GINI Policy Paper 4: Measuring material deprivation over the economic crisis: Does a re-evaluation of ‘need’ affect measures of material deprivation?

Measures of material deprivation attempt to capture enforced deprivation. To achieve this survey respondents are usually asked to indicate where non possession of an item of interest is due to not being able to afford it (classified as enforced deprivation) or for some other reason (such as not wanting or needed the item). The information presented in this paper shows that individuals are more likely to express that they do not want or need an item the lower their household income. In addition after 2007 as the economic crisis began to hit households there is some evidence of an increase in the share of households reporting that they lived without these items for a reason other than the fact that they couldn’t afford. These findings raise some important questions about what this category is capturing and that classifying these individuals as not materially deprived of an item may lead to an under recording of material deprivation. An explanation is required to understand why individuals living in lower income households are more likely to report that deprivation is not “enforced” than are individuals living in higher income households. Some preliminary model estimates suggest that the relationship cannot be explained by differences in age, gender or residential population density, at least for cars. In many European countries the impact of the recent economic and financial crisis hit households hard in 2011, 2012 and 2013 as unemployment increased. The EU-SILC microdata, used in this analysis, is currently available up to 2011 which will not capture the full impact of the crisis and its aftermath on material deprivation. More recent data may provide some further evidence on how individuals/households re-evaluate “need/want” as their income falls. It is shown that after 2007/2008 there have been annual increases in the share of individuals reporting that they are unable to meet unexpected financial expenses and an increase in the already steep income gradient. This suggests that as durables need repair or replacement there will be a further increase in the share of households going without these items unless household incomes increase.