Chapter 6

Income and Wealth

Geir Øvensen

This chapter will discuss the type and amount of economic resources available to Palestinian households. Access to economic resources affect living conditions both directly and indirectly. Most assets, in particular consumer durables, yield immediate and tangible welfare benefits for users. The distribution of economic resources over households and individuals is also highly correlated with the distribution of other living condition components. On the one hand, economic resources, in the strict sense, can be transformed into living conditions benefits such as health, education and leisure activity. On the other hand, income-generating activities may be conditioned by education and good health.

Economic resources may, of course, have both private and public origins. In many countries an important goal in public policy has been to break or modify the connection between private economy and other crucial living condition components through the establishment of a so-called welfare state. In the fields of health and education, there has often been a public desire to secure minimum standards for all persons, regardless of access to (private) economic resources. In this context, identification of deprived socio-economic groups with regard to economic resources should be considered a prerequisite for public compensatory measures. In Palestinian society, as well as in other Middle Eastern communities, kinship structures, however, play a dominant role in the allocation and distribution of economic resources. Local authorities have usually lacked an adequate financial base for financing public welfare. In the occupied territories, the lack of political institutions recognized by the population has further reduced the importance of the public sector, in particular during the intifada.

The family-based Palestinian household constitutes a strong network of economic obligations and privileges. By contrast to Western societies, decisions on consumption and income generating activity are considered as household rather than individual matters. The share of household resources available to an individual is mainly determined by age and sex. In most cases, the patriarchal imprint evident in Palestinian households implies that the final decision-making authority rests with the Head of Household. (The informal influence of women, in particular the wife of the Household Head, on decision-making should, however, not be underestimated).

The authority of the Head of Household is based on his formal position and his knowledge about household economic affairs, usually being the main provider of household income1. He disposes of the lion's share of the economic resources that may be characterized as "individual". Due to their dependence on income-earners for obtaining economic means, housewives and other unpaid family workers usually dispose of a relatively small share of individually attributable household economic resources. In spite of their often significant labour activity, the purchasing power of youth and children is close to naught except in some urban upper-class households.

Due to the close and complex economic relations between family members, FAFO has decided to focus on indicators related to the economic resources of households rather than those of individuals. The discussion above shows that the relation between individual and household economic welfare is not, and cannot, be clear-cut. In most cases it is reasonable, however, to assume a positive correlation between household and individual economic resources.

The Problem of Under-reporting of Economic Resources
The strength of kinship groups has traditionally been accompanied by, and has also enabled, extensive opposition to taxation. The lack of national and local authorities acceptable to the Palestinian population under Israeli occupation, has deepened this resistance. The strong fear of taxation, and the resulting scepticism towards strangers asking about economic affairs, have also led to common under-reporting and concealment of assets2.

On the basis of experiences gained during the pilot survey, the original rather high ambitions as to measurement of wealth and income levels were adjusted, notwithstanding the desire for exact information. The main indicator for measuring differences in household economic resources between regions and between groups, has been a wealth index especially constructed for this purpose. Household wealth, rather than household income, has been chosen as principal point of reference for two main reasons: First, most items comprised by the household wealth index are verifiable, thus reducing the problem of under-reporting. Second, because of the unstable economic situation prevailing in the occupied territories, wealth is probably a more valid expression of household economic resources than various kinds of income.

In the first part of this chapter there will be a discussion of the distribution of the wealth index by region and socio-economic group. In particular, attention will be given to the identification of deprived segments in the population. The second part of the chapter will deal with household income, and discuss possible explanations of variations in household wealth.


al@mashriq                       960715