Measurement and analysis of household welfare: possible approaches using GGS data L. Ovcharova, A. Pishniak, D. Popova Independent Institute for Social Policy

Objective Developing a comprehensive methodology of measuring household welfare Developing a comprehensive methodology of measuring household welfare Expected output: a household welfare index, measuring various dimensions of welfare, which could be used in simulations of demographic intentions Expected output: a household welfare index, measuring various dimensions of welfare, which could be used in simulations of demographic intentions

I. Methodology

Theoretical approaches Household welfare is measured by 5 domains:  Income  Durables/Property  Basic needs  Housing  Subjective welfare

Income domain Household income is calculated as a maximum value of: Household income is calculated as a maximum value of: -the sum of separate components of income -total household income estimated by the respondent. Missing values are imputed on the basis of linear regression model. Missing values are imputed on the basis of linear regression model. Per capita income is adjusted for regional disparities in purchasing power using the ratio of the cost of all-Russian subsistence minimum and regional subsistence minimum. Per capita income is adjusted for regional disparities in purchasing power using the ratio of the cost of all-Russian subsistence minimum and regional subsistence minimum. Income outliers are capped. Income outliers are capped.

Other domains Each domain index consists of a group of indicators Each domain index consists of a group of indicators When the household is able to afford the item (indicator) it is awarded the score of 1. If an item cannot be afforded the household is awarded the score of 0. When the household is able to afford the item (indicator) it is awarded the score of 1. If an item cannot be afforded the household is awarded the score of 0. Possible approaches to estimate the total household welfare index: A simple count approach A prevalence weighting approach I = Σa i x i / Σa i *100

Durables/property domain: indicators There are 11 indicators available Color TV set Video Cassette Recorder or DVD-Player Washing Machine Microwave Personal Computer Telephone Car or Mini-van for Private Use A Second Car Second Housing Refrigerator Dish-Washer

Basic needs domain: indicators There are 6 indicators available Once a year to go on 1-week vacation away from home for every member of the household To replace, if necessary, old furniture To buy new, not second-hand, clothes To eat meat, chicken, or fish at least every second day To invite friends or relatives for lunch, dinner at least once a month To keep the house warm enough

Housing domain: indicators Number of rooms/equivalent household size Number of rooms/equivalent household size Status of ownership (owner/tenant) Status of ownership (owner/tenant) Basic utilities (constructed on the base of RLMS, 2004) Basic utilities (constructed on the base of RLMS, 2004)

Subjective welfare: indicators 2 indicators of subjective welfare are available: 1) Subjective assessment of financial well- being “the ability to make ends meet» - answers “very easy” or “easy”1 - answers “very difficult” or “difficult”0 ___________________________________ 2) Satisfaction with the housing – scale answers from 8 to answers from 0 to 2 0

Combining the domain indices into an overall welfare index The analysis of the reliability of the scale was undertaken to show whether all domain indices measure the same variable “household welfare”

Combining the domain indices into an overall welfare index: weighting Weights were generated by single factor analysis. The weights are as follows:

II. Profiles

Income Quintiles (mean rank) Quintiles Basic needs domain Durables/ Property domain Housing domain Subjective welfare domain INDEX-1 (basic) INDEX-2INDEX Total

Household Size (mean) INDEX-1 (basic) INDEX-3 single persons persons persons & more persons Total50.0

Type of Settlement (mean rank) Basic needs domain Income domain Durables / Property domain INDEX-1 (basic)Housing domain Subjective welfare domain INDEX-3 Regional, territorial or republican center Other cities Urban-type community Countryside Total

Socio-Demographic Type (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 HH with able- bodied and without children Single able- bodied with children Single able- bodied without children Pensioners Total

Age of Respondent (mean rank) Basic needs domain Income domain Durables/ Property domain INDEX-1 (basic)Housing domain Subjective welfare domain INDEX women men women 55 & older men 60 & older Total

MAX Level of Education ( mean rank ) Basic needs domain Income domain Durables/ Property domain INDEX-1 (basic)Housing domain Subjective welfare domain INDEX-3 Less than primary Primary education Incomplete secondary education Primary vocational institution Secondary Secondary vocational institution Incomplete higher educational institution Higher educational institution Postgraduate course Total

MAX Professional Status ( mean rank ) Basic needs domain Income domain Durables/ Property domain INDEX-1 (basic)Housing domain Subjective welfare domain INDEX-3 Unskilled workers Semi-skilled workers Highly -skilled workers in industry or agriculture Employees of the service sector and employees involved in information processing Medium specialists Top specialists (including military) Heads Total

Dependency Load (mean rank) Number of children INDEX-1 (basic)INDEX & more Total 50.0 Pensioners Number of pensioners INDEX-1 (basic) INDEX & more47.0 Total 50.0 Children

III. Empirical Applications

Simulation of child birth intentions using the Welfare INDEX BSig.Exp(B) INDEX-1 (basic) Good health in comparison with bad health Number of rooms per capita Duration of marriage Number of children under 18 years in household CONST Number of cases ; Log Likelihood = Sample: Women under 45 years Dependent variable: Intention to give birth to a child in the next three years Income PC

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