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A Measure of Income Poverty Including Housing: Benefits and Limitations for Policy Making

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  • Virginia Maestri

Abstract

Motivated by the increasing importance of housing wealth, the paper reviews the debate about the inclusion of housing in social indicators. The review identifies the availability of two different approaches: the inclusion of imputed rent and the deduction of housing expenses from disposable income. The advantages and disadvantages of different measurement methods are discussed from the point of view of different policy aims (poverty and tax analyses). This study uses 2010 EU-SILC data and provides an assessment of the impact of the housing situation of households on relative poverty and inequality and corresponding transition matrices into and out of poverty, according to the two approaches for measuring the housing situation. The results show that relative income poverty and inequality decrease if imputed rent is taken into account, while they increase if housing expenses are considered. The paper suggests that the deduction of housing expenses provides a better measure of relative poverty, while avoiding most measurement problems. The use of the capital market approach for the estimation of imputed rent would improve the assessment of the redistributive effect of taxes. The analysis and comparison of both approaches provides useful suggestions on the distributional effect of housing in different housing systems. Finally, the paper concludes with some remarks on housing-related variables and measurement issues for the construction of better social indicators. Copyright Springer Science+Business Media Dordrecht 2015

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  • Virginia Maestri, 2015. "A Measure of Income Poverty Including Housing: Benefits and Limitations for Policy Making," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(3), pages 675-696, April.
    • Handle: RePEc:spr:soinre:v:121:y:2015:i:3:p:675-696
    DOI: 10.1007/s11205-014-0657-z
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    References listed on IDEAS

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    1. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute of Labor Economics (IZA).
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    5. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional Effects of Imputed Rents in Five European Countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(3), pages 167-179.
    6. Dan Andrews & Aida Caldera Sánchez & Åsa Johansson, 2011. "Housing Markets and Structural Policies in OECD Countries," OECD Economics Department Working Papers 836, OECD Publishing.
    7. Tadashi Yagi & Toshiaki Tachibanaki, 1998. "Income Redistribution Through The Tax System: A Simulation Analysis Of Tax Reform," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(3), pages 397-415, September.
    8. Simone Pellegrino & Massimiliano Piacenza & Gilberto Turati, 2011. "Assessing the Distributional Effects of Housing Taxation in Italy: From the Actual Tax Code to Imputed Rent," CESifo Working Paper Series 3368, CESifo.
    9. Onrubia, Jorge & Rodado, M. Carmen & Ayala, Luis, 2009. "How do services of owner-occupied housing affect income inequality and redistribution?," Journal of Housing Economics, Elsevier, vol. 18(3), pages 224-232, September.
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    1. Manuel Schechtl, 2021. "Taking from the Disadvantaged? Consumption Tax Induced Poverty Across Household Types in 11 OECD Countries," LIS Working papers 807, LIS Cross-National Data Center in Luxembourg.
    2. Jane Zavisca & Theodore Gerber & Hyungjun Suh, 2021. "Housing Status in Post-Soviet Contexts: A Multi-dimensional Measurement Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(2), pages 609-634, January.
    3. Enrico Fabrizi & Chiara Mussida, 2020. "Assessing poverty persistence in households with children," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(4), pages 551-569, December.
    4. Enrico Fabrizi & Chiara Mussida, 2018. "Assessing poverty persistence in households with dependent children: the role of poverty measurement," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1839, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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