On Italian Households' Economic Inadequacy Using Quali-Quantitative Measures
Social Indicators Research, Forthcoming
35 Pages Posted: 28 Jun 2015 Last revised: 30 Jun 2015
Date Written: June 22, 2015
Motivated by an interest in investigating factors associated with poverty risks in Italy, our study provides insight into the relationship between various socio-economic, demographic, and behavioural variables and a new measure of the economic inadequacy of households. We propose that a household is in a condition of economic inadequacy when it simultaneously has difficulty making ends meet and is in arrears with payments of commitments for more than 90 days. To analyse the determinants of economic inadequacy, we use cross-sectional microdata collected through a structured questionnaire from a 2012 survey of household income and wealth (SHIW) conducted by the Bank of Italy. The results of the analysis show that the probability of economic inadequacy for Italian households is higher when the household is located in regions in southern Italy, has a low equivalent income, registers a decrease in income compared with that of a normal year, has a low liquidity ratio, pays rent for the house of residence, is over-indebted, is indebted to friends and relatives, and has an unhappy and impatient household head. We also propose constructing a composite indicator at the regional level that combines the percentage of households in relative poverty, as measured by the Italian National Institute of Statistics (ISTAT), and the percentage of households that we identify as existing in a condition of economic inadequacy. The composite indicator allows us to take into account some aspects of household living conditions that are not included in the measure of relative poverty.
Keywords: bivariate probit model; household’s economic inadequacy; endogeneity; survey of household income and wealth
JEL Classification: C3; C36; D03; D91; I32
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