Ageing, income and housing in Spain: a view from the SHARE

The ageing of the population in the last century has influenced, is influencing and will influence our societies at different levels. Demographic changes imply changes in the structure of the population and these entail changes in public policies, in accordance with these new structures. Sometimes, these demographic changes are drastic, derived from wars or epidemics. However, the change we are currently facing is clearly gradual. In 1958, a review of a report by the UN Department of Economic and Social Affairs published in 1956 indicated that the debate on the economic and social effects of ageing was alive and well and was already raising some concerns. More than sixty years have passed since then, and old and new concerns coexist in the academic and social spheres. In order to be able to face the challenges and opportunities posed by population ageing, we need extensive knowledge about older people, since with this knowledge we can understand their current situation, their evolution and even try to predict -with the limitations that may exist- certain scenarios.  

For this reason, the following entry has a dual purpose. Firstly, I am going to present a relevant survey - undoubtedly a reference one - in the field of the study of ageing in a broad sense. The Survey of Health, Ageing and Retirement in Europe (SHARE) is a multidisciplinary and international panel database. It currently includes microdata from 27 European countries - and Israel - on the health, socioeconomic status, and social and family networks of people aged 50 and over. In addition, it usually interviews - as far as possible - the same people, in order to obtain comparable data over time. Since 2003, more than 2829 publications - including books, book chapters, magazine articles and others - have used this database for some purpose. To access the data it is necessary to fill in a form, accepting its conditions of use and requesting access via e-mail. 

Secondly, I am going to analyse in a descriptive way some questions from four of the modules included in the questionnaire of the seventh wave of respondents, carried out in 2017, focusing on people over 65 years old resident in Spain. To do so, I have chosen four modules: demographics, housing, household income and consumption. The demographic module includes year of birth and sex. The housing module includes information on the tenancy regime of the dwelling, whether the person surveyed has other properties and the subjective value of both, among others. The household income module includes the different types of income received. Finally, the consumption section collects information regarding some household expenses. 

The choice of these modules and some of their questions (see Table) is due to the following. The academic literature indicates that older people are normally a "poor in income" and "rich in assets" age group - in English, cash-poor or income-poor and asset-rich. That is, with some assets, but no liquidity. One of the main assets -real assets, in this case- that older people have is their usual home, and some proposals within what is known as "asset-based welfare" propose transforming this illiquid capital of the home into liquid capital through certain financial instruments -such as, for example, the reverse mortgage-. The use of these instruments of capital release and even "asset-based welfare" itself are subject to dilemmas and discussions that can be dealt with extensively in other entries. By the way, a first -and interesting- reflection on reverse mortgages from a social perspective was well articulated by Irene Lebrusán Murillo in this blog. 

Table. Selected questions from different modules using the seventh wave of SHARE

Source: Own elaboration through the questionnaire in Spanish of the seventh wave of the SHARE

Demographics

In total, SHARE surveyed 3,307 people in Spain, of whom 1,498 were men and 1,809 women. By age, their distribution is reflected in the following pyramid The average is 76.5 years old, almost 76 for men and 77 for women. 

Household income: four out of ten households have less than EUR 800 after taxes and contributions

To analyze the total income after taxes and contributions of all household members in an average month in the previous year, I have created four categories - based on the options that SHARE itself provides for the Spanish case when a person does not know exactly how much money is available. The categories are divided into less than or equal to 800 euros, between 800 and 1,300 euros, between 1,300 and 2,000 euros and more than 2,000 euros. The results of the households that answered the question related to the level of income are presented in the following infographic. Four out of ten households have less than 800 euros after taxes and contributions, on average, per month. Only one household in ten has more than 2,000 euros. 

Consumption: difficulty in making ends meet

With regard to the difficulty or not of making ends meet on the basis of income, almost four out of ten households with persons over 65 years of age indicate that they have certain difficulties and six out of ten arrive more or less easily. Uniting this information with the previous one, we find that nearly half of the persons in the lowest monthly income level have difficulty making ends meet, contrasting with only two out of ten in higher income levels. 

Housing: 94% owned and an average value of 140,000

Taking into account the type of relationship that the person interviewed has with the dwelling, it has only been possible to obtain 733 responses. Of these, almost 94% owned the dwelling, 2% lived in rented accommodation and another 2% did not rent - on assignment.  Although the high rate of ownership may be shocking a priori, it is close -by excess- to the information provided by the National Institute of Statistics, which places this percentage around 90% in this age group. With respect to the -subjective- value of the housing, eliminating the extreme values -under 20,000 euros and above 600,000 euros- the average is close to 140,000 euros, although the median value is below 100,000 euros, showing that this value of the housing does not follow a symmetrical distribution. 

Implications and reflections

Although the absence of data in terms of housing prevents us from drawing better conclusions, it should be pointed out that a high percentage of people over 65 years of age say they have some difficulty making ends meet and that housing, due to the high level of ownership, has the potential to provide a source of extra income to offset unexpected expenses due to care or other health problems, or simply to maintain a level of consumption similar to that of the years before retirement. 

There is certainly much work to be done in this regard, although the problem is clear: older people do not have enough income. Equity release schemes have a certain track record, especially in Anglo-Saxon countries. However, their development is still low in relation to the potential target group. And in Spain, even more so. To put it simply, the private market is not very interested in these operations, and families have doubts about these complex products - even unknown ones - and about the moral weight of the inheritance. Furthermore, important questions arise: would these operations not constitute the individualisation of a social problem? What happens to those who do not own a home? If these operations are extended, they could be a patch for the present and the near future, but what do we do in fifty years time - at present, among young people the tendency to own is low - and what do we do with the difference in market value of a house in Madrid and that of a house in Chinchilla? 

I would not like to go off on a tangent by closing an entrance that already ends up with questions, but I am going to do it. The problem is structural. To solve structural problems you have to focus on what is important, you have to look at a long term horizon, you have to imagine. And, at the same time, we cannot forget what is urgent: guaranteeing a decent income for the elderly.  

References

This paper uses data from SHARE Waves 1, 2, 3, 4, 5, 6 and 7 (DOIs: 10.6103/SHARE.w1.710, 10.6103/SHARE.w2.710, 10.6103/SHARE.w3.710, 10.6103/SHARE.w4.710, 10.6103/SHARE.w5.710, 10.6103/SHARE.w6.710, 10.6103/SHARE.w7.710), see Börsch-Supan et al. (2013) for methodological details.(1)

The SHARE data collection has been funded by the European Commission through FP5 (QLK6-CT-2001-00360), FP6 (SHARE-I3: RII-CT-2006-062193, COMPARE: CIT5-CT-2005-028857, SHARELIFE: CIT4-CT-2006-028812), FP7 (SHARE-PREP: GA N°211909, SHARE-LEAP: GA N°227822, SHARE M4: GA N°261982) and Horizon 2020 (SHARE-DEV3: GA N°676536, SERISS: GA N°654221) and by DG Employment, Social Affairs & Inclusion. Additional funding from the German Ministry of Education and Research, the Max Planck Society for the Advancement of Science, the U.S. National Institute on Aging (U01_AG09740-13S2, P01_AG005842, P01_AG08291, P30_AG12815, R21_AG025169, Y1-AG-4553-01, IAG_BSR06-11, OGHA_04-064, HHSN271201300071C) and from various national funding sources is gratefully acknowledged(see www.share-project.org).

Börsch-Supan, A. (2020). Survey of Health, Ageing and Retirement in Europe (SHARE) Wave 7. Release version: 7.1.0. SHARE-ERIC. Data set. DOI: 10.6103/SHARE.w7.710

Bergmann, M., A. Scherpenzeel and A. Börsch-Supan (Eds.) (2019). SHARE Wave 7 Methodology: Panel Innovations and Life Histories. Munich: MEA, Max Planck Institute for Social Law and Social Policy