Does going beyond income make a difference? Income vs. equivalent income in the EU over 2007-2011

Ledić, Marko; Rubil, Ivica

doi:10.3326/pse.44.4.1.

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Does going beyond income make a difference? Income vs. equivalent income in the EU over 2007-2011

Marko Ledić*

Ivica Rubil*

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https://doi.org/10.3326/pse.44.4.1

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Table 1
Ordered logit estimation of life satisfaction model

	2007		2011		Difference		2007 and 2011 pooled
	Est.	SE	Est.	SE	Diff.	p-value	Est.	SE
lnY (β)	0.358	[0.031]***	0.296	[0.025]***	-0.062	0.124	0.324	[0.020]***
UNE (γ₁)	-0.661	[0.084]***	-0.690	[0.056]***	-0.029	0.773	-0.678	[0.047]***
HEAvbad (γ₂)	-2.264	[0.150]***	-2.313	[0.111]***	-0.049	1.000	-2.285	[0.089]***
HEAbad (γ₃)	-1.645	[0.071]***	-1.614	[0.060]***	0.031	1.000	-1.622	[0.046]***
HEAfair (γ₄)	-0.896	[0.050]***	-0.849	[0.042]***	0.047	0.474	-0.865	[0.032]***
HEAgood (γ₅)	-0.457	[0.042]***	-0.443	[0.035]***	0.014	0.803	-0.446	[0.027]***
HOUspace (γ₆)	-0.251	[0.042]***	-0.299	[0.036]***	-0.048	0.382	-0.282	[0.027]***
HOUrot (γ₇)	-0.330	[0.052]***	-0.317	[0.048]***	0.013	0.844	-0.317	[0.035]***
HOUdamp (γ₈)	-0.245	[0.048]***	-0.181	[0.042]***	0.064	0.318	-0.205	[0.032]***
HOUbathtoil (γ₉)	-0.219	[0.067]**	-0.054	[0.064]	0.165	0.076	-0.143	[0.046]**
CRImoder (γ₁₀)	-0.126	[0.034]***	-0.131	[0.029]***	-0.005	0.924	-0.125	[0.022]***
CRImajor (γ₁₁)	-0.202	[0.053]***	-0.232	[0.063]***	-0.030	0.721	-0.202	[0.039]***
ENVwater (γ₁₂)	-0.160	[0.037]***	-0.147	[0.035]***	0.013	0.803	-0.153	[0.025]***
ENVair (γ₁₃)	-0.087	[0.034]*	-0.116	[0.032]***	-0.029	0.534	-0.097	[0.023]***
male (π₁)	-0.123	[0.030]***	-0.067	[0.025]**	0.056	0.151	-0.087	[0.019]***
age (π₂)	-0.059	[0.006]***	-0.053	[0.005]***	0.006	0.415	-0.056	[0.004]***
age²(π₃)	0.641	[0.057]***	0.584	[0.045]***	-0.057	0.432	0.616	[0.035]***
edulow (π₄)	-0.212	[0.056]***	0.015	[0.051]	0.227	0.003	-0.094	[0.038]*
eduhigh (π₅)	0.020	[0.037]	0.015	[0.029]	-0.005	0.921	0.020	[0.023]
marrcoh (π₆)	0.353	[0.057]***	0.277	[0.043]***	-0.076	0.286	0.295	[0.034]***
divsep (π₇)	-0.309	[0.071]***	-0.231	[0.054]***	0.078	0.380	-0.263	[0.043]***
widow (π₈)	-0.173	[0.077]*	-0.170	[0.059]**	0.003	0.975	-0.182	[0.047]***
urban (π₉)	-0.048	[0.037]	-0.050	[0.030]+	-0.002	0.963	-0.062	[0.023]**
child (π₁₀)	0.144	[0.048]**	0.146	[0.037]***	0.002	0.970	0.158	[0.029]***
trust (π₁₁)	0.286	[0.011]***	0.222	[0.009]***	-0.064	0.000	0.247	[0.007]***
year2011 (π₁₂)							0.110	[0.020]***
pseudo R²	0.106		0.077				0.087
log likelih.	-34,000		-47,000				-82,000
chi-2	5,783		5,983				11,000
N	18,899		25,117				44,016

Note: Ordered logit estimates. Dependent variable: life satisfaction, with integer values from 1 (very dissatisfied) to 10 (very satisfied). All models include a constant (α) (coefficient not reported) and country dummies (δ2, δ3,…, δ27) (coefficients not reported). In column “Difference”, the differences are obtained by subtracting the coefficients for 2007 from those for 2011. For definitions of variables, see section 3 and Appendix. Robust standard errors are in brackets. +, *, ** and *** indicate statistical significance at the 10, 5, 1 and 0.1 percent level, respectively. The reference individual: woman, secondary education, single, from rural settlement,

childless, surveyed in 2011, from Austria, non-unemployed, with all non-income dimensions at the best levels. Weights are used in all estimations.

Table A1
Number of observations per country and year

Countries	Year
	2007		2011
	N	% of total N	N	% of total N
AT	534	2.8	729	2.9
BE	713	3.8	734	2.9
BG	586	3.1	691	2.8
CY	683	3.6	586	2.3
CZ	749	4.0	708	2.8
DE	1,364	7.2	2,312	9.2
DK	772	4.1	841	3.3
EE	740	3.9	702	2.8
EL	702	3.7	658	2.6
ES	451	2.4	901	3.6
FI	774	4.1	852	3.4
FR	1,126	6.0	1,889	7.5
HU	686	3.6	690	2.7
IE	403	2.1	807	3.2
IT	484	2.6	1,407	5.6
LT	749	4.0	897	3.6
LU	484	2.6	650	2.6
LV	591	3.1	756	3.0
MT	528	2.8	474	1.9
NL	771	4.1	811	3.2
PL	936	5.0	1,632	6.5
PT	376	2.0	544	2.2
RO	638	3.4	1,148	4.6
SE	900	4.8	820	3.3
SI	650	3.4	623	2.5
SK	731	3.9	656	2.6
UK	778	4.1	1,599	6.4
	18,899	100.0	25,117	100,0

Table A2
Variable definitions and summary statistics

Variable name in life satisfaction model	Description	Reference (best) category for non-income dimensions	2007		2011
Variable name in life satisfaction model	Description	Reference (best) category for non-income dimensions	Mean	SD	Mean	SD
S	life satisfaction; integer scale from 1 (very dissatisfied) to 10 (very satisfied)	-	7.06	2.08	7.05	2.12
lnY	logarithm of household disposable income equivalized by the OECD equivalence scale	-	9.99	0.71	9.81	0.71
UNE	1 if unemployed; 0 otherwise	“non-unemployed”: (self)employed, retired, students, other inactive	0.05	0.22	0.08	0.27
HEAvbad	1 if self-assessed health (SAH) very bad; 0 otherwise	SAH very good	0.02	0.13	0.02	0.15
HEAbad	1 if SAH bad; 0 otherwise	SAH very good	0.08	0.27	0.08	0.27
HEAfair	1 if SAH fair; 0 otherwise	SAH very good	0.27	0.44	0.28	0.45
HEAgood	1 if SAH good; 0 otherwise	SAH very good	0.41	0.49	0.4	0.49
HOUspace	1 if there is shortage of space; 0 otherwise	there is no shortage of space in dwelling	0.19	0.39	0.16	0.37
HOUrotten	1 if dwelling has rotten parts; 0 otherwise	there are no rotten parts in dwelling	0.13	0.33	0.10	0.30
HOUdamp	1 if there are damps or leaks in dwelling; 0 otherwise	there are no damps or leaks in dwelling	0.15	0.35	0.14	0.35
HOUbathtoil	1 if there is no bath or toilet in dwelling; 0 otherwise	there are both bath and toilet in dwelling	0.07	0.25	0.06	0.23
CRImoder	1 if moderate problems with crime or vandalism in the neighbourhood	no problems with crime or vandalism in neighbourhood	0.33	0.47	0.26	0.44
CRImajor	1 if major problems with crime or vandalism in neighbourhood.	no problems with crime or vandalism in neighbourhood	0.14	0.34	0.06	0.23
ENVwat	1 if any problems with drinking water in neighbourhood	no problems with drinking water in neighbourhood	0.36	0.48	0.22	0.41
ENVair	1 if any problems with air in neighbourhood	no problems with air in neighbourhood	0.44	0.50	0.26	0.44
male	1 if male; 0 if female	-	0.49	0.50	0.49	0.50
age	age in years	-	46.96	17.27	48.21	17.78
edulow	1 if low education (primary or less); 0 otherwise; reference: intermediate educ. (secondary)	-	0.10	0.31	0.10	0.30
eduhigh	1 if high education (tertiary); 0 otherwise; reference: intermediate educ. (secondary)	-	0.21	0.41	0.25	0.43
marrcoh	1 if married or in cohabitation; 0 otherwise; reference: single	-	0.67	0.47	0.54	0.5
divsep	1 if divorced or separated; 0 otherwise; reference: single	-	0.08	0.27	0.13	0.33
widow	1 if widowed; 0 otherwise; reference: single	-	0.09	0.28	0.12	0.32
urban	1 if living in urban area; 0 otherwise	-	0.24	0.43	0.25	0.43
child	1 if person has a child; 0 otherwise	-	0.75	0.43	0.69	0.46
trust	average of trust in people, legal system and police; 1-10 scale; higher value means higher trust	-	5.54	1.96	5.30	1.95

Note: The means and standard deviations are for all countries and only for the observations in the sample used for the estimation of the life satisfaction model.

Figure A2
Decomposition of the difference between the Gini coefficient for original and rescaled incomes

Countries	Year
	2007		2011
	N	% of total N	N	% of total N
AT	534	2.8	729	2.9
BE	713	3.8	734	2.9
BG	586	3.1	691	2.8
CY	683	3.6	586	2.3
CZ	749	4.0	708	2.8
DE	1364	7.2	2312	9.2
DK	772	4.1	841	3.3
EE	740	3.9	702	2.8
EL	702	3.7	658	2.6
ES	451	2.4	901	3.6
FI	774	4.1	852	3.4
FR	1126	6.0	1889	7.5
HU	686	3.6	690	2.7
IE	403	2.1	807	3.2
IT	484	2.6	1407	5.6
LT	749	4.0	897	3.6
LU	484	2.6	650	2.6
LV	591	3.1	756	3.0
MT	528	2.8	474	1.9
NL	771	4.1	811	3.2
PL	936	5.0	1632	6.5
PT	376	2.0	544	2.2
RO	638	3.4	1148	4.6
SE	900	4.8	820	3.3
SI	650	3.4	623	2.5
SK	731	3.9	656	2.6
UK	778	4.1	1599	6.4
	18899	100.0	25117	100,0

Note: The means and standard deviations are for all countries and only for the observations in the sample used for the estimation of the life satisfaction model.

This is an Open Access article distributed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC-BY-NC) which permits non commercial use and redistribution, as long as you give appropriate credit, provide a link to the license, and indicate if changes were made.

December, 2020
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