Chapter 6
Household
Income and Wealth
Geir Øvensen
Introduction
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.
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