Abstract
There is a burgeoning literature on wealth in the rich world. It mainly focuses on the top. This paper shows that assets can also matter for the analysis of poverty and financial vulnerability. We introduce the concept of triple precariousness, afflicting households that not only have low income but also very low or non-existent assets to draw on for consumption needs, especially liquid assets. We ask whether these households—whom we might call the truly vulnerable—have different characteristics from those that we identify as poor or needy on the basis of income based metrics. This study looks in detail at Belgium, a country that represents a particularly interesting case because households are known to have levels of household wealth that are among the highest in the Eurozone, especially around and below the median, and yet it also has a comparatively high poverty rate, measured using disposable household income, as is commonly done in poverty studies. Drawing on HFCS data, we show that households with a reference person that is young, unemployed, low educated, migrant, single, and above all a tenant are especially financially vulnerable. By contrast, our assessment of the extent and depth of financial need among the elderly—a segment of society that is at a relatively high risk of income poverty—also changes. A substantial share of income poor elderly households own significant assets. We draw out some tentative consequences of these findings for anti-poverty and redistributive policies.
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Notes
Wealth and net worth are used interchangeably throughout this paper.
Results of this validation exercise are not included in this paper, but are available upon request.
According to this definition the reference person is determined based on the following sequential steps:
one of the partners in a registered or de facto marriage, with dependent children.
one of the partners in a registered or de facto marriage, without dependent children.
a lone parent with dependent children.
the person with the highest income.
the eldest person.
(HFCN 2013a, pp. 16–17).
It is worth noting that the largest share in total assets highly depends on where the household’s main residence and other real estate property are classified because they typically constitute the largest shares of net worth. Indeed, we find for all households that non-liquid assets have the dominant share in total assets. However, our results remain robust even when real estate is not included.
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The authors gratefully acknowledge financing from BELSPO for the CRESUS project (BR/121/A5/CRESUS). We would like to thank participants of the CSP Seminar, the 2014 Spring Meeting of the ISA RC28, the 2014 FISS Conference and the 2015 SASE Conference for their helpful comments and suggestions on earlier drafts of this paper. Remaining errors are all ours.
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Kuypers, S., Marx, I. The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness. Soc Indic Res 142, 131–147 (2019). https://doi.org/10.1007/s11205-018-1911-6
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DOI: https://doi.org/10.1007/s11205-018-1911-6