satisfaction Demographic Age (U) Subjetive Health status (+) Subjective social class (+) Household composition Nº of dependent persons (-) Household type and marital status (+) Socio-economic Occupation (-) Durables ownership (+) Leisure expenditure capacity (+) Habitat Semi-urban (-) Social capital Contacts with friends and known people (+)

Results and conclusions 1. Individual leisure behavior model (leisure is life domain that conforms overall happiness) Control for individual heterogeneity in satisfaction variability. 2. Leisure experience: modeled as a commodity, is a subjective and unobservable variable. 3. Results for the case of analysis (leisure satisfaction in Andalusia): - me and the others The presence of other people in the narrowest environment increases leisure satisfaction. 4. Only informal socialization turns out to have a significant impact on leisure satisfaction: contacts with friends do affect, whereas participation in associations do not. informal social capital . 5. Possibly, some supply conditions induce corner solutions .

Both papers are available under request to: Thank you! Both papers are available under request to: VAmestoy@diw.de

Tabla IIa. Sample statistics – FINANTIAL SATISFACTION MODEL

Tabla IIb. Sample statistics – FINANTIAL SATISFACTION MODEL (cont)

Tabla IIb. Sample statistics – LEISURE SATISFACTION MODEL

Tabla IIb. Sample statistics - LEISURE SATISFACTION MODEL (cont)