Absolute-Poverty, Food and Housing

Better nutrition and comfortable housing are complements in the capability space: however, for the poor and low-income families food and housing can be substitutes in the commodity space. We take Engel law to implement a simple food-based measure of absolute poverty in a developed country, asking the question of who is paying the burden of the austerity policies in Italy. Food-based poverty measures are counter cyclical, as well as the Sen index: boom and bust of housing and land bubble are a further burden on the poor. A major cause of absolute-poverty comes in the form of a negative market externality of the housing market: poor families pay “too much” for housing costs, forcing a constraint on food consumption for the worst-off. The share of fixed costs, food and housing, in 2013, was 49% for all the three main subsets, shifting upward since 1997. OLS and 2SLS estimates for 10 family types, North and South, lend support to the substitution effect between food and housing, and confirm a high degree of heterogeneity, even within the same family type and geographical area. Children and their families in absolute poverty are the most hit group by the economic crisis: young families lost grounds. Absolute-poverty rates are higher for the families living in rented houses and with a lower level of education. Negative housing externalities on poverty could be balanced empowering women and children for their positive externalities