Measurement and Analysis of the Economic Insecurity

Abstract

This study creates the first Insecurity Economic Index (IDIE) of households in Chile. First, it operatively relates to the insecurity term with variables associated to the perception of economic risks on behalf of individuals. Secondly, in order to develop the index, it is assumed that this perception depends on different relevant variables such as household income levels –and their variability-, net wealth and other economic financial variables. It is concluded that the household economic insecurity in Chile increased from 2006 to 2009 (34.9% in comparison to 36.4%), that female as heads of households are more economically insecure than male heads of households (41.9% in comparison to 32.1% in 2006 and a 43% in comparison to 33.4% in 2009), that educational differences exists among heads of households (19.7% of the most educated are economically insecure in comparison to 41.9% of the less educated in 2006 and 21.4% of the most educated in comparison to 45.4% of the less educated in 2009), differences by household income quintiles (55.2% of households that belong to the poorest quintile are economically insecure in comparison to the 18.9% for the richest quintile in 2006, and 55.3% of the households belonging to the poorest quintile are economically insecure in comparison to 18.9% for the richest in 2009). There are also important differences with respect to economic insecurity per occupational sector. Finally, it is highlighted that the IDIE –being transversal to all social groups- can be used as an additional measure to consider for the impact and implementation evaluation of different economic policies.