Relative Deprivation, Reference Groups and the Assessment of Standard of Living

Economic Systems (Impact Factor: 0.61). 03/2012; 36(1). DOI: 10.1016/j.ecosys.2011.04.006


This paper proposes two new indices of relative deprivation, derived from an extension of the concept of the generalized Gini for the measurement of distributional change. Population- and income-weighted relative deprivation indices are then defined and, using panel data from the Consortium of Household Panels for European Socio-Economic Research, this paper checks which of the various ways of defining individual deprivation best fits the answers given by individuals on the degree of their satisfaction with income. The analysis finds that the deprivation indices proposed are consistently and negatively correlated with income satisfaction as reported by respondents, that income weighted measures fit better than population weighted measures, and that this fit improves with countries that experienced deep institutional changes such as the transitional economies of Eastern Europe.

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    • "The availability of individual data resulted in especially intense development in the latter area. Widely discussed issues of inclusive growth and relative deprivation (see Ali and Son 2007, Silber and Alberto in 2012, Podder 1996) are very closely linked with the problems of inequality and polarization, as one of their possible consequences. The key question in this type of analysis remains the problem of assessing the consequences of changes in the level of inequality – polarization and convergence processes in particular 1 . "
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    ABSTRACT: Polarization in income distribution is an issue often analyzed in the literature in the context of income inequality. One aspect of such researches concerns impact of polarization on the economic growth. Analyses from this field, presented in the literature, are usually focused on the econometric modeling. However, for a broader assessment of the relationship between polarization and the economic growth more detailed analysis is needed – taking into account areas of the income concentration and possible consequences for economic behavior of individuals and households. The empirical results indicate the presence of polarization in the distribution of income in 2000-2010 in Poland and the dominance of the upper polarization over the lower polarization. While the lower polarization is a clearly negative phenomenon, its impact was not directly considered in the study. And the upper polarization – in the situation of Poland – proved to involve positive changes in the economic behavior of households in the area of savings, loans and labor supply.
    87th Annual Conference of Western Economic Association International; 07/2012
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    • "Economics has approached the question of relative deprivation and reference groups in more recent times with the introduction of the first quantitative measure of relative deprivation developed by Yitzhaki in 1979, and today there are a range of measures of relative deprivation that can be readily used for analyses (Hey and Lambert, 1980, Bossert and D'Ambrosio, 2006, Chakravarty et al. 2005, Chakravarty, 2007). In particular, recent research has shown how quantitative measures of relative deprivation can be adapted to incorporate self-selection mechanisms of the reference groups (Verme and Izem, 2008, Silber and Verme, 2011), an issue particularly relevant if we want to better understand how feelings of deprivation can be generated among marginalized groups in society. "
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    ABSTRACT: One of the recurrent explanations of the Arab spring is that governments were disconnected from their populations and that public policies were simply not in line with people's sentiments and expectations. This paper provides a methodology to better understand how objective conditions of deprivation are translated into subjective feelings of deprivation using a strand of the recent literature on relative deprivation. The authors apply this methodology to better understand the question of gender and youth deprivation in the context of the Moroccan labor market. They find that the reference group (the people with whom people compare themselves) plays a pivotal role in understanding how feelings of labor deprivation are generated. This can explain the apparent mismatch between objective conditions and subjective feelings of deprivation related to joblessness among young men and women. The methodology can help us understand why greater discontent may be exhibited by a group of individuals who are in fact less deprived in a material sense. It can also potentially help governments design public policies that address objective conditions of deprivation, such as unemployment, with a better understanding of subjective implications.
    Review of Income and Wealth 06/2012; 61(1). DOI:10.1111/roiw.12080 · 0.81 Impact Factor
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    ABSTRACT: Distributional patterns evolved quite differently and stabilized at diversified levels across the Central–Eastern European and former Soviet Union countries which underwent transition. In this paper we provide an overview of income inequality dynamics for 22 transition countries from 1989 to 2008 and of the explanations and interpretations proposed by the main literature. We then highlight that while the effects of different transition approaches on output dynamics and other macroeconomic aggregates have been largely analysed, scarce attention has been devoted so far to their impact on distributive patterns. However, this kind of analysis might usefully contribute to complete the complex picture of the many social, economic and structural factors affected by transition and provide useful policy insights for those countries still experiencing deep institutional change.
    Economic Systems 03/2012; 36(1):2-10. DOI:10.1016/j.ecosys.2011.09.001 · 0.61 Impact Factor
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