More than Cash: Societal Influences on the Risk of Material Deprivation

This paper considers the societal factors which determine a household’s command over resources aside from cash income. The aim of this paper is to explain why in some European countries the deprivation risk for households is relatively low despite high absolute poverty levels. Two main mechanisms at the societal level are identified that reduce deprivation but which do not directly impact disposable income. The first is the provision of in-kind benefits which increase the purchasing power of households; the second is informal support from networks. An analysis using 2012 EU-SILC data shows that both factors are significant in explaining the cross-country variation in Europe while controlling for national affluence. Households which have higher in-kind benefits from social services as well as non-cash company benefits and their own production show lower levels of deprivation. On the national level, universally provided social services (e.g. housing, healthcare or transport) can substantially improve the living conditions of the income poor and reduce social exclusion. However, the main factor explaining cross-country variation in deprivation is the provision of informal support from networks. When the social context is dominated by low generalised trust, social support for poor households is lower, leading to a marginalisation of the poor. In contrast, when trust is high, support from kin and non-kin networks in terms of lump sum transfers or co-usage of consumer goods significantly improve living conditions.