1. Household Arrangements and Economic Poverty: A Subjective Well-Being Approach The Family’s Role in Poverty Abatement
Mariano Rojas
Universidad de las Américas, Puebla, Mexico
International Conference on Multidimensionality of Poverty
Brasília, August, 2005
International Poverty Centre

2. Introduction Two main purposes: Presentation
Show the usefulness of the subjective well-being approach for the study of poverty
Well-being conception of poverty
Show an application:
Estimation of an equivalent income in Mexico
useful for well-being comparisons
useful for well-being inference from income
Presentation
The SWB approach
Household Arrangements
Intra-household arrangements

3. The SWB Approach The well-being as declared by the person
Happiness and Life Satisfaction conceptions
The well-being of a person
Of flesh and blood and in her circumstance
Person as the authority to judge her well-being
A person’s well-being is essentially subjective
Inferential methodology
To identify relevant explanatory factors
Bottom-up rather than a doctrinal –top-down- one
Transdisciplinary issue
Interdisciplinary study

4. Human and Economic Poverty
Domains of life literature
Persons being human in many concrete areas of being
Life satisfaction / happiness emerging from satisfaction in all these domains
Not all domains are equally important for swb
Defining the domains of life

5. Well-Being Health Economic LIFE SATISFACTION or HAPPINESS Job FamilyX P L F A C T O R S
Job
Family
Friends
Personal
Community

6. The Database Data for estimations come from: Survey in central Mexico
Five states plus Mexico City
November, 2001
1540 questionnaries properly answered
Designed to address many subjective well-being issues
Financial support from CONACYT, Mexico
Limitations
Cross-section
Persons rather than families as units

7. Human and Economic Well-Being
Table 3
Life Satisfaction and Satisfaction in Domains of Life
CES specification
Coefficient
Asymp.Prob>t
α-Health
0.074
0.07
α-Economic
0.044
0.12
α-Job
0.059
α-Family
0.107
0.09
α-Friendship
-0.014
0.25
α-Personal
0.067
α-Community
0.000
0.50 ε
0.525
0.00 σ
1.108
0.01
R-squared
0.334

8. Well-Being Health Economic LIFE SATISFACTION or HAPPINESS Job Family
Friends
Personal
Community

9. Human and Economic Well-Being
Economic satisfaction is not a main determinant of life satisfaction
There is more in life than the standard of life
But it is a relevant factor
We can concentrate in the study of the economic domain
Use the SWB approach to estimate equivalent incomes useful for economic well-being comparisons
Well-being comparison of persons living under different household arrangements
Does The Family matter? Per capita vs equivalent income

10. Household Arrangements and Economic Well-Being
Household equivalent incomes:
How much income does a person living in a n-member household needs to have the same ‘utility’ than a person living alone?
n times, more than n times, less than n times
Comparisons across families with different arrangements
within and across countries
Relevance for income-based poverty rates with an economic well-being referent

11. Household Arrangements and Economic Well-Being
A SWB approach to equivalence scales estimation:
Leyden School: van Praag and others
Required change in income to keep a person’s utility constant as her household size increases
Life satisfaction/happiness as utility
Economic satisfaction as utility
Economic satisfaction variable
Four satisfaction questions
Income satisfaction
Purchasing power satisfaction
Housing satisfaction
Financial situation satisfaction
Satisfaction scale: 1 to 7 verbal ordinal
Factorial analysis, principal components extraction to obtain new variable. 1 to 7 scale.

12. Household Arrangements and Economic Well-Being

13. Household Arrangements and Economic Well-Being

14. Household Arrangements and Economic Well-Being
Table 8
Alternative Equivalence Scales and their Overestimation of Equivalent Income
One-member household as reference
Household Age Composition*
SWB Scale
Oxford Scale
Per capita Scale
Single
1.00
Couple
1.39
1.70
2.00
Couple & 1 child
1.80
2.20
3.00
Couple & 2 children
2.13
2.70
4.00
Couple & 3 children
2.40
3.20
5.00
Couple & 4 children
2.65
3.70
6.00
Couple & 3 children & 1 extra-adult person
2.58
3.90
Couple & 3 children & 2 extra-adult persons
2.74
4.60
7.00
* teenagers were not considered because Oxford scale does not make such a distinction.

15. Household Arrangements and Economic Well-Being
Implications for economic poverty
ENIGH-2002
Estimation for the whole Mexican Population
Table 13
Percentage of Persons beneath a Monthly Equivalent Income in Mexico
according to different equivalence scales
Per Capita Scale
Oxford Scale
SWB Scale
Beneath MN$300
5.86
1.83
0.41
Beneath MN$600
22.05
10.60
4.06
Beneath MN$900
37.54
21.91
10.26
Beneath MN$1500
61.17
42.91
25.43

16. Intra-Household Arrangements and Economic Well-Being
Is equivalent income a good economic well-being proxy for every member in a household?
Intra-household arrangements
Theories of the family
Communitarian/Altruistic
Individualistic - Cooperative bargaining
Family status:
Father, mother, son, daughter, grandparent, other.
Breadwinning status:
Main, secondary, marginal, other (no)
Proportion of household income generated by person
Does it make a difference for economic satisfaction?
Controlling for other variables

18. Conclusion
Calculation of a household equivalent income useful for economic well-being comparisons
Assessing poverty with an income indicator that has a well-being referent
Being able to take into consideration different household arrangements across families and across countries.
Inference for the whole family
The Family
An important role in poverty abatement (more economic satisfaction from the same per capita income)
As long as:
Substantial economies of scale
Communitarism/altruism
Specific household arrangements
SWB approach can make many contributions to poverty research
Poverty conceptualization
Human poverty, economic poverty