Abstract
Household consumption expenditure represents a crucial measure to be used for assessing individuals’ material living conditions and well-being. Indeed, the analysis of household conditions can provide policy makers with a clear picture of the economic and social situation of the area in which they are operating. However, official sample surveys which are generally used for this purpose, such as the Household Budget Survey in Italy carried out by the National Institute of Statistics, do not allow for reliable disaggregated estimates thus hindering appropriate and effective planning and evaluation of political interventions at local level. By referring to the 2012 Italian Household Budget Survey, this paper aims at obtaining reliable provincial estimates of household consumption expenditure in Italy. We use Small Area Estimation methods and we adjust the estimates for spatial differences in price levels by computing and using sub-national Purchasing Power Parities, thus obtaining “real” estimates of consumption expenditure to be used for intra-national comparisons.
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Notes
The HBSs are national surveys mainly focusing on consumption expenditure. The surveys differ among countries in terms of frequency, timing, content or structure. Currently data are collected for all 28 EU Member States as for Montenegro, Former Yugoslav Republic of Macedonia, Turkey and Norway.
In 2014 the HBS carried out by ISTAT has been modified both in the data collection process and in the measures that can be estimated. Indeed, the revised survey (called “Survey on Household Expenses”, in italian “Indagine sulle spese delle famiglie”) provides not only information on households’ consumption behaviour and expenditure but also on tourist movements of resident households in Italy.
The equivalence scale used by ISTAT differs from the modified-OECD equivalence scale which assigns a value of 1 to the first adult in the household, 0.5 to each other adult and 0.3 to each child under 14.
Data regarding taxable income are available at municipal level. Due to the hierarchical administrative division characterizing Italy (i.e. regions, provinces and municipalities), each municipality is included in a specific province. The availability of the total number of tax payers (contributors) as well as the total amount of taxable incomes for each municipality enabled us to calculate the average value of taxable income per capita in each province. It is worth noting that the data processed and published by the Ministry of Economy and Finance are those declared by the taxpayer, not yet validate by the competent offices and therefore subject to the presence of possible inconsistencies. Further methodological issue on the data collected can be found at http://www1.finanze.gov.it/pagina_dichiarazioni/dichiarazioni.html.
In a linear regression where we use as target variable the direct estimates of the mean of the equivalised consumption at province level and as auxiliary variables the taxable income averaged at province level and the share of ownership of the house at province level we get a value of adjusted \(R^2\) equal to 0.63.
In order to clarify the way we summarized results in Table 2 (and in similar tables) we point out that quantiles and the mean refer to the distribution of 109 estimates (direct and FH) of MHCE and not to the quantiles and the mean of the consumption in Italy.
In the computation of PPPs for the year 2009, the region of Calabria was represented by Reggio Calabria. Moreover, it was not possible to monitor prices and compute the PPP for L’Aquila (Abruzzo region) due to the effect of the earthquake.
As expected, the variability within regions remained stable due to the level (regional capital city) for which local PPPs were available. Similar results were obtained by Pittau et al. (2011).
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The Authors would like to thank Prof. Luigi Biggeri and the reviewers for their valuable comments and advice which have certainly improved the quality of this paper.
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Marchetti, S., Secondi, L. Estimates of Household Consumption Expenditure at Provincial Level in Italy by Using Small Area Estimation Methods: “Real” Comparisons Using Purchasing Power Parities. Soc Indic Res 131, 215–234 (2017). https://doi.org/10.1007/s11205-016-1230-8
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DOI: https://doi.org/10.1007/s11205-016-1230-8