Living Conditions and Poverty in Living Conditions and Poverty in Andalucía. Andalucía.

A Research on Subjective Well-beingA 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

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 SurveyDescription of the Survey

a. Information on housing conditions (area and dewling).

b. General demographic and socio-economic variables: educational, sources of

income, health status and occupation information on each household member.

c. Health and social problems; social services usage.

d. Income for each member, financial situation.

e. Subjective variables on social situation, political variables, evaluation of public

performance, social capital and satisfaction with life domains.

Description of the datasetDescription of the dataset

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

Overview of the satisfaction variablesOverview of the satisfaction variables

Building Financial SatisfactionBuilding Financial Satisfaction

Esperanza Vera-Toscano,

Victoria Ateca Amestoy &

Rafael Serrano del Rosal

• 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

MotivationMotivation

X

Job Satisfaction (0.0007)

Financial Satisfaction (0.639)

Housing Satisfaction (0.198)

Health Satisfaction (0.072)

Leisure Satisfaction (0.056)

Environmental Satisfaction (0.031)

General Satisfaction

• 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.

MotivationMotivation

AimAim

• 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?:

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

FrameworkFramework

Internal norm

External norm

Variables within the Variables within the 2003 Survey on Living Conditions and Poverty2003 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 regressionResults: Ordered probit regression

Variables ̂ p-value Income and Expectation Variables

Income (lnY) 0.261 0.380 Save > 500 €/month 0.535 0.004 Save 500-241 €/month 0.203 0.495 Save 240-121 €/month 0.474 0.000 Save 120-61 €/month 0.311 0.006 Need 61-120 €/month -0.294 0.030 Need 121-240 €/month -0.248 0.012 Need 241-500 €/month -0.351 0.001 Need > 500 €/month -0.288 0.019 Steady Income 0.327 0.103 Some Steady Income 0.190 0.335 Little Steady Income 0.059 0.755 Short term Expectations 0.254 0.000 Long term Expectations 0.090 0.138 Good Health 0.237 0.027 Bad Health -0.237 0.016 It is socially involved 0.176 0.006

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.

Results: Ordered probit regressionResults: 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

Variables ̂ p-value

Income Group (Mode) Very Rich 0.1665 0.033 Rich -0.0804 0.832 Poor 0.3330 0.135 Very Poor 0.1788 0.058

Subjective Social Class Very Poor -1.0144 0.000 Poor -0.3715 0.000 Comfortable 0.1989 0.034 Prosper 0.5562 0.001

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

Results: Ordered probit regressionResults: Ordered probit regression

Variables ̂ p-value

Income Group (Mean) Very Rich 0.0469 0.909 Rich 0.2787 0.958 Poor 1.4691 0.028 Very Poor 0.5134 0.084

Subjective Social Class Very Poor -0.9794 0.000 Poor -0.3667 0.000 Comfortable 0.2124 0.020 Prosper 0.5922 0.000

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

Relative Income II: Internal and external norm

Exogenous reference group by cohort:

Age*Education

Endogenous reference group in terms of own class adscription

Results: Ordered probit regressionResults: Ordered probit regression

Controlling for further individual heterogeneity:

Variables ̂ p-value

Socio-demographic Characteristics

Age -0.013 0.131 Age squared 0.0001 0.031 male -0.109 0.128 # adult living in the house -0.094 0.013 # children living in the house -0.038 0.291 Living alone 0.088 0.315 Nuclear family -0.074 0.436 Lone parents -0.255 0.015 Other household types -0.132 0.382

Socio-economic Characteristics primary schooling 0.053 0.686 secondary education 0.098 0.617 university level 0.029 0.875 Unemployed -0.477 0.000 Student 0.042 0.732 Retired -0.135 0.198 Housewife -0.144 0.145

1. Age: U-shape

2. Gender: No difference

3. Household size:

# of adults negative impact

# of kids no effect

4. Household type:

Lone parents less satisfied than couple with no kids

5. Education: No difference

6. Occupation:

Unemployed significantly less satisfied

ConclusionsConclusions

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 (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.

6. 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-.

7. Subjective social class (own adscription) determines FS

Adeq1 – Save > 500 €/month Adeq2 – Save 500-241 €/month Adeq3 – Save 240-121 €/month Adeq4 – Save 120-61 €/month Adeq5 – Save < 60 €/month & need < 60 €/month Adeq6 – Need 61-120 €/month Adeq7 – Need 121-240 €/month Adeq8 – Need 241-500 €/month Adeq9 – Need > 500 €/month

If income > savings then

adeqn = saving-income (saving capacity)

If no saving, income < necessary income then

adeqn = nec. inc. -income (financial need)

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The Leisure The Leisure

Experience:Experience:

me and the othersme and the others

Victoria Ateca Amestoy,

Rafael Serrano del Rosal &

Esperanza Vera-Toscano

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

AimsAims

• 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)

FrameworkFramework

XX

Job Satisfaction (0.0007)

Financial Satisfaction (0.639)Financial Satisfaction (0.639)

Housing Satisfaction (0.198)

Health Satisfaction (0.072)

Leisure Satisfaction (0.056)

Environmental Satisfaction (0.031)

General Satisfaction

Basic commoditiesBasic 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, discretionalLimits between categories: cook a meal, go to the park with the children

Commodity production function and consumer’s problemCommodity production function and consumer’s problem

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Household manteinance production function

Total income constraint

Variables from Variables from Survey on Living Conditions and PovertySurvey 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 regularitiesHypotheses 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)

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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 (+)

ResultsResults

Significant variables in the estimation of the ordered probit model for leisure satisfaction

Results and conclusionsResults 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 .

Thank you!

Both papers are available under request to:

VAmestoy@diw.de

Table 3: Sample Statistics

Variables

% (means if counts)

Std. errors

Subjective Financial Satisfaction Very much satisfied 0.0547 0.0066 Much satisfied 0.1991 0.0163 Satisfied 0.2147 0.0126 Not satisfied not unsatisfied 0.1436 0.0111 Unsatisfied 0.2366 0.0148 Much unsatisfied 0.0987 0.0075 Very much unsatisfied 0.0522 0.0050

Income and Expectation Variables Income (imputed monthly household income) 1158.9 35.935 Adeq1 – Save > 500 €/month 0.0266 0.0046 Adeq2 – Save 500-241 €/month 0.0492 0.0069 Adeq3 – Save 240-121 €/month 0.0799 0.0076 Adeq4 – Save 120-61 €/month 0.0936 0.0085 Adeq5 – Save < 60 €/month & need < 60 €/month

0.0744 0.0072

Adeq6 – Need 61-120 €/month 0.0432 0.0060 Adeq7 – Need 121-240 €/month 0.1638 0.0140 Adeq8 – Need 241-500 €/month 0.2622 0.0148 Adeq9 – Need > 500 €/month 0.2066 0.0130 Steady 1 – Steady Income 0.5778 0.0159 Steady2 – Some steady Income 0.2471 0.0120 Steady 3 – Little steady Income 0.1282 0.0080 Steady 4 – No steady Income 0.0439 0.0046 Short1 – Good opportunities for today 0.3583 0.0181 Short2 – Not so good opportunities for today 0.5511 0.0181 Long1 – Good opportunities for our children 0.5391 0.0190 Long2 – Not so good opportunities for children

0.2884 0.0171

Tabla IIa. Sample statistics – FINANTIAL SATISFACTION MODELTabla IIa. Sample statistics – FINANTIAL SATISFACTION MODEL

Table 3: Sample Statistics

Variables

% (means if counts)

Std. errors

Health1 – Good Health 0.7448 0.0137 Health2 – Regular Health 0.1687 0.0087 Health3 – Bad Health 0.0849 0.0117

Social Capital p – It is socially involved 0.5473 0.0217

Subjective Social Class Def1 – Very Poor 0.0112 0.0017 Def2 – Poor 0.1285 0.0126 Def3 – No poor/no rich 0.6319 0.0160 Def4 – Comfortable 0.2000 0.0172 Def5 – Prosper 0.0260 0.0044

Socio-demographic Characteristics Age 48.551 0.4150 Male 0.4673 0.0100 Adult – # adult living in the house 2.4561 0.0356 Children – # children living in the house 0.4314 0.0198 Hhold1 – Living alone 0.2013 0.0141 Hhold2 – Living with couple 0.2020 0.0107 Hhold3 – Nuclear family 0.4289 0.0138 Hhold4 – Lone parents 0.0593 0.0055 Hhold5 – Other household types 0.1082 0.0079

Socio-economic Characteristics Educ1 – No schooling 0.3468 0.0172 Educ2 – primary schooling 0.3192 0.0142 Educ3 – secondary education 0.1974 0.0123 Educ4 – university level 0.1261 0.0138 Occup1 – Working 0.3237 0.0132 Occup2 – Unemployed 0.0517 0.0039 Occup3 – Student 0.0298 0.0036 Occup4 – Retired 0.2384 0.0135 Occup5 – Housewife 0.3362 0.0165

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

Tabla IIb. Sample statistics – LEISURE SATISFACTION MODELTabla IIb. Sample statistics – LEISURE SATISFACTION MODEL

Variables %

(means if counts)

Std. errors

Leisure Satisfaction Very much unsatisfied 0.0117 0.0048 Much unsatisfied 0.0223 0.0025 Unsatisfied 0.0900 0.0096 Not satisfied not unsatisfied 0.1078 0.0080 Satisfied 0.2996 0.0149 Much satisfied 0.3490 0.0130 Very much satisfied 0.1193 0.0120

Objective Personal Variables Age 47.4086 0.3927 Female 0.5174 0.0095

Subjective Personal Variables Good health 0.7723 0.0111 Regular health 0.1548 0.0074 Bad health 0.0714 0.0094 Very poor 0.0095 0.0013 Poor 0.1094 0.0103 No poor nor rich 0.6213 0.0164 Comfortable 0.2219 0.0164 Prosper 0.0333 0.0057

Household Composition Vars. # children in household 0.3640 0.0161 # male adults in household (16-65 years) 0.6951 0.0195 # female adults in household (16-65 years) 0.6562 0.0158 # elderly in household (+65 years) 0.2422 0.0123 No handicapped in household 0.9419 0.0042 One handicapped in household 0.0491 0.0039 2+ handicapped in household 0.0027 0.0010 Living alone 0.0964 0.0098 Living with couple 0.1962 0.0080 Nuclear family 0.4829 0.0131 Lone parents 0.0766 0.0055 Other household types 0.1477 0.0099 Single 0.2834 0.0100 Married / Common law 0.5631 0.0130 Divorced 0.0426 0.0069 Widow 0.1092 0.0101

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

Socio-Economic Variables Household Income (Euros per month) 1076.99 30.9668 Working 0.4080 0.0121 Unemployed 0.0892 0.0062 Retired 0.2096 0.0125 Student 0.0419 0.0048 Housewife 0.2286 0.0097 All leisure expenditure capacity 0.3482 0.0169 Very high leisure expenditure capacity 0.1262 0.0084 High leisure expenditure capacity 0.1004 0.0080 Low leisure expenditure capacity 0.0965 0.0064 No leisure expenditure capacity 0.3276 0.0164 Lots of non-basic good owner 0.0299 0.0092 Some non-basic good owner 0.1795 0.0100 Few non-basic good owner 0.1753 0.0079 One non-basic good owner 0.2529 0.0103 No non-basic good owner 0.3622 0.0168

Social Capital: Participation/Integration No Participation in associations 0.7262 0.0143 Participation in one association 0.1744 0.0109 Participation in more than one association 0.0993 0.0080 Very little contacts with known people 0.1964 0.0139 Little contacts with known people 0.2338 0.0122 Quite some contacts with known people 0.3863 0.0154 Lots of contacts with known people 0.1788 0.0149

Environmental Variables Very rural 0.2599 0.0241 Rural 0.2379 0.0226 Semi-urban 0.1732 0.0173 Urban 0.3288 0.0229