Living Conditions and Poverty in Andaluc

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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, SpainDIW-BERLIN, 10.08.05
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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.
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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.

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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

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Building Financial SatisfactionEsperanza
Vera-Toscano, Victoria Ateca Amestoy Rafael
Serrano del Rosal
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Motivation

• Two-layer model
• Empirical evidence How important is financial
  satisfaction for general life satisfaction?
• Pratt index 0.639
• Absolute correlation (Spearmans Rho) 0.407
• Partial correlation (Spearmans Rho) 0.2382

Financial Satisfaction (0.639)
Housing Satisfaction (0.198)
Health Satisfaction (0.072)
General Satisfaction
X
Leisure Satisfaction (0.056)
Environmental Satisfaction (0.031)
Job Satisfaction (0.0007)
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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.

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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

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Framework

• What do people value when assessing their
  financial situation?
• Income in absolute terms
• Personal aspirations as individuals 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 individuals concern for
  her peers income (inter-personal dependency)
• Endogenous and exogenous reference groups

Internal norm
External norm
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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

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Results Ordered probit regression
Relative Income I Internal norm

1. Income No difference
2. Adequacy Non-linear, non-monotonic relationship
3. Steadiness Uncertainty of revenue brings
   dissatisfaction
4. Expectations A discount rate operates among
   individuals
5. Health Status Bad health brings dissatisfaction
6. Social relations More is better.

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Results Ordered probit regression
Relative Income II Internal and external
norm Exogenous reference group by
socio-geographic characteristics ProvinceGroup E
ndogenous reference group in terms of own class
adscription

1. ctm The modal reference income is the best fit
2. Exogenous reference group/objective adscription
   larger distances to the modal reference income
   cause greater satisfaction/dissatisfaction
3. Endogenous reference group/subjective
   adscription Those feeling richer are happier and
   vice-versa

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Results Ordered probit regression
Relative Income II Internal and external
norm Exogenous reference group by
cohort AgeEducation Endogenous reference group
in terms of own class adscription

1. ctm The mean reference income is the best fit
2. Exogenous reference group Rich people impose a
   negative externality on their poor counterparts,
   but at a decreasing rate.
3. Endogenous reference group same regularity

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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

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Conclusions

1. Individuals evaluate their financial situation
   assessing how adequate and stable that income is
   to satisfy their needs.
2. Health status and social participation are
   individual economic assets which are also
   important determinants of FS.
3. 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.
4. It is important to consider alternative central
   tendency measures when looking at the reference
   income of individuals' peers.
5. In a cohort reference group (EducationAge)
   poorer individuals 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.
6. In the socio-geographic reference group (Social
   GroupProvince) modal reference income is the
   best fit for the model -potentially implying the
   importance for individuals of what is visible in
   their neighborhood-.
7. Subjective social class (own adscription)
   determines FS

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The Leisure Experienceme and the
others Victoria Ateca Amestoy, Rafael Serrano
del Rosal Esperanza Vera-Toscano
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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
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Framework

• 2 layers model
• Halpern Donovan
• 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)
General Satisfaction
X
X
Leisure Satisfaction (0.056)
Environmental Satisfaction (0.031)
Job Satisfaction (0.0007)
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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

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Commodity production function and consumers
problem
Leisure experience production function
Household manteinance production function
Total income constraint
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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

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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

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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 ()
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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 .

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Thank you! Both papers are available under
request to VAmestoy_at_diw.de
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Tabla IIa. Sample statistics FINANTIAL
SATISFACTION MODEL
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Tabla IIb. Sample statistics FINANTIAL
SATISFACTION MODEL (cont)
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Tabla IIb. Sample statistics LEISURE
SATISFACTION MODEL
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Tabla IIb. Sample statistics - LEISURE
SATISFACTION MODEL (cont)