How Should One Measure Economic Insecurity?
(OECD Statistics Working Papers 2015/03/05)
TABLE OF CONTENTS
HOW SHOULD ONE MEASURE ECONOMIC INSECURITY? ........................................................ 2
OECD STATISTICS WORKING PAPER SERIES ......................................................................... 3
ABSTRACT ......................................................................................................................... 5
1. Introduction ......................................................................................................................7
2. The costs of reducing economic insecurity............................................................................8
3. How is “economic insecurity” now measured? .................................................................... 10
3.1. Large income losses: the “Economic Security Index” of Jacob Hacker et al. ......................... 11
3.2. The buffering role of private wealth: the D’Ambrosio et al. approach ..................................... 12
3.3. Downside income volatility relative to trend: Rohde, Tang and Rao ...................................... 13
3.4. A compound “macro” index: The IEWB Index of Economic Security of Osberg and Sharpe ...... 14
4. Measurement choices and desirable principles ....................................................................15
4.1. Dimensionality and the optimal aggregation of hazards ....................................................... 15
4.2. Unit of analysis ............................................................................................................. 17
4.3. What time period should be used? ................................................................................... 19
4.4. Desirable principles of measurement ................................................................................ 20
5. Measuring named risk insecurity .........................................................................................21
5.1. Security in the event of unemployment ...............................................................................21
5.2. Security in the event of illness .........................................................................................23
5.3. Security in the event of disability ......................................................................................24
5.4. Security in the event of widowhood ................................................................................. 25
5.5. Security in old age .........................................................................................................27
6. Why not just ask people directly? ...................................................................................... 29
7. Conclusion .....................................................................................................................33
REFERENCES ....................................................................................................................43