Measurement and Identification of Asset-Poor Households: A Cross-National Comparison of Spain and the United Kingdom

This paper is concerned with the analysis of the wealth dimension of poverty in developed countries, which can hardly be measured by means of the information on household income. We focus in identifying the group of households that lack enough wealth holdings to sustain them during a period of economic crisis in order to quantify asset poverty, and its demographic weight, in two industrialized countries with particularly different household demographics and saving attitudes such as Spain and the United Kingdom. Our results show that the age profile of the asset poor is remarkably similar in the two countries. In both it is individuals in households whose head is under 45 years old who are more likely to be asset poor, even if, when the housing wealth component is excluded, both show that the incidence of asset poverty by head of household age follows a clear U-shape pattern. However, some country-specific differences also arise. For instance, the incidence of wealth poverty in the United Kingdom is twice that of Spain. Using counterfactual analysis we find that, although the different household demographics clearly contribute importantly to this result, there remains a significant part of the asset-poverty gap which is not explained by this relevant factor.