Benessere economico

Economic well-being

Basic concepts

Earning capacities and economic resources are not seen as an end but rather as a mean by which an individual is able to obtain and to support a specific standard of living. Variables which can help measuring the economic well-being include income, wealth, spending on consumer goods, housing conditions and ownership of durable goods. As for most of the other dimensions of well-being, it is important to go over the mere study of mean or median levels of the chosen indicators, evaluating also the distribution among population: the judgment on the level of material well-being of a society can change if the same overall mean income is equally divided among citizens or it is concentrated in the hands of a few wealthy people.

Dimensions considered to represent the domain

The domain was divided into two sub-dimensions:

  1. Available income and wealth. The income can be seen as the return of the assets individuals have at their disposal, real, financial and human. In a market economy, income measures the purchasing power of individuals and it is therefore a very significant variable in estimating the level of economic well-being. Wealth, as well as guaranteeing income, reduces insecurity, making people less vulnerable to the possible negative events that may affect them; it facilitate access to credit, and therefore allows people both to equilibrate their consumption pattern along the life cycle and to invest in physical and human capital; it confers social prestige. This sub-dimension also includes the analysis of debt.
  2. Expenditure on consumption and material conditions of life. Expenditure on consumption represents a direct estimate of goods and services that determine living conditions of an individual or a household, even if interpersonal comparisons are affected by differences in preferences and individual habits. Expenditure is strongly correlated to income. Material life conditions measure what is available in practice to individuals and the difficulties they encounter in acquiring the desired goods and services, capturing aspects that could not be detected by the level of income or consumption.

List of indicators

  1. Per capita adjusted disposable income: Ratio of adjusted household disposable income (inclusive of the value of in-kind services provided by public and non-profit institutions) to the total number of residents.
    This indicator estimates the total amount of income available to people resident in Italy, including the value of in-kind services. The National Accounts provides estimates directly comparable across countries.
  2. Disposable income inequality: Ratio of total equivalised income received by the 20% of the population with the highest income to that received by the 20% of the population with the lowest income.
    It is a simple statistic about the distance between the richest and the poorest. It is measured using income equivalent to take into account different family compositions (different needs between children and adults, economies of scale generated by sharing the same dwelling). This index is preferred to the Gini index because it is used for EU comparisons, though it does not provide information on the central part of the distribution.
  3. People at risk of poverty: Percentage of persons at risk of poverty, with an equivalised income less than or equal to 60% of the median equivalised income.
    It focuses on the lack of disposable income (and therefore of purchasing power) relative to a standard fixed on the basis of the entire distribution. In this sense, it also reflects the inequality in income distribution and not just the absolute life conditions. It is one of the indicators used in the Action Plan Europe 2020.
  4. Per capita net wealth: Ratio of total net wealth of households to the total number of residents.
    It is an indicator of financial resources other than income. The regional breakdown is currently unavailable.
  5. People living in financially vulnerable households: Percentage of people in households with debt service greater than 30% of disposable income.
    It measures financial instability and possible economic difficulties. The regional breakdown is currently unavailable.
  6. People living in absolute poverty: Proportion of individuals belonging to households with an overall consumption expenditure below the threshold of absolute poverty.
    Compared with measures of relative poverty, this indicator is independent from the distribution of consumption expenditure. Its interpretation is straightforward: it represents the share of people who spend less than a socially necessary minimum. The threshold of absolute poverty is differentiated by number of household members, age of the components, macro-area and size of municipality of residence; it reflects regional differences in the cost of living. The regional breakdown is currently unavailable.
  7. Severe material deprivation rate: Share of population living in households lacking at least 4 items out of the following 9 items: i) to pay rent or utility bills, ii) keep home adequately warm, iii) face unexpected expenses (of 800 euros in 2014), iv) eat meat, fish or a protein equivalent every second day, v) a week holiday away from home, or could not afford ) vi) a car, vii) a washing machine, viii) a colour TV, or ix) a telephone.
    It is a Eurostat indicator that directly considers the lack, for economic reasons, of some goods and services which are considered essential for a decent life.
  8. Severe housing deprivation rate: Share of population living in a dwelling which is considered as overcrowded, while also exhibiting at least one of the housing deprivation measures. Housing deprivation is calculated by reference to households with a leaking roof, neither a bath, nor a shower, nor an indoor flushing toilet, or a dwelling considered too dark.
  9. Index of economic distress: Share of individuals in households choosing the first answer category to the question “Considering all the available income, how does your household manage to get to the end of the month?” (With great difficulty, with difficulty, with some difficulty, with some ease, with ease, very easily).
  10. Low work intensity: Proportion of people living in households with very low work intensity namely household members of working age (person aged 18-59 years, with the exclusion of dependent children aged 18-24) that have worked during the income reference year less than 20% of the number of months that could theoretically have been worked by the same household members.