Household Wealth

The wealth of a household can be defined as its net balance of economic assets measured at a given point in time. As mentioned in the introduction, household wealth affects living conditions in at least two ways. First, real capital or physical items like consumer durables, have a direct "user value" for the household members. Second, liquid assets indirectly yield welfare benefits if transformed into other living condition components3.

Household wealth may be acquired through saving of income, inheritance, or appreciation of household economic assets. Apart from receipt or inheritance of gifts, the ability of a household to generate wealth depends on the size of the income which remains after daily consumption
expenditures like food and clothing have been deducted. Indispensable for human physical survival, absolute expenditure on such basic items is less dependent on the household income level than other goods are. Their share of the budget is consequently greater the lower the household income is. The residual character of wealth leads to greater variation in household wealth than in household income. Household wealth is thus particularly useful as an indicator for identification of households which suffer economic deprivation.

The lower the level of a household's economic resources, the greater the vulnerability its members will be towards economic fluctuations. The sedimentary nature of household wealth makes it less vulnerable to sudden changes in the economic environment than for example (continuous) labour income. The relative short-term stability of wealth makes it an important buffer against the insecure economic situation in the occupied territories, especially since the outbreak of the intifada.

A comprehensive index, more fully documented in a technical report available from FAFO, has been constructed to measure household wealth. The population of households in the occupied territories has been divided into three equal-sized groups, yielding a low, middle and high wealth group. A region or socio-economic group may be characterized as under-privileged, relative to the occupied territories on average, when its share of households in the lowest wealth group exceeds 1/3 and its share in the upper wealth group is less than 1/3. It is worth emphasizing that even if the wealth index allows a ranking of households according to wealth, it does not aspire to measure the absolute level of household economic resources or economic deprivation for any region or socio-economic group4.

Distribution of Wealth over Region, Type of Locality, Refugee Status and Religion5
Investigation of whether any geographical region is economically deprived is of particular use for policy making, because compensatory policy measures then more easily can be directed to the target population. Can any one of the three main regions in the survey be characterized as relatively deprived with regard to household wealth? Figure 6.1 shows that the regional variations in household wealth are substantial.

Figure 6.1 Household wealth in the occupied territories by region

Gaza is clearly the region worst off, being over-represented in the lower wealth group, and under-represented in the higher group. Arab Jerusalem, on the contrary, is over-represented in the higher, and under-represented in the lower group. The wealth score of the West Bank is somewhat higher than for the occupied territories in total.

When dividing the West Bank into sub-regions clear variations in household wealth within the main regions are revealed. Central West Bank (Ramallah and Bethlehem sub-districts) has a high score on household wealth, similar to that of Arab Jerusalem. The wealth scores of the northern and southern part are practically identical, and clearly lower than the score for central West Bank.

There are also substantial regional differences in the wealth score within the Gaza Strip. The northern part, dominated by Gaza city, comes out significantly better than the southern area, dominated by the towns Rafah and Khan Yunis6. This difference may partially be caused by geographical distances to the Israeli labour market, which is more accessible from the northern part of the Gaza Strip than from the southern part. Figure 6.2 sums up intra-regional variations in household wealth for Gaza and the West Bank.

Figure 6.2 Household wealth in Gaza and the West Bank by sub-region

In contrast to most developing countries, the urban-rural dimension is less relevant for the distribution of wealth in the occupied territories. Because of the high degree of urbanization in the Gaza Strip, a conventional rural-urban classification of localities is mainly applicable in the West Bank. Even in the West Bank, the relatively small geographical distances involved mean that hardly any locality is more than one hour away from a major town. (This holds true even though new Israeli restrictions after the Gulf War have separated the northern and southern part of the West Bank). Figures 6.3 show the distribution of household wealth by type of locality. Refugee camps, which constitute a type of locality distinctive for the Palestinian society, is clearly a (relatively) deprived type of locality.

Figure 6.3 Household wealth in Gaza and the West Bank by type of locality

Almost 40% of the households in the survey are registered as refugees by UNRWA. Refugee camps are found in all three regions investigated by this survey, but the majority of camp refugees resides in Gaza. Since 1948, many refugees have settled down in dwellings outside the camps, and the survey shows that more than 60% of the UNRWA refugees now live outside the camps.
It was expected at the outset that there would be marked differences in household wealth between refugees and non-refugees, since many households in the latter group lost their houses and agricultural land in 1948. The consequences of the Palestinian exodus in 1948 are still highly visible, as is testified by the variations in household wealth according to refugee status.

A clear difference in household wealth between, on the one hand, UNRWA refugees, and, on the other, non-refugees, can be observed.

The relevance of this single comparison should, however, be questioned because of the great heterogeneity within the group of UNRWA refugees. As shown in figures 6.4 there are substantial regional and locality variations in the wealth of UNRWA refugee households.

Figure 6.4 Household wealth in Gaza and the West Bank by refugee status

In both Gaza and the West Bank, the household wealth score is higher for refugees outside than refugees inside camps. In Gaza refugee households outside camps have a score clearly below non-refugees. In the West Bank, on the contrary, there is no difference in the wealth score between the non-refugees and refugees outside camps. In both Gaza and the West Bank camp refugees is the group clearly worst off. Finally, West Bank households have a higher wealth score irrespective of refugee status, and the difference is greatest for refugees outside camps.

The relatively small difference in household wealth between Gaza and West Bank non-refugees indicates that regional differences between Gaza and the West Bank to a large extent are related to differences in the refugee situation. The low wealth score of both refugee groups in Gaza, and the large refugee share in the Gaza population, jointly pull the average household wealth score for Gaza downwards.

Religious affiliation was considered of minor importance as reference variable for the distribution of household economic resources in the occupied territories. First, the area is almost exclusively Moslem, (96%). Second, a possible correlation between religion and household wealth has more academic interest than policy relevance.

Apparently, Christian households have much higher scores on household wealth than Moslem households. 90% of the Christian population in the occupied territories, however, live in the high wealth score areas of Central West Bank and Arab Jerusalem, while virtually no Christians live in low score Gaza.

Household Wealth and Household Composition
"With every mouth comes a pair of hands". This saying indicates the dual effect of household size on economic resources. On average it seems reasonable to assume that the more household members there are, the higher the household income, but also the household expenditure. In the introduction it was asserted that the ability of a household to generate wealth depends on the size of the income which remains after daily consumption expenditures like food and clothing have been subtracted. Investigation of the correlation between household size and household wealth should thus give a more correct picture of the possible effect of household size on household economic resources than the correlation between household size and household income.

In particular, a high number of adult men in the household could be expected to increase household wealth, because most men receive income from labour activity. A high number of children, on the other hand, could be expected to increase household expenditures more than household income.

What, then, is the correlation between household size and wealth? Because the number of adult males, adult females and children in a household are highly correlated it is difficult to isolate the effect of each group. Household wealth, however, clearly seems to increase with the number of adult males in the household, but this relation is weaker in Gaza than in the other regions.

A high number of children, on the contrary, seems to affect household wealth somewhat negatively. The negative effect of a high number of children on household wealth is weaker in the three regions taken separately than for the occupied territories in total. This result is partially a consequence of the high average number of children in low wealth Gaza.

Altogether, in all three main regions, there is a weak increase in household wealth with increasing total household size. From the household's perspective, there is thus no clear indication that large families lead to poverty.

Palestinian society is also characterized by the existence of relatively close economic relations between family members even when living in different households. The survey does not measure the prevalence of "dispersed extended families" explicitly, except for the type of relationship between families behind multi-household entrance doors. No clear correlation between household wealth and for example the number of brothers in the housing unit could be found, neither for the occupied territories in total, nor for each of the three main regions.

Household Wealth and Head of Household Characteristics
What is the relation between individual Head of Household characteristics like sex, age, civil status, education, and household wealth? With respect to gender differences, the 10% of households with female Household Heads are worse off than other households. A probable explanation is that many of these women are widowed, divorced or separated. On the other hand, many women are Household Heads because their husbands are working abroad, and thus receive remittances which should have pulled household wealth upwards.

The influence of the Head of Household's age on household wealth shows marked regional variations. In Gaza and Arab Jerusalem no correlations are found between Head of Household age and household wealth. In the West Bank, however, there is a clear wealth increase from young to middle-aged Heads of Household, but a decline for the two oldest age groups. A reasonable explanation for the initial increase is that older Household Heads have had more time to accumulate capital. A possible explanation for the drop in household wealth for the two oldest age groups may be lack of savings and labour activity which might compensate for this among older Heads. Many old Household Heads lost their property in 1948, and are too old to have profited from relatively advantageous wage employment in Israel.

Household wealth, as expected, increases with Head of Household education, both for the occupied territories taken together and for the three main regions separately. Figure 6.5 shows the correlation between household wealth and Head of Household education for the occupied territories in total.
Further investigation shows that the effect of education is strongest in Arab Jerusalem and weakest in Gaza. A possible explanation is that Arab Jerusalem offers more relevant employment for well educated persons than the other regions do.

Figure 6.5 Household wealth by Head of Household's education

Finally, the place where the Head of Household has received his education seemingly has a strong effect on household wealth in the occupied territories. Breaking down data to the regional level, it is, however, revealed that the effect of place of education on household wealth is almost exclusively tied to present region of residence. The only exception is education outside the Middle East, which seems to trigger a higher score on the household wealth index, irrespective of region of residence.

Household Wealth and Meat Consumption7
In most Middle Eastern countries meat consumption tends to increase with increasing household economic resources. In this survey households have been asked about their weekly meat consumption, (excluding poultry, etc.). The distribution of meat consumption by region and socio-economic group in the occupied territories shows similarities with the distribution in the household wealth index (correlation coefficient 0.31). The regional variations are illustrated in figure 6.6.

Figure 6.6 Household weekly meat consumption by region and type of locality

Meat consumption is not higher in rural than in urban areas, and consequently seems to be determined by household economic resources rather than by type of locality. Both weekly household meat consumption and the household wealth index thus act as measures of household economic resources. As could be expected, meat consumption increases strongly with the number of adult males in the household.


al@mashriq                       960715