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Empirical Economics

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01-11-2015

Comparative measures of multidimensional deprivation in the European Union

Authors: Gianni Betti, Francesca Gagliardi, Achille Lemmi, Vijay Verma

Published in: Empirical Economics | Issue 3/2015

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Abstract

This paper proposes new fuzzy measures of monetary poverty and also non-monetary deprivation, providing an economic interpretation of the parameters involved. For non-monetary deprivation, the paper provides a step-by-step procedure: dimensions or groupings of initial items of deprivation are identified using explanatory and confirmatory factor analyses, and a weighting system is applied for the aggregation of individual items into the dimension they represent. The methodology is applied to European Union countries using European Union-Statistics on Income and Living Conditions (EU-SILC) data for the 2011 survey wave.

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At macro-level see Anand and Sen (1997), while at individual level see Townsend (1979).

See also Cheli and Betti (1999) and Betti et al. (2002, 2004) for a longitudinal approach to poverty analysis using fuzzy sets, the book of Lemmi and Betti (2006) for further contributions on philosophy, mathematics, economics of the fuzzy set approach to poverty measurement, and the recent contributions of Belhadj (2011, 2012), Alkire and Foster (2011), Belhadj and Limam (2012) and Betti et al. (2013).

The equivalised income of a household is obtained by dividing its total disposable income by the household’s equivalent size computed by using an equivalence scale which takes into account the actual size and composition of the household.

Membership function (m.f.) is a quantitative specification of an individual’s or household’s degree of poverty or deprivation.

The exploratory factor analysis has identified 9 dimensions as follows: items \(b1\), \(b2\), \(b3\), \(b4\) and f1 in dimension 1; items \(g1\), \(g2\) and \(g3\) in dimension 2; items \(d3\), \(d4\) and \(d5\) in dimension 3; items \(c1\) and \(c2\) in dimension 4, items \(a1\), \(a2\), \(a3\), \(a4\) and \(a5\) in dimension 5, items \(h1\), \(h2\), \(i2\) and \(i2\) in dimension 6, items \(e1\), \(e2\) and \(e3\) in dimension 7, items \(g4\) and \(g5\) in dimension 8, and finally items \(d1\) and \(d2\) in dimension 9.

National income distributions have been pooled with weights in proportion to the population size for constructing the EU-level distribution.

The table has been ordered according to this ratio in order to illustrate the point being made.

Regional poverty rates have been computed from regional income distributions, but always using the national poverty line.

By the ‘level of poverty line’ is meant the population level to which the income distribution is pooled for the purpose of defining the poverty line. In fact, different levels for the poverty line can be seen as implying a different mix of ‘relative’ and ‘absolute’ measures. By relative measures is meant measures concerning purely the distribution of income, and by absolute measures those concerning income levels.

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Title: Comparative measures of multidimensional deprivation in the European Union
Authors: Gianni Betti
Francesca Gagliardi
Achille Lemmi
Vijay Verma
Publication date: 01-11-2015
Publisher: Springer Berlin Heidelberg
Published in: Empirical Economics / Issue 3/2015
Print ISSN: 0377-7332
Electronic ISSN: 1435-8921
DOI: https://doi.org/10.1007/s00181-014-0904-9

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