An Integrated Database to Measure Living Standards

Abstract

This study generates an integrated database to measure living standards in Italy using propensity score matching. We follow the recommendations of the Commission on the Measurement of Economic Performance and Social Progress proposing that income, consumption of market goods and nonmarket activities, and wealth, rather than production, should be evaluated jointly in order to appropriately measure material welfare. Our integrated database is similar in design to the one built for the United States by the Levy Economics Institute to measure the multiple dimensions of well-being. In the United States, as is the case for Italy and most European countries, the state does not maintain a unified database to measure household economic well-being, and data sources about income and employment surveys and other surveys on wealth and the use of time have to be statistically matched. The measure of well-being is therefore the result of a multidimensional evaluation process no longer associated with a single indicator, as is usually the case when measuring gross domestic product. The estimation of individual and social welfare, multidimensional poverty and inequality does require an integrated living standard database where information about consumption, income, time use and subjective well-being are jointly available. With this objective in mind, we combine information available in four different surveys: the European Union Statistics on Income and Living Conditions Survey, the Household Budget Survey, the Time Use Survey, and the Household Conditions and Social Capital Survey. We perform three different statistical matching procedures to link the relevant dimensions of living standards contained in each survey and report both the statistical and economic tests carried out to evaluate the quality of the procedure at a high level of detail.