SEA - Practical Application of Science Volume I, Issue 2 (2), 2013

Oana-Ramona LOBONŢ Faculty of Economics and Business Administration, West University of Timisoara

NEW ALTERNATIVE Literature review POSSIBILITIES FOR MEASURING IN ROMANIA

Keywords Aggregate Romanian Index of Deprivation Poverty Social exclusion

JEL classification I32

Abstract

Poverty assessment requires and is generally based on the existence of well-defined levels of standard of living. Therefore, in this paper we try to investigate the opportunities for offered by economic practice, as well as to outline the real possibilities for building an aggregate index, sufficiently complex to reveal the evolution of poverty as economic deprivation in Romania. In this paper, the construction of an Aggregate Romanian Index of Deprivation involves a subjective judgment because this index represents one of the methods used for configure the level and dynamics of poverty and social exclusion. The proposed index focuses on specific issues such as combining a number of indicators, chosen to cover a range of economic, social and housing issues, into a single deprivation score for each region in Romania.

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1. INTRODUCTION 2002 based on surveys of family budgets. Moreover, in order to meet monitoring in a During the last years, Romania has comparative approach of the progress of paid special attention to social policies, Member States in relation to the objectives especially those related to social cohesion, of the European Union social policy, in equal opportunities and equitable 1997, the National Institute of Statistics distribution of income in order to ensure has suggested an indicator to measure the the resources and opportunities necessary relative magnitude of poverty, as amended for communities to actively take part in the and adapted to the requirements of the economic, social and cultural life. European Council in 2001. The new These objectives have a strategic methodology for the calculation of relative status, being established and put into poverty indicators considered a set of 18 practice at governmental level through indicators to measure social inclusion, out numerous strategies, programmes, policies of which 10 primary indicators and 8 and measures to fight back poverty and secondary indicators. social exclusion. However, since poverty In Romania, by Resolution no. 488 stands for an element which is both of 26 May 2005, approving the national quantitative and qualitative, the economic social inclusion indicators system, it is practice imposed the outline of a set of being outlined the list of main level specific indicators that measure this indicators, also secondary and tertiary, to phenomenon. be calculated annually by the National Avoiding extensive theoretical Institute of Statistics and the Anti-Poverty debates on poverty and social exclusion, and Endorsement of Social Inclusion the approach of the present article is Commission. Diagnosis poverty level is limited to trying to determine opportunities based primarily on the absolute method for to shape a new methodology to quantify the quantification of the phenomenon on these phenomena, without ignoring the the basis of certain indicators to capture the already existing methodologies. dynamics of the monetary dimension of poverty and identification of groups at 2. RETROSPECTIVE LOOK ON THE highest risk: POSSIBILITIES OF MONITORING  The poverty rate, the threshold of POVERTY 60% of median income available per adult equivalent, also called In outlining the possibilities relative poverty or risk of poverty; of quantification of the poverty  The ratio between top and bottom phenomenon, stands the cooperation quintile of the distribution of between specialists and experts in this population by available income topic, the Ministry of Labour, Family and (the wealthiest 80% compared to Social Protection for the Elderly (current the poorest 20%); name), the National Institute of Statistics,  The rate of persistent poverty, at and a number of international bodies, the threshold of 60% of median including the World Bank, the Heritage income available per adult Foundation, The Organisation for equivalent; Economic Co-Operation and Development,  Deficit relative to median U.S. Department of Human Services threshold of 60% of median The first attempts to analyze and income; measure poverty have emerged in 1995,  Coefficient of variation of when the National Institute of Statistics employment rates; launched a poverty analysis programme,  Long-term ILO unemployment based on households’ surveys and, since rate;

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 Proportion of population in Protection and Social Inclusion to achieve jobless households; a permanent exchange (peer -reviewed)  The share of young people 18-24 between European Union member states. years old who left the school Moreover, we notice that recently, the early; Romanian Government adopted a number  Life expectancy at birth; of strategic documents aiming to fight back  The percentage of people who poverty and social exclusion , including the appreciate their health as being National Plan against Poverty and for bad or very bad. Social Inclusion (2004 ) , National Strategy Such systems, developed in order to for Sustainable Development which takes measure poverty, represent a more easily over the stipulations of the Strategy for assimilated instrument for decision-making Sustainable Development renewed for an system as it has been proven the enlarged Europe, adopted by the European sustainability of implementing the Joint Union Council in 2006, the Millennium Memorandum on Social Inclusion, a Declaration which sets the ONU agenda programmatic document of reference for for the 21st century in terms of peace, the elaboration of social policies, security and development, the National concluded between the Government of Strategy for the development of social Romania and the European Commission in services , national reform programs and 2005. other sectoral strategies and action plans . Harmonizing the agents that disseminate the change of vision in the 3. INDICATORS FOR MEASURING area of poverty and social inclusion POVERTY AND SOCIAL through methodologies of calculus EXCLUSION developed within CASPIS and data provided by Romania to the European Means for measurement and Union's official statistics (based on analysis of poverty dynamics in Romania EUROSTAT methodology) assumed are implemented by the National Institute compatibility on the 3 basic pillars: i) of Statistics, based on Household budget concepts, definitions, classifications, ii) survey, taking into consideration poverty data collection methods, iii) sampling lines or thresholds, i.e. a basket with goods methods. and services considered necessary to cover Thus, in compliance with Briciu the basic needs of an individual or (2009: 163) we notice that the household. Poverty assessment implies the implemented methodologies have put a existence of well-defined levels of living two way pressure, namely ”awareness and standards, poverty thresholds called addressing serious concerns, respectively "absolute" and "relative", according to broadening the makers of the current issues their updates on large periods of time, that are already planned resources general compared to the national standard of living issues that require a coherent and of the society. corroborating responsibilities of public The indicator of measuring absolute institutions.” Directions of development of poverty is based on a national social statistics are based on information methodology, developed in 2002 in order collected through a series of surveys of to monitor and evaluate policies and family, household, statistics on living programs aimed at increasing the , conditions and the labour force. to reduce the lack of resources necessary to Strategic approach to social policies ensure basic needs, while the indicator required the adoption of a new instrument, measuring relative poverty is based on the flexible and decentralized called Open methodology approved by the European Method of Coordination on Social Council of Laeken in December 2001, and

160 SEA - Practical Application of Science Volume I, Issue 2 (2), 2013 is adequate to monitor and evaluate poverty assessment, which in their policies aimed at reducing inequality. construction involve both setting monetary Poverty measurement is based on and non-monetary risk indicators, and an the poverty threshold calculated from the equivalence scale for monetary variables results of surveys that provide information and application of methods of aggregation on the rules implemented in food that lead to obtaining synthetic indicators. consumption expenditure, considered as However, poverty measurement and necessary or on the income (or analysis equally lead to the identification expenditure) level of the population, i.e. a of levels of individual or household percentage of them, each of which can be inequality and vulnerability in the society, highlighted as both positive and negative. quantified by specific indicators: Among the indicators used to - Indicators that measure inequality: highlight the poverty profile (Anghelache Gini index, Theil index, dispersal et al, 2006): ratio and income of distribution / - Indicators measuring the consumption of the poorest share of incidence of the phenomenon: the population, human development total poverty rate (head count index as the average of indicators of ratio), which determines the life (life expectancy at birth), percentage of deprived people education (literacy ratio and school from households whose enrolment ratio) and standard of consumption expenditure per living (GDP per capita); adult equivalent is less than the - Indicators measuring vulnerability: poverty threshold (superior dynamics and inconsistency of level) of the total population; revenue and consumption, of specific - Indicators that measure the non-monetary variables as severity of the phenomenon: determinants of unpredictability. poverty depth index is Lately we have noticed that both at calculated as a ratio between the academic and government level, the minimum cost of putting together a level of expertise to eliminating poverty and the measure poverty and social inclusion, maximum cost assessed on the permanently suggesting new sets of assumption of the entire indicators, applicable nationwide in order population and it ensures an to grasp the specific problems, regionally income equal to the poverty for the territorial disaggregation of data, at threshold and severity of the county level or locally, to capture poverty indicators (Foster - additional and specific dimensions of the Greer - Thorbecke class phenomenon. indexes, Sen index, of inequality); 4. NEW ALTERNATIVE - Poverty indicators based on POSSIBILITIES FOR MEASURING several dimensions: in POVERTY IN ROMANIA Romania, National Institute of Statistics develops In the present paper, after analysing multidimensional poverty several indicators that reflect the level of analysis studies based on the poverty, we have tried to customize certain method which is based on fuzzy indicators aggregated in their regional set theory "Totally Fuzzy and dimension can offer us a clear view on the Relative”. evolution of poverty as economic Our attention is drawn by these deprivation in Romania. multidimensional indices of relative

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We are fully aware that the (2000: 84), which presents the ten basic construction of an Aggregate Romanian capabilities, Robeyns (2003, (a), 2009) Index of Deprivation involves a subjective takes into consideration 14 capabilities in judgment as this index represents one of order to investigate gender inequalities in the methods used to configure the level and western societies, however, in the context dynamics of poverty and social exclusion. of clear connection between these and the The proposed index focuses on specific functionality features: life and physical issues such as combining a number of health; mental well-being; bodily integrity indicators, chosen to cover a range of and safety; social relations; political economic, social and housing issues, into a empowerment; education and knowledge; single deprivation score for each of the domestic work and nonmarket care; paid regions in Romania work and other projects; shelter and The hypothesis that shaped the environment, mobility; leisure activities; suggestion of this index comes from the time-autonomy; respect; religion. deprivation index suggested by Townsend However, literature presents (1979), who selected 12 elements that he different contradictory points of view in considered to be key indicators of this matter (Pogge, 2002; Nussbaum, 2003, deprivation, both for adults and children: (b); Vallentyne, 2005; Pierik and Robeyns, one week holiday per year; getting the visit 2007); in respect to capabilities, they of a friend or relative in our home, in order should be selected as relevant and state to have a meal together, during the last who should decide on the aggregation of four weeks; spending spare time together the various dimensions into an overall or visiting a friend or a relative, during the assessment, at the level of ideal theories of last four weeks; getting the visit of a justice in our moral calculus. This is why, playmate during the last four weeks; a except for being framed in the capabilities party for the most recent birthday theory, for the assembly of the Aggregate anniversary; deprivation from an Romanian Index of Deprivation, we need entertainment during the last two weeks; to add analytical structures particular to the lack of fresh meet at least four times per eight development regions from Romania. week; lack of one cooked meal per day in a In Testi et al, 2004 we come across week; lack of one cooked breakfast most of a series of indicators of multiple the days of the week; not having a deprivations, choosing the direct refrigerator in the household; poor measurement of poverty, in order to prove socialisation of the members of the the multi-dimension of the phenomenon. household, especially on Sundays; the (Table 1). Beside these indicators, we impossibility of using exclusively one of mention those indicators already known to the following four main utilities: toilet be taken into account in empirical analysis, with running water; sink with running among which we can mention: Lived water; bath tub or shower; electric or gas Poverty Index (Afrobarometer, 2004, cooker. 2005; Mattes et al. 2003), the United Starting from the definition of Nations Development Programme Townsend’s deprivation indicator, a series (UNDP)’s Human Development Index, of indicators of modern multiple , Gender deprivations have been developed; these Empowerment Measure and Service indicators try to impose the approach of Deprivation Index (UNDP, 2003); a capabilities, considered to be fundamental Capability Poverty Measure (UNDP, 1996) rights, as a model of human development and a Multidimensional Poverty Index (Sen, 1985; Sen et Nussbaum, 1993; (Alkire and Santos, 2010). Nussbaum, 2000; Clark, 2002, 2005, Sen, 2008). By improving Nussbaum’s list Insert Table 1 about here

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The methodology suggested in the 6. REFERENCES literature assures us to think that for [1] Afrobarometer (2004). Lived poverty in South Romania also it can be assembled such an Africa: Desperation, hope and patience. Afrobarometer Briefing Paper No. 11. Cape index of multiple deprivations by taking Town: Afrobarometer. into consideration sub-indicators, [2] Afrobarometer (2005). Lived poverty in South considered to be more relevant to highlight Africa. Afrobarometer Briefing Paper No. 13. the economic and socio-cultural Cape Town: Afrobarometer. parameters of each region. The data [3] Alkire, S., & Santos, M.E. (2010). Acute multidimensional poverty: A new index for required for the assembly of this index can developing countries. OPHI Working Paper be collected from the Eurostat database, No. 38. Oxford: Oxford Poverty and Human and the National Institute of Statistics of Development Initiative, University of Oxford. Romania. [4] Anghelache, C-tin, Isaic-Maniu, A., Mitruț, C- tin. & Voineagu, V. (2006). Sistemul de indicatori utiliza 5. CONCLUSIONS ți în măsurarea sărăciei, Economie teoretică și aplicată, no. 8, 45-52, Retrieved from We believe it is possible to put http://store.ectap.ro/articole/135.pdf. together a Romanian Aggregate Index of [5] Briciu, C. (2009). Măsurarea sărăciei și Deprivation by using the methodology incluziunii sociale – un caz de asimilare selectivă a inovației, Calitatea Vieții, XX, nr. applied at the assembly of the English 1–2, 161-170. Indices of Deprivation, after determining [6] Cadum, E, Costa, G, Biggeri, A, & Martuzzi, and obtaining a unique sizing summary for M. (1999). Deprivazione e mortalità: un indice each area considered important: income, di deprivazione per l'analisi delle demographic structure, economic, disuguaglianze su base geografica. Epid Prev, 23, 175-187. healthcare, education, conditions of living, [7] Carstairs, V., & Morris, R., (1991). geographic location, criminality. Factor Deprivation and health in Scotland. Aberdeen: analysis and assigning a rank to each Aberdeen University Press. region of Romania helps putting into [8] Forrest, R., & Gordon, D. (1993). People and placement the communities in each region Places: a 1991 Census atlas of England, SAUS. University of Bristol. in a ranking by the level of scarcity in the [9] Jarman, B., (1983). Identification of respective field. underprivileged areas, British Medical It is obvious that this is not a Journal, 286, 1705–09 completed research on the empirical side, [10] Mattes, R., Bratton, M., & Davids, Y.D. as we need carefully collected and (2003). Poverty, survival and democracy in Southern Africa. Afrobarometer Paper No. 23, processed micro-data on all these domains. Cape Town: Afrobarometer. Precisely because the index method has [11] Nussbaum, M., (2000). Women and Human wide applicability in the analysis of social Development: The Capabilities Approach, and economic complex phenomena in Cambridge: Cambridge University Press. dynamics and on territorial level, the [12] Nussbaum, M., (2003 a). Sen’s capability approach and gender inequality: selecting assembly of such an index would lead to relevant capabilities, Feminist Economics, the dimensioning of a relative size of 9(2-3), 61-92. dynamics, coordination, or of an extremely [13] Nussbaum, M., (2003 b). Capabilities as useful programming. Fundamental Entitlements: Sen and Social The contemporary socio-political Justice, Feminist Economics, 9(2-3), 33-59. [14] Pierik, R. & Robeyns, I. (2007). Resources context is an impediment to fair reception versus Capabilities: Social Endowments in and increasing the practical efficiency of Egalitarian Theory, Political Studies, 55(1), regional public policies, therefore, such an 133–52. index meets the practical needs of regional [15] Pogge, T. (2002). Can the Capability analyses, and the urban-rural area of Approach be Justified? Philosophical Topics, 30(2), 167 228. residence. –

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[16] Sen, A. K. (2008). The Economics of [20] United Nations Development Programme Happiness and Capability, Bruni, Comim & (2003). South Africa: Human Development Pugno (eds), Capability and Happiness, New Report 2003 – The Challenge of Sustainable York: Oxford University Press. Development in South Africa: Unlocking [17] Sen, A.K. (1985). Commodities and People’s Creativity. Cape Town: Oxford Capabilities, Amsterdam, North-Holland. University Press Southern Africa. [18] Testi, A., Ivaldi, E., & Busi, A., (2004). An [21] United Nations Development Programme, index of material deprivation for geographical (1996). Human Development Report 1996. areas, Working Paper No. 23, Giugno Oxford: Oxford University Press. University, Retrieved from [22] Vallentyne, P. (2005). Debate: Capabilities http://www.diec.unige.it/23.pdf. versus Opportunities for Wellbeing, Journal of [19] Townsend, P., Phillimore, P. & Beattie, A. Political Philosophy, 13, 359–71. (1988). Health and deprivation: inequality and the North, Croom Helm Ltd, London.

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Table no 1 Indices of Multiple Deprivation

Index of Deprivation Selected variables for composition Data source Author index 1= percentage of economically active people 1981 census of The Townsend Index unemployed; Northern region Townsend et of Disadvantage & 2 = percentage of households with more than one (counties of Cleveland, al, 1988 Deprivation person per room; Cumbria, Durham, - is a measure of material 3 = percentage of households with no car; Northumberland and deprivation 4 = percentage of households not owner-occupied Tyne and Wear 1 = pensioners living alone as a percentage of all residents in households; 2 = children aged under five years as a percentage of all residents in households; 3 = people in households of one person over 16 and one or more children as a percentage of all residents Jarman in households; Census data of the Underprivileged Area 4 = people in households headed by a person in workload of General Jarman, 1983 Score (UPA 8) socioeconomic group 5 (unskilled manual workers) 2 Practitioners in - take account of the social as a percentage of all residents in households; England and Wales factors 5 = people aged 16 or more unemployed as a percentage of economically active adults; 6 = people in households living at more than 1 person for room as a percentage of all residents in households; 7 = people aged 1 or over with a usual address one year before the census different from the present usual address as a percentage of all residents in households; 8 = people in households headed by a person born in the New Commonwealth as a percentage of all residents in households 1 = persons in private households living at a density Carstairs deprivation of >1 person The population of Carstairs & index per room as a proportion of all persons in private Scotland Morris, 1991 - is evaluating inequalities in households; health 2 = proportion of economically active males who are seeking work; 3 = proportion of all persons in private households with head of household in social class four or five; 4 = proportion of all persons in private households with no car MATDEP Variables: 1 = percentage of household with more than one person per room; 2 = percentage of households lacking or sharing use of a bath/shower and/or inside Wc; 3 = percentage of household with no central heating; 4 = percentage of household with no car MATDEP and SOCDEP SOCDEP Variables: Forrest & - MATDEP is designed to 1 = percentage of economically active population SUA 1991 census data Gordon, 1993 measure material unemployed; deprivation, SOCDEP quantifies social deprivation 2 = percentage ofeconomically active 16-24 year olds unemployed; 3 = lone parent households as a proportion of all households; 4 = percentage of households containing a single pensioner; 5 = percentage of households containing a person

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Index of Deprivation Selected variables for composition Data source Author index with limiting long-term illness; 6 = percentage of households containing dependants only (e.g. single pensioners with long term illness) 1 = Income; Department of Social the Index of Multiple 2 = Employment; Security benefits data Department of Deprivation 2000 3 = Health Deprivation and Disability; and University and Social Policy (IMD 2000) 4 = Education, Skills and Training; Colleges Admission and Social - measure a major aspect of 5 = Housing; Service (UCAS) data Work at the the dimension of deprivation 6 = Geographical Access to Services. for England University of Oxford, 2000

Italian proposals for 1 = low education; deprivation indexes 2 = unemployment; Italian 1991 census Cadum et al - designed to analyse 3 = renter occupier housing; data base 1999 general mortality according 4 = no indoor bathroom to deprivation category and to measure the size of 5 = lone parent with childhood ecological bias use 38 separate indicators, organised across seven distinct domains of deprivation which can be combined, using appropriate weights, to calculate the The English Indices Index of Multiple Deprivation 2010 (IMD 2010): The Office for of Deprivation 1 = Income Deprivation Domain; Every year data National - identify the most deprived 2 = Employment Deprivation Domain; collection Statistics areas across the country. 3 = Health Deprivation and Disability Domain; 4 = Education, Skills and Training Deprivation Domain; 5 = Barriers to Housing and Services Domain; 6 = Crime Domain; 7 = Living Environment Deprivation Domain

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