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Measuring Vulnerability to Poverty with Latent Transition Analysis

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Abstract

In last years, the debate about social and economic development considered with increasing interest the exposure to the risk of poverty rather than poverty itself. The risk for an individual or a household to become or remain poor in an immediate future is defined as vulnerability to poverty. According to the recent literature, poverty is a complex phenomenon requiring an operationalisation that takes into account its multidimensionality, encompassing both objective and subjective elements. Due to the latent nature of poverty, it is possible to study this construct by analysing a set of manifest indicators. Focusing on vulnerability to poverty, a forward-looking perspective has also to be considered for depicting the dynamicity of the analysed phenomenon. For these reasons, here we propose to use latent transition analysis (LTA) to study vulnerability to poverty. This approach allows identifying unobservable (latent) classes within a population based on the responses to multiple observed variables. Moreover, it allows evaluating the movement between different classes over time, in terms of probability of transition. This probability can be used to estimate vulnerability to poverty. The usefulness of LTA in this context is showed by presenting a case study concerning Italian households over 2008–2012.

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Notes

  1. Over the same period, the peculiarity of these countries, when compared to France, Germany and Netherlands, is also clear if one looks at the domestic euro-area sovereign exposure of banks. While in both groups of countries banks reduced their domestic sovereign debt exposure until 2008, with periphery banks actually reducing their domestic sovereign exposures proportionately more, they both started increasing it again after 2008, with periphery banks increasing it by more than core-country banks (Battistini et al. 2014).

  2. This means that they were at least in one of the following three conditions: at-risk-of-poverty in terms of income, severely materially deprived—meaning that they had living conditions constrained by a lack of resources such as not being able to afford to pay their bills, keep their home adequately warm, or take a one week holiday away from home—or living in households with very low work intensity.

  3. Source: Istat (http://seriestoriche.istat.it.)

  4. A social system that uses a large part of the resources for the pensions allowed those who have had a regular job for long time to maintain a good level of income at retirement, reducing the risk of poverty for older people (Saraceno 2015).

  5. Arguably, households living in Southern Italy are even in worse conditions than poor households living elsewhere, due to the great inequality (Brandolini and Torrini 2010).

  6. https://ec.europa.eu/eurostat/documents/1978984/6037342/ISCED-EN.pdf

  7. A more extensive overview of the different items and the related categories can be found in the SHIW website: https://www.bancaditalia.it/statistiche/tematiche/indagini-famiglie-imprese/bilanci-famiglie/documentazione/index.html.

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  1. DiSES, University of Naples Federico II, Naples, Italy

    Antonio Acconcia, Maria Carannante & Germana Scepi

  2. DiScAG, University of Calabria, Rende, Italy

    Michelangelo Misuraca

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Acconcia, A., Carannante, M., Misuraca, M. et al. Measuring Vulnerability to Poverty with Latent Transition Analysis. Soc Indic Res 151, 1–31 (2020). https://doi.org/10.1007/s11205-020-02362-3

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  • DOI: https://doi.org/10.1007/s11205-020-02362-3

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