An Index of the Quality of Life for European Countries: Evidence of Deprivation from EU-SILC Data

Riccardo Soliani, Alessia Di Gennaro () and Enrico Ivaldi ()
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Alessia Di Gennaro: DIEM ¨C Faculty of Economics, Genova (Italy), Italy

Review of Economics & Finance, 2012, vol. 2, 1-14

Abstract: Starting from EU-SILC data, a sample survey that defines the harmonised lists of target primary (annual) and secondary (every four years or less frequently) variables transmitted to Eurostat by the 27 countries, we have chosen a set of about fifty indicators on a qualitative basis. An exploratory factorial analysis led us to accept only eleven variables distributed around three principle components, assuming that each of them could become, after further inquiry, an index of deprivation. Then we carried out the factorial analysis on the three principle components just found. The distribution of the eleven remaining data can be roughly interpreted as follows: the first group indicates material deprivation; the second one social deprivation; the third one can be labelled as depending on economic policy. Three factorial indexes consist in the factor score resulting from the factorial analysis on the partial indicators summarizing information supplied by each variable; the sum of our three indicators offers a global index of the quality of life (QL-index), whose values can be classified in order to identify groups of countries with similar conditions. A map will be drawn to overview the condition of the countries considered. We will test the three obtained indicators with the Spearman rho, comparing it with the ranking score of the Human Development Index and the Inequality Adjusted Human Development Index of European countries. The expected result is quite high correlation between them, mainly for the material deprivation index. The correlation with the ranking score will allow us to compare the relation of HDI, our QL-index, and the three components of it considered separately. The comparison between the two, the HD Index and the QL-Index, should reveal that the latter is more correlated with the IHDI. The greater number of indicators in our index should improve its explaining power, taking into account also social dimensions not so relevant in the HDI. The articulation of our index makes it possible to analyse the phenomenon more precisely; at the same time, the sum of the three indicators could be a good validation of the HDI.

Keywords: Deprivation; Human Development Index; Factorial analysis; European living conditions (search for similar items in EconPapers)
JEL-codes: C14 I32 O15 (search for similar items in EconPapers)
Date: 2012
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