Measurement and analysis of Measurement and analysis of household welfare: possible household welfare: possible

approaches using GGSapproaches using GGSdatadata

29.11.2007

L. Ovcharova, A. Pishniak, D. Popova

Independent Institute for Social Policy

ObjectiveObjective

Developing a comprehensive Developing a comprehensive methodology of measuring methodology of measuring household welfare household welfare

Expected output: a household Expected output: a household

welfare index, measuring various welfare index, measuring various dimensions of welfare, which could dimensions of welfare, which could be used in simulations of be used in simulations of demographic intentions demographic intentions

I. MethodologyI. Methodology

Theoretical approachesTheoretical approaches

Household welfare is measured by 5 domains: Household welfare is measured by 5 domains:

Income Income Durables/Durables/

Property Property Basic needsBasic needs Housing Housing Subjective Subjective

welfarewelfare

Income domainIncome domain Household income Household income is calculated as a maximum is calculated as a maximum

value of: value of: -- the sum of separate components of income the sum of separate components of income -- total household income estimated by the total household income estimated by the

respondent. respondent.

Missing values are imputed on the basis of Missing values are imputed on the basis of linear regression model.linear regression model.

Per capita income is adjusted for regional Per capita income is adjusted for regional disparities in purchasing power disparities in purchasing power using theusing the ratio ratio of the cost of all-Russian subsistence minimum and of the cost of all-Russian subsistence minimum and regional subsistence minimum. regional subsistence minimum.

Income outliers are capped.Income outliers are capped.

Other domainsOther domains Each domain index consists of a group of indicatorsEach domain index consists of a group of indicators

When the household is able to afford the item When the household is able to afford the item (indicator) it is awarded the score of 1. If an item (indicator) it is awarded the score of 1. If an item cannot be afforded the household is awarded the cannot be afforded the household is awarded the score of 0. score of 0.

Possible approaches to estimate the total Possible approaches to estimate the total household welfare index: household welfare index:

A simple count approachA simple count approach A prevalence weighting A prevalence weighting approachapproach

I = Σaixi / Σai *100

Durables/property domain: Durables/property domain: indicatorsindicators

There are 11 indicators availableThere are 11 indicators available

Color TV setColor TV set

Video Cassette Recorder or DVD-Video Cassette Recorder or DVD-PlayerPlayer

Washing MachineWashing Machine

MicrowaveMicrowave

Personal ComputerPersonal Computer

TelephoneTelephone

Car or Mini-van for Private UseCar or Mini-van for Private Use

A Second CarA Second Car

Second HousingSecond Housing

RefrigeratorRefrigerator

Dish-WasherDish-Washer

Basic needs domain: Basic needs domain: indicatorsindicators

There are 6 indicators availableThere are 6 indicators available

Once a year to go on 1-week vacation away Once a year to go on 1-week vacation away from home for every member of the from home for every member of the householdhousehold

To replace, if necessary, old furnitureTo replace, if necessary, old furniture

To buy new, not second-hand, clothesTo buy new, not second-hand, clothes

To eat meat, chicken, or fish at least every To eat meat, chicken, or fish at least every second daysecond day

To invite friends or relatives for lunch, dinner To invite friends or relatives for lunch, dinner at least once a monthat least once a month

To keep the house warm To keep the house warm enoughenough

Housing domain: indicatorsHousing domain: indicators

Number of rooms/equivalent Number of rooms/equivalent household size household size

Status of ownership (owner/tenant)Status of ownership (owner/tenant)

Basic utilities (constructed on the base Basic utilities (constructed on the base of RLMS, 2004)of RLMS, 2004)

Subjective welfare: Subjective welfare: indicators indicators

2 indicators of subjective welfare are available: 2 indicators of subjective welfare are available:

1) Subjective assessment of financial well-1) Subjective assessment of financial well-being “the ability to make ends meetbeing “the ability to make ends meet»»- - answers “very easy” or “easy”answers “very easy” or “easy” 11- answers “very difficult” or “difficult”- answers “very difficult” or “difficult” 00

______________________________________________________________________

2) Satisfaction with the housing – scale 2) Satisfaction with the housing – scale 0-10 0-10

- answers from 8 to 10- answers from 8 to 10 1 1- answers from 0 to 2- answers from 0 to 2

0 0

Combining the domain indices Combining the domain indices into an overall welfare indexinto an overall welfare index

The analysis of the reliability of the scale was undertaken to show The analysis of the reliability of the scale was undertaken to show whether all domain indices measure the same variable “household whether all domain indices measure the same variable “household

welfare”welfare”

Standardized ranks of domain indices:

Corrected Item-Total Correlation

Cronbach's Alpha if Item

Deleted

Income 0,5415 0,5232

Durables/property 0,4683 0,5569

Basic needs 0,5068 0,5295

Housing 0,2735 0,6619

Subjective welfare 0,2433 0,6501

Overall Cronbach's Alpha 0,6431

Combining the domain indices Combining the domain indices into an overall welfare index: into an overall welfare index:

weightingweightingWeights were generated by single factor

analysis. The weights are as follows:

Standardized ranks of domain indices:

Basic index or "gold standard"

Basic index, including housing domain

Basic index, inckuding

housing and subjective welfare domains

Income 0,33 0,29 0,26

Durables/property 0,28 0,25 0,22

Basic needs 0,39 0,35 0,31

Housing 1,00 0,10 0,09

Subjective welfare 1,00 0,12

1,00

II. ProfilesII. Profiles

Income Quintiles (mean Income Quintiles (mean rank) rank)

Quintiles

Basic needs

domain

Durables/ Property domain

Housing domain

Subjective welfare domain

INDEX-1(basic)

INDEX-2 INDEX-3

1 20.8 25.0 42.4 12.5 21.1 20.6 20.9

2 25.2 30.9 54.1 13.0 33.9 34.0 34.1

3 33.9 37.6 58.8 13.6 48.5 48.4 48.4

4 50.0 46.5 66.2 15.6 65.5 65.6 65.5

5 69.8 55.0 74.9 20.6 80.780.7 81.281.2 81.081.0

Total 39.9 39.0 59.3 15.1 50.0 50.0 50.0

Household Size (mean)Household Size (mean)

 

INDEX-1 (basic)

INDEX-3

single 41.8 44.0

2 persons 48.9 49.7

3 persons 54.9 54.7

4 persons 53.0 51.9

5 & more persons 48.3 45.1

Total 50.0 50.0

63,8

13,8

68,2

27,4 26,8

54,6

15,0

36,1

54,0

35,8

15,5

60,846,6 52,1

42,8

16,1

54,046,2

43,846,5

14,4

37,942,7

36,344,6

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Basic needsdomain

Income domain Durables/Propertydomain

Housing domain Subjective welfaredomain

single2 persons3 persons4 pesrons5 & more persons

Type of Settlement (mean Type of Settlement (mean rank) rank)

 Basic needs

domainIncome domain

Durables/Property domain

INDEX-1(basic) Housing

domain

Subjective welfare domain

INDEX-3

Regional, territorial or republican center 45.4 57.8 44.0 57.0 70.4 16.8 58.6

Other cities 40.3 53.8 38.2 51.2 77.4 14.8 54.0

Urban-type community 39.9 48.5 38.6 49.2 59.9 16.4 49.5

Countryside 30.5 33.1 31.7 37.2 21.2 12.1 31.6

Total 39.9 49.9 39.0 50.0 59.3 15.1 50.0

Socio-Demographic Type Socio-Demographic Type (mean rank) (mean rank)

Basic needs domain

Income domain

Durables/Property domain

INDEX-1(basic) Housing

domain

Subjective welfare domain

INDEX-3

HH with able-bodied and children 46.9 44.6 43.2 52.5 53.1 15.8 51.3

HH with able-bodied and without children 42.7 53.1 41.8 53.2 61.7 15.8 53.4

Single able-bodied with children 31.3 43.0 26.4 39.0 54.6 13.8 39.2

Single able-bodied without children 45.7 70.7 28.4 56.0 76.1 17.3 58.5

Pensioners 21.8 47.7 31.9 39.3 61.0 11.9 40.1

Total 39.9 49.9 39.0 50.0 59.3 15.1 50.0

Age of Respondent (mean Age of Respondent (mean rank)rank)

Basic needs domain

Income domain

Durables/Property domain

INDEX-1(basic) Housing

domain

Subjective welfare domain

INDEX-3

18-24 51.5 53.2 43.4 57.7 58.0 18.5 57.3

25-34 53.2 52.6 40.8 57.2 58.9 14.7 56.4

35-44 44.6 48.4 41.5 52.2 56.6 15.1 51.5women 45-54 men 45-59 40.7 52.3 41.4 51.8 60.8 15.5 52.0women 55 & oldermen 60 & older 24.0 46.3 32.7 39.8 60.6 13.6 40.8

Total 39.9 49.9 39.0 50.0 59.3 15.1 50.0

MAX Level of Education (MAX Level of Education (mean mean rankrank) )

Basic needs

domainIncome domain

Durables/ Property domain

INDEX-1(basic) Housing

domain

Subjective welfare domain

INDEX-3

Less than primary 12.1 32.1 16.4 21.9 38.9 13.0 21.2

Primary education 16.0 36.8 20.3 27.4 47.7 11.2 27.2Incomplete secondary education 21.1 37.5 24.2 31.6 53.0 13.3 32.3Primary vocational institution 35.0 45.8 31.0 43.7 57.6 13.5 43.9

Secondary 37.0 44.9 34.2 45.2 55.1 15.1 45.1Secondary vocational institution 37.9 47.9 38.0 48.3 57.3 14.7 48.1Incomplete higher educational institution 49.8 54.6 46.1 59.1 63.1 19.4 59.4Higher educational institution 55.6 62.7 53.2 66.1 68.3 17.1 66.3

Postgraduate course 63.2 69.1 62.8 73.6 77.6 19.6 74.8

Total 39.9 49.9 39.0 50.0 59.3 15.1 50.0

MAX Professional Status (MAX Professional Status (mean mean rankrank) )

Basic needs domain

Income domain

Durables/Property domain

INDEX-1(basic) Housing

domain

Subjective welfare domain

INDEX-3

Unskilled workers 25.9 38.9 26.0 35.1 55.6 13.8 36.0

Semi-skilled workers 40.7 46.7 36.2 48.2 53.3 14.1 47.3Highly -skilled workers in industry or agriculture 42.0 51.7 34.5 50.5 58.6 15.1 50.5Employees of the service sector and employees involved in information processing 46.8 52.2 41.3 55.0 58.2 15.5 54.5

Medium specialists 54.1 60.4 47.8 62.9 62.4 16.8 62.2Top specialists (including military) 56.0 63.0 52.1 66.2 65.0 15.8 65.7

Heads 76.0 67.3 70.3 80.1 69.5 24.9 79.9

Total 48.5 55.1 43.5 57.2 60.4 15.9 56.8

Dependency Load (mean Dependency Load (mean rank)rank)

59.0

15.8

59.6

47.241.5

52.1

14.028.5

45.9

33.2

14.0

58.5

31.6

48.7

39.9

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

C a p a b i l i t i e s d o m a i n I n c o m e d o m a i n P r o p e r t y d o m a i n H o u s i n g d o m a i n S u b j e c t i v e d o m a i n

0 1 2 и более

 Number of children

INDEX-1(basic) INDEX-3

0 49.6 50.5

1 53.4 52.2

2 46.4 45.5

3 35.9 33.0

4 & more 25.9 23.8

Total 50.0 50.0

Pensioners

 Number of pensioners

INDEX-1(basic)

INDEX-3

0 54.6 54.4

1 41.4 42.1

2 & more 47.0 47.0

Total50.0 50.0

53,3

14,8

64,7

36,7 37,1

54,4

16,0

45,848,7

42,8

14,5

52,742,8

35,540,3

13,4

32,935,2

24,2

33,7

13,1

27,827,2

15,5

25,7

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Basic needsdomain

Income domain Durables/Propertydomain

Housing domain Subjective welfaredomain

01234 и более

Children

III. Empirical ApplicationsIII. Empirical Applications

Simulation of child birth Simulation of child birth intentions using the Welfare intentions using the Welfare

INDEXINDEX

  B Sig. Exp(B)

INDEX-1 (basic) 0.01 0.03 1.01

Good health in comparison with bad health 1.83 0.00 6.24

Number of rooms per capita 0.34 0.04 1.40

Duration of marriage -0.12 0.00 0.88

Number of children under 18 years in household -0.72 0.00 0.49

CONST -1.94 0.01 0.14Number of cases - 3110; Log Likelihood = 620.503

Sample: Women under 45 years

Dependent variable: Intention to give birth to a child in the next three years

Income PC 0.00 0.67 1.00

Thank you!Thank you!