Measuring Housing Inequality with the Value of Freedom in the Capability Approach: Proposal and Demonstration

Figures & data

Table 1. Dimensional indicators and disadvantage thresholds.

Dimension: Thematic dimension	Disadvantaged if:	weight
Opportunity: Entitlements to housing tenure options	A person is entitled to only one or none of the following options: mortgage access for homeownership, rental housing in private sector, and social housing. Entitlement conditions for each options: Mortgage access: permanent employment, or self-employed for more than three years, and no debts other than mortgages Private rental housing^1: employed, monthly gross income no less than four times of the Rent Liberalisation Threshold (RLT) and having withdrawable savings more than three times of the RLT^2 Social housing: the taxable income of household lower than the social housing eligibility threshold (36,798 euro in 2017)	1/3
Security: Resilience to risks for housing cost payments	A person becomes immediately vulnerable to pay housing costs (rent or mortgage) with minor shocks^3	1/3
Ability: Basic ability of financial planning for housing	A person has little knowledge on financial matters, or did not learn from (grand) parents how to plan budget between 12 and 16 years of age	1/3

¹ Informal rules that lessors ask tenants for proofs of ability for stable rent payment, such as regular income and monthly gross income more than three to four times of the rent (Verberk, Warnaar, and Bos 2019). Generally, tenants need disposable savings of roughly three times of monthly rent to cover the first month rent, a down payment and the fee for broker agency.

² RLT is the monthly rent limit of social housing in the Dutch housing system (710.68 euro in 2017). If the rent is higher than RLT, housing is categorised as private rental housing. The study used the RLT as a minimum requirement for the entitlement to the private rent.

³ Minor shocks were defined in relative terms from the list of shocks in the survey question. They include: suspension or reduction of social/housing benefits or pension, temporary unemployment of breadwinner, increase in rent, increase of the mortgage interest, expense for unexpected shocks such as illness

Table 2. Incidence of disadvantages in each dimension and simultaneous disadvantages.

Incidence of disadvantages in each dimension
Opportunity: Entitlements to different housing tenure options	Entitled to none of the options (disadvantaged)	10.8%
	Entitled to only 1 option (disadvantaged)	14. 4%
	Entitled to 2 options	25.6%
	Entitled to all options	49.2%
Security: Resilience to risks for housing cost payments	Vulnerable to minor shocks (disadvantaged)	22.5%
	Vulnerable to moderate shocks	27.1%
	Vulnerable only to extreme shocks	5.6%
	Not vulnerable to any shocks	44.8%
Ability: Basic ability for financial planning for housing	Neither have knowledge nor learned how to budget (disadvantaged)	22.7%
	Have financial knowledge or learned how to budget	50.6%
	Have financial knowledge and learned how to budget	26.7%
Incidence of simultaneous disadvantages
Disadvantaged in all three dimensions		2.6%
Disadvantaged in two dimensions		16.0%
Disadvantaged in one dimension		39.7%
Disadvantaged in none of the dimensions		41.7%

Table 3. Multidimensional housing disadvantages in financial terms (MHDs-f) by different cutoffs of multidimensional disadvantage, the Netherlands 2017.

	Disadvantage cutoff (k)	(1)	(2)	(3)	(4)
		MHDs-f Index (Mo = H x A)	Multidimensional Headcount (H)	Intensity of Disadvantage (A)	Average number of dimensions disadvantaged
(1)	0	–	41.7%	–	–
(2)	≥ 1/3	0.264	58.3%	0.453	1.36
(3)	≥ 2/3	0.133	18.6%	0.716	2.15
(4)	= 3/3	0.026	2.6%	n/a	3.00

Figure 1. Comparison of provincial performance rankings, the Netherlands 2017–2018.

Note: the measures of [2] housing inadequacy and [3] dwelling dissatisfaction referred to the data of Netherlands Housing Survey in 2018 (WoON 2018). [1] The proportion of households having insufficient income for accessing adequate housing. This measure used the eligibility threshold of social housing as the socially agreed level of sufficient income for adequate housing in the Dutch context. The threshold of social housing refers to taxable household incomes, which was 36,798 euro in 2017. [2] The proportion of households having one or more problems with room density, drafts, mould and heating. [3] The proportion of households who responded as “very dissatisfied,” “dissatisfied,” or “not satisfied, but not dissatisfied either” with current dwelling (out of the five-level Likert scale).

Figure 2. Inequality in the capability for housing: MHDs-f by household type, age groups, and employment type, the Netherlands 2017 (k = 2/3).

Note: The employment types were identified according to the contract types (either permanent contract or temporary basis contract). The temporary basis work includes stand-by-work, temping, and self-employment in this study.

Figure 3. The number of simultaneous housing disadvantages by sub-groups, the Netherlands 2017.

Figure 4. Percentage contribution of each sub-group to the national MHDs-f, the Netherlands 2017 (k = 2/3).

Figure 5. Percentage contribution of each province to the national MHDs-f, the Netherlands 2017 (k = 2/3).

Verberk, M., M. Warnaar, and J. Bos. 2019. Inkomenscriteria voor Huurders en Kopers [Income Criteria for Tenants and Buyers (in the Netherlands)]. Utrecht: Nibud.

 Google Scholar