We analyze households’ economic freedom to determine their standard of living, characterized by their capacity to spend on housing, utilities, food, and transport: economic poverty is a lack of freedom due to budgetary constraints. We propose three new measures. The first is the classical notion of “freedom to choose”, distinguishing however between the categories of high, medium and low frequency of purchase. Facing a food price increase, households in the lowest decile cannot escape it: they are not free. For the lowest decile the share of high-frequency consumption goods is 60%. We show that the households in the 1° decile of consumption recorded an inflation rate which, between 1999 and 2009, was 7 percentage points higher than the inflation rate for the 10° decile. The second is a measure of the freedom to choose an adequate food plan: the share of households unable to ensure adequate food consumption, according to our measure, was 6.3% in 2007, increasing to 8.4% in 2009. We show that food consumption, inside and outside the home, is constrained by housing costs. The level of food consumption for households below the food poverty line is startlingly low for families with children, and constraints on food consumption in the north are slightly higher than in the south of Italy. The third measure is defined with reference to a “negative saving” of necessities, i.e. a level of income lower than that required to ensure an adequate consumption of non-durable goods and services. The share of households which experienced financial difficulties in 2008, at the onset of the crisis, was 13.7%. The households with negative savings are typically those having one earner, working class, young and living in rented housing; this group tended to increase between 1998 and 2008. While the level of food and clothing consumption is almost equal in the north and the south of Italy, the degree of economic vulnerability is higher in the south when considering income and savings.
Campiglio, L. P., Libertà del vivere una vita civile e deprivazione economica, <<Quaderno dell'Istituto di Politica Economica>>, 2011; (58): 1-48 [http://hdl.handle.net/10807/8333]
Libertà del vivere una vita civile e deprivazione economica
Campiglio, Luigi Pierfranco
2011
Abstract
We analyze households’ economic freedom to determine their standard of living, characterized by their capacity to spend on housing, utilities, food, and transport: economic poverty is a lack of freedom due to budgetary constraints. We propose three new measures. The first is the classical notion of “freedom to choose”, distinguishing however between the categories of high, medium and low frequency of purchase. Facing a food price increase, households in the lowest decile cannot escape it: they are not free. For the lowest decile the share of high-frequency consumption goods is 60%. We show that the households in the 1° decile of consumption recorded an inflation rate which, between 1999 and 2009, was 7 percentage points higher than the inflation rate for the 10° decile. The second is a measure of the freedom to choose an adequate food plan: the share of households unable to ensure adequate food consumption, according to our measure, was 6.3% in 2007, increasing to 8.4% in 2009. We show that food consumption, inside and outside the home, is constrained by housing costs. The level of food consumption for households below the food poverty line is startlingly low for families with children, and constraints on food consumption in the north are slightly higher than in the south of Italy. The third measure is defined with reference to a “negative saving” of necessities, i.e. a level of income lower than that required to ensure an adequate consumption of non-durable goods and services. The share of households which experienced financial difficulties in 2008, at the onset of the crisis, was 13.7%. The households with negative savings are typically those having one earner, working class, young and living in rented housing; this group tended to increase between 1998 and 2008. While the level of food and clothing consumption is almost equal in the north and the south of Italy, the degree of economic vulnerability is higher in the south when considering income and savings.
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