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More than Cash: Societal Influences on the Risk of Material Deprivation

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Abstract

This paper considers the societal factors which determine a household’s command over resources aside from cash income. The aim of this paper is to explain why in some European countries the deprivation risk for households is relatively low despite high absolute poverty levels. Two main mechanisms at the societal level are identified that reduce deprivation but which do not directly impact disposable income. The first is the provision of in-kind benefits which increase the purchasing power of households; the second is informal support from networks. An analysis using 2012 EU-SILC data shows that both factors are significant in explaining the cross-country variation in Europe while controlling for national affluence. Households which have higher in-kind benefits from social services as well as non-cash company benefits and their own production show lower levels of deprivation. On the national level, universally provided social services (e.g. housing, healthcare or transport) can substantially improve the living conditions of the income poor and reduce social exclusion. However, the main factor explaining cross-country variation in deprivation is the provision of informal support from networks. When the social context is dominated by low generalised trust, social support for poor households is lower, leading to a marginalisation of the poor. In contrast, when trust is high, support from kin and non-kin networks in terms of lump sum transfers or co-usage of consumer goods significantly improve living conditions.

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Notes

  1. It can be argued that the assumption of an “enforced absence” is flawed. Preferences still play a role, as a person spending a high part of his or her income on ‘unnecessary’ types of goods can still be lacking those goods deemed necessary for participating in society. Moreover, the “non-monetary absence” is subject to a large income gradient that can be explained based on the presence of adaptive preferences (McKnight 2013), meaning that households with a low income will often have decreased aspirations.

  2. Guio et al. (2009) as well as Dickes et al. (2010) show a high level of congruence between the 27 national patterns of social perceptions. Nonetheless, annual holidays are only perceived as absolute necessities by more than half of the population in 12 Member States. Also, not all of the households amenities are perceived in all EU countries to constitute social needs (e.g. colour TV only in 19 countries, phone in 14 countries, car in 16 countries) (see Guio et al. 2009). In addition to differential perceptions across Member States, it can also be questioned to what extent all groups of individuals within a country have the same social perception. Different elasticities of demand for consumer goods could exist e.g. by generation, location or family composition (Till and Eiffe 2010).

  3. ICC = σ 2μ /(σ 2μ  + σ 2ε ) with sigma referring to the population-level estimates of variance.

  4. Nonetheless, also with social security benefits the problem arises that the contribution does not have to be equal to the benefits received—even if accounting across persons.

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  1. School of Educational and Social Sciences, Carl von Ossietzky University Oldenburg, 26129, Oldenburg, Germany

    Sabine Israel

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Israel, S. More than Cash: Societal Influences on the Risk of Material Deprivation. Soc Indic Res 129, 619–637 (2016). https://doi.org/10.1007/s11205-015-1138-8

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