Are you unhappy? Then you are poor! Multi‐dimensional poverty in Belgium

Abstract

PurposeThis paper aims to present a multi‐dimensional measure of poverty. The proposed method has been applied to the Panel Set of Belgian Households dataset for Belgium for the years between 1994 and 2000.Design/methodology/approachFirst, a common model is decided upon by exploratory factor analysis, and applied by confirmatory factor analysis. Cluster analysis (CA) is then used to separate the multi‐dimensional poor. Finally, the possible causes of multi‐dimensional poverty are surfaced by estimating a discrete duration model.FindingsThe proposed method reveals three dimensions of poverty: “material deprivation”, “social deprivation” and “psychological health”. Between 9 and 11 per cent of the representative sample of Belgian individuals are poor. The paper also identifies causes of poverty, including not having a job, not having the Belgian nationality, having a poor health or a disability, being lower educated, experiencing financial poverty, being divorced or widowed, living in the Walloon or Brussels regions, and having a bad psychological health.Research limitations/implicationsResearch implications include the use of polychoric and tetrachoric correlations as a starting point of factor analysis, as well as the combination of factor analysis and CA.Originality/valueThe paper proposes an alternative multi‐dimensional measure of poverty. It argues that previous measures may suffer from categorisation errors and suggests a solution to this problem. The advantages of the proposed method are that all information is used to disentangle the poor from the non‐poor and that dimensions of poverty are defined using the correlations between deprivations. Finally, the paper identifies “psychological health” as one of the dimensions of poverty.