I chimed in on this ‘overburden rate’ for the DSP who asked me to review their roadmap for social inclusion 2020-2025 report last year, which includes this particular indicator.
I’ve just copied and pasted a few paragraphs on that if you’re interested!
1)
‘In terms of measurement, while all of the indicators are measured at the household level, the analysis could draw attention to individual level indicators, where household level measurement obscures the experience of particular groups such as growing numbers of younger adults living at home, women and workers. Over the past decade or so, there has been a compositional change at the household level in Ireland, making time-series data difficult to interpret especially when it comes to indicators around incomes or indicators of cost burden over incomes. Since 2012, SILC data show the share of adult children living at home and the average age at which young adults leave home have increased in Ireland on both counts by more than almost any other EU member. For instance, for the 25-34-year-old group the share living with parents has doubled from approximately 21% in 2012 to 41% in 2021 (just behind Spain at 46%). Six in ten of this group are in full-time employment. In 2021, it was less than 4 in 10 (37.5%). Thus, though many are deprived of independent living and socially excluded from a normal adult life through the cost of housing, their earnings or even social welfare payments inflate the household earnings of their parents while the mortgage stays the same or in many cases, is paid off. Growing numbers in this group reflect inadequate earnings for a minimum essential standard of living in a cost of living crisis. Estimates for household incomes in which these workers live (but also average household incomes generally) are being pushed up by this compositional effect in a way that’s not reflecting their living standards. Certainly the likeliness of a young adult living and working at home being found below the income poverty threshold or in deprivation as it is measured in the EU is much lower, though they are deprived of housing and socially excluded through housing affordability issues. https://ec.europa.eu/eurostat/databrowser/view/ILC_LVPS08__custom_6256126/default/table?lang=en
This has a clear effect on the housing cost burden indicator for example, which at 5% suggests that there is no housing crisis in Ireland today. The measure is clearly not meaningful or policy relevant as it is presented. Counted at the household level, this indicator obscures the inability for growing numbers of young working adults to afford minimum essential goods (living independently) and in fact the estimate suggests presents most 95% of the population are in a reasonable position in terms of the housing costs they face. The Roadmap for Social Inclusion 2020-2025 mentions the importance of earnings for individual workers but none of the indicators address labour market issues and how they relate to living costs, instead losing the detail of intergenerational inequalities in housing in household level data. Irish 15-29 year olds for example have one of the lowest AROP rates in the EU. This is in large part not due to high earnings but to the fact that 4 in 5 still live at home, now the 7th highest share in the EU. Ireland had the 18th highest rate in 2012. Ireland has one of the highest shares of low pay in the EU for instance. This issue is highly gendered and also important to help capture more appropriately living standards for younger people that are actually in line in a meaningful way with the hurdles they face in 2023 and has real life implications for policy.
Some of the indicators on the list are not particularly useful generally, but also some are specifically not useful for analysis of Irish poverty and social exclusion.
It’s important to distinguish between housing cost overburden and housing affordability. I’ve already discussed some of the issues around how changing household composition are biasing the results, especially for younger adults. The value of the housing cost burden indicator is highly dubious in capturing issues in the Irish housing market, arguably the largest policy issue in Ireland today. The indicator does nothing to illuminate the experience of workers and how their earnings relate to minimum living costs. Indeed, compositional changes towards more adults and more workers per household (which continue) could bias the results such that estimates indicate an improvement in living standards in a time-series analysis where a decline in living standards (deprived of normal living) is the actual reality for many. There are subjective measures collected in SILC on the burden of their housing costs, which would be more interesting and relevant, but ultimately, I would argue that the best way to measure social exclusion or poverty relating to housing costs is affordability by wages/earnings (median or at the 20th percentile, possibly controlled by age group) over the cost of renting a one-bedroom apartment or a room in shared accommodation.’
2)
Over the last two decades we’ve also been playing catch up with other high income EU countries in terms of women’s participation thus pushing up household incomes (relevant if we’re analysing time-series).
3)
I think HAP payments are also biasing results as they are included in household income in SILC (pushing it up obviously and the burden down).
I’d argue that sticking to earnings we’d have different results and that they’re conceptually more aligned with the concept of ‘affordability’, which is different from current overburden.
Hi Michael,
I chimed in on this ‘overburden rate’ for the DSP who asked me to review their roadmap for social inclusion 2020-2025 report last year, which includes this particular indicator.
I’ve just copied and pasted a few paragraphs on that if you’re interested!
1)
‘In terms of measurement, while all of the indicators are measured at the household level, the analysis could draw attention to individual level indicators, where household level measurement obscures the experience of particular groups such as growing numbers of younger adults living at home, women and workers. Over the past decade or so, there has been a compositional change at the household level in Ireland, making time-series data difficult to interpret especially when it comes to indicators around incomes or indicators of cost burden over incomes. Since 2012, SILC data show the share of adult children living at home and the average age at which young adults leave home have increased in Ireland on both counts by more than almost any other EU member. For instance, for the 25-34-year-old group the share living with parents has doubled from approximately 21% in 2012 to 41% in 2021 (just behind Spain at 46%). Six in ten of this group are in full-time employment. In 2021, it was less than 4 in 10 (37.5%). Thus, though many are deprived of independent living and socially excluded from a normal adult life through the cost of housing, their earnings or even social welfare payments inflate the household earnings of their parents while the mortgage stays the same or in many cases, is paid off. Growing numbers in this group reflect inadequate earnings for a minimum essential standard of living in a cost of living crisis. Estimates for household incomes in which these workers live (but also average household incomes generally) are being pushed up by this compositional effect in a way that’s not reflecting their living standards. Certainly the likeliness of a young adult living and working at home being found below the income poverty threshold or in deprivation as it is measured in the EU is much lower, though they are deprived of housing and socially excluded through housing affordability issues. https://ec.europa.eu/eurostat/databrowser/view/ILC_LVPS08__custom_6256126/default/table?lang=en
This has a clear effect on the housing cost burden indicator for example, which at 5% suggests that there is no housing crisis in Ireland today. The measure is clearly not meaningful or policy relevant as it is presented. Counted at the household level, this indicator obscures the inability for growing numbers of young working adults to afford minimum essential goods (living independently) and in fact the estimate suggests presents most 95% of the population are in a reasonable position in terms of the housing costs they face. The Roadmap for Social Inclusion 2020-2025 mentions the importance of earnings for individual workers but none of the indicators address labour market issues and how they relate to living costs, instead losing the detail of intergenerational inequalities in housing in household level data. Irish 15-29 year olds for example have one of the lowest AROP rates in the EU. This is in large part not due to high earnings but to the fact that 4 in 5 still live at home, now the 7th highest share in the EU. Ireland had the 18th highest rate in 2012. Ireland has one of the highest shares of low pay in the EU for instance. This issue is highly gendered and also important to help capture more appropriately living standards for younger people that are actually in line in a meaningful way with the hurdles they face in 2023 and has real life implications for policy.
Some of the indicators on the list are not particularly useful generally, but also some are specifically not useful for analysis of Irish poverty and social exclusion.
It’s important to distinguish between housing cost overburden and housing affordability. I’ve already discussed some of the issues around how changing household composition are biasing the results, especially for younger adults. The value of the housing cost burden indicator is highly dubious in capturing issues in the Irish housing market, arguably the largest policy issue in Ireland today. The indicator does nothing to illuminate the experience of workers and how their earnings relate to minimum living costs. Indeed, compositional changes towards more adults and more workers per household (which continue) could bias the results such that estimates indicate an improvement in living standards in a time-series analysis where a decline in living standards (deprived of normal living) is the actual reality for many. There are subjective measures collected in SILC on the burden of their housing costs, which would be more interesting and relevant, but ultimately, I would argue that the best way to measure social exclusion or poverty relating to housing costs is affordability by wages/earnings (median or at the 20th percentile, possibly controlled by age group) over the cost of renting a one-bedroom apartment or a room in shared accommodation.’
2)
Over the last two decades we’ve also been playing catch up with other high income EU countries in terms of women’s participation thus pushing up household incomes (relevant if we’re analysing time-series).
3)
I think HAP payments are also biasing results as they are included in household income in SILC (pushing it up obviously and the burden down).
I’d argue that sticking to earnings we’d have different results and that they’re conceptually more aligned with the concept of ‘affordability’, which is different from current overburden.
Best,
Ciarán Nugent
NERI