1. Measurement and analysis of household welfare: possible approaches using GGS data 29.11.2007 L. Ovcharova, A. Pishniak, D. Popova Independent Institute for Social Policy

2. 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

3. I. Methodology

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

5. 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.

6. 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

7. 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

8. 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

9. 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)

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

11. 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”

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

13. II. Profiles

14. Income Quintiles (mean rank) Quintiles Basic needs domain Durables/ Property domain Housing domain Subjective welfare domain INDEX-1 (basic) INDEX-2INDEX-3 1 20.825.042.412.521.120.620.9 2 25.230.954.113.033.934.034.1 3 33.937.658.813.648.548.4 4 50.046.566.215.665.565.665.5 5 69.855.074.920.680.781.281.0 Total 39.939.059.315.150.0

15. Household Size (mean) INDEX-1 (basic) INDEX-3 single41.844.0 2 persons48.949.7 3 persons54.954.7 4 persons53.051.9 5 & more persons48.345.1 Total50.0

16. 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 45.457.844.057.070.416.858.6 Other cities 40.353.838.251.277.414.854.0 Urban-type community 39.948.538.649.259.916.449.5 Countryside 30.533.131.737.221.212.131.6 Total 39.949.939.050.059.315.150.0

17. 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 46.944.643.252.553.115.851.3 HH with able- bodied and without children 42.753.141.853.261.715.853.4 Single able- bodied with children 31.343.026.439.054.613.839.2 Single able- bodied without children 45.770.728.456.076.117.358.5 Pensioners 21.847.731.939.361.011.940.1 Total 39.949.939.050.059.315.150.0

18. Age of Respondent (mean rank) Basic needs domain Income domain Durables/ Property domain INDEX-1 (basic)Housing domain Subjective welfare domain INDEX-3 18-24 51.553.243.457.758.018.557.3 25-34 53.252.640.857.258.914.756.4 35-44 44.648.441.552.256.615.151.5 women 45-54 men 45-59 40.752.341.451.860.815.552.0 women 55 & older men 60 & older 24.046.332.739.860.613.640.8 Total 39.949.939.050.059.315.150.0

19. 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 12.132.116.421.938.913.021.2 Primary education 16.036.820.327.447.711.227.2 Incomplete secondary education 21.137.524.231.653.013.332.3 Primary vocational institution 35.045.831.043.757.613.543.9 Secondary 37.044.934.245.255.115.145.1 Secondary vocational institution 37.947.938.048.357.314.748.1 Incomplete higher educational institution 49.854.646.159.163.119.459.4 Higher educational institution 55.662.753.266.168.317.166.3 Postgraduate course 63.269.162.873.677.619.674.8 Total 39.949.939.050.059.315.150.0

20. 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 25.938.926.035.155.613.836.0 Semi-skilled workers 40.746.736.248.253.314.147.3 Highly -skilled workers in industry or agriculture 42.051.734.550.558.615.150.5 Employees of the service sector and employees involved in information processing 46.852.241.355.058.215.554.5 Medium specialists 54.160.447.862.962.416.862.2 Top specialists (including military) 56.063.052.166.265.015.865.7 Heads 76.067.370.380.169.524.979.9 Total 48.555.143.557.260.415.956.8

21. Dependency Load (mean rank) Number of children INDEX-1 (basic)INDEX-3 049.650.5 153.452.2 246.445.5 335.933.0 4 & more25.923.8 Total 50.0 Pensioners Number of pensioners INDEX-1 (basic) INDEX-3 054.654.4 141.442.1 2 & more47.0 Total 50.0 Children

22. III. Empirical Applications

23. Simulation of child birth intentions using the Welfare INDEX BSig.Exp(B) INDEX-1 (basic)0.010.031.01 Good health in comparison with bad health1.830.006.24 Number of rooms per capita0.340.041.40 Duration of marriage-0.120.000.88 Number of children under 18 years in household-0.720.000.49 CONST-1.940.010.14 Number 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

24. Thank you!