GREECE'S 'HUMANITARIAN CRISIS': THE FACT AND THE FICTION

UPDATE 19/04/15: A new set of EU-SILC data are now available for 2014. The links provided below can be used to access the new figures, although I have not yet updated any of the tables or graphs in this post.

Greece, in brief.

If you're reading this blog then you have no doubt followed the dramatic series of events involving Greece and its creditors that followed the parliamentary election that took place on 25 January 2015. But in case you've not...

With nearly 64% of voters casting a ballot, and 36.3% of those voting for Syriza (the Coalition of the Radical Left), Greece got itself a new government. Surprisingly, Syriza held their noses and entered a coalition with the far(cical) right party, the Independent Greeks, who had barely scraped into parliament after losing more than half of their share of the vote since the 2012 elections. Their victory was hailed by anti-austerity activists and commentators everywhere as an unquestionable mandate to not merely end austerity in Greece, but also reshape Europe while we're at it.

Unfortunately for all of us, when Syriza took their mandate to the bank, announcing that the troika was unwelcome and we demanded debt relief and a lower surplus target, our creditors predictably refused to cash it - an eventuality once derided by our new Prime Minister as having "not one [chance] in a million." What followed was not entirely predictable, but not far from either. First, the ECB made a point of not playing fair and Samaras' trap for Syriza snapped shut, thus combining with Syriza's own uncompromising ways to bring us briefly to the edge of at least a nasty bank run if not Grexit. In this toxic environment, Syriza's bargaining cards, never top trumps to begin with, started to eat into their own hands, like something out of Saw IX.

As the Eurogroup (whose legitimacy we had openly questioned) went into meeting after meeting to resolve the impasse and avert Grexit, we learned that other austerity-ravaged nations most certainly did not have our back, that the Eurogroup itself was possibly not such an august institution after all, with contradictory draft communiques leaking in every direction, and that parts of the German press were, basically, assholes (so where parts of ours). In the end, a 4-month extension to our programme was agreed, to be supervised by the Institutions Formerly Known as the Troika. Despite some commentators decrying the triumph of 'nastiness' over 'democracy', everyone has now gone back to sell the compromise to their respective electorates - our government describing it as Greece taking ownership and control of reforms, and others as Greece bowing to the inevitable and denouncing la revolucion. As I write these lines, our reform proposals have just been submitted to our partners and got a general thumbs up.

In the days leading up to the compromise, Greeks were visibly uplifted by, even proud of, the new government's confrontational style and the personality cult surrounding our new finmin, economist, game theorist and notorious Modest-Proposal-touting econ-blogger Yanis Varoufakis. A sense prevailed that we were finally in the driver's seat,  and were no longer going to be pushed around. Even the regular clashes between Varoufakis and his counterparts as well as the first rounds of Eurogroup madness were treated with a combination of nail-biting euphoria and crass humour that brought to mind the Euro cup knockout rounds of 2004. The inevitable concessions made to the Eurogroup have caused some notable reactions, but I doubt the new Government is in any danger.

This offers me some hope that either Syriza will be able to sell much-needed reforms that other, discredited parties, would have struggled to, or it will educate its voters in realism, compromise and prioritisation in a way that other parties could not. Either way, Greece wins.

Yani say what?

For his share of the negotiations, Varoufakis employed a range of devices of varying validity and tact - from pretty solid ones, such as arguments on the sustainability of our own debt or the under-estimated impact of austerity on Greek GDP and our tax base, to less helpful ones such as declaring other countries insolvent; bringing up German post-war debt relief and the rise of the Neonazi Golden Dawn in Greece, to downright cringeworthy flattery.

But the defining claim of Varoufakis', echoed by many commentators and examined by virtually none, is that Greece needs fiscal slack and/or debt relief in order to deal with a man-made humanitarian crisis caused by years of austerity. Predictably, this phrasing didn't go down well. It was echoed in the now-infamous Moscovici draft but then reportedly struck down by Germany, eventually making no appearance in the 'final' 18/02 Eurogroup communique.

Of course, everyone brings their own biases into this discussion and so do I. But there are definitions of the term out there (see here) and claims of a 'humanitarian crisis' are testable on more or less objective grounds. I promise you that, as with many such mythbusters, the truth is neither on Greece's side nor against us. It's on the side of people everywhere who want to understand and solve problems.

Do-it-yourself Statporn

Where do you start checking claims of a "humanitarian crisis"? Most people start with macro indicators such as unemployment and GDP - and no doubt Greece has suffered enormously on both counts; the Economist's round-up is particularly useful as a starting-point. But even an economic depression does not a humanitarian crisis make (no one calls the Great Depression such a thing, after all). Besides, as of Nov 2014, unemployment had been falling for a full year (though half of this seems to be due to people exiting the working age population altogether, as one critic pointed out to me), and GDP had grown for three quarters before blipping downwards in Q4 ahead of the elections. Whatever it was we'd suffered, the macro figures suggested we were on the mend, despite ongoing austerity. To justify talk of a 'humanitarian crisis', and the policies to address it, you better have facts on the actual hardship experienced by humans on the ground.

Enter EU-SILC, Eurostat's survey of incomes and living conditions, and the source of all poverty-related statistics in the EU member states. I've covered its figures in 2011 and 2012, and a new batch of figures is available for 2013 as we speak (even 2014 in some countries, but not Greece unfortunately). Using EU-SILC, you can explore the most important dimensions of poverty for yourself using the links below:

Food poverty - are you unable to afford meat, fish or pulses every other day?
Financial precarity - are you unable to deal with unexpected expenses?
Fuel poverty - are you unable afford to keep your house warm?
Arrears - are you behind on your bills?
Physical safety - are you confronted by violence, crime or vandalism in your area?
Access to healthcare - are you unable to access the right kind of medical care due to cost?
Even better, access to healthcare by level of activity limitation - this distinguishes between people with serious, ongoing medical problems and those without. Unfortunately the data series ends at 2012.

There are also two measures of  extreme poverty that I'm very keen on:
Multiple deprivation - do you face multiple poverty-related problems at once?
Deprivation, risk of poverty and low work intensity - are you experiencing poverty and have little prospect of working your way out of it?

What the numbers tell us 

This is a lot of data to take in so you need to look at it in an organised way. My preferred method of analysis is to take each type of household in Greece in 2013 (latest SILC data for Greece when this post was written; see below for an update) and compare it to the equivalent abroad for each category of poverty or hardship. I've particularly isolated two 'live-alikes' for each category and each group - the countries with the percentage closest to Greece's. This helps put our performance into context, and, as you will see if you check for yourselves, the differences are almost always statistically negligible.


What the figures will tell you is that Greece is generally in a bad shape. On most counts, and for most segments of the population, we do worse than at least 20 of the 31 countries for which Eurostat provides comparisons (the EU 27 plus Iceland, Serbia, Switzerland and Norway). By EU standards we have unacceptably high numbers of households in arrears (i.e. behind on their bills, loan payments, rent etc), numbers of people feeling unsafe in their neighbourhoods, and people unable to work their way out of poverty (a small but particularly hard-hit minority). We do better when it comes to financial precarity and food poverty - ranking closer to the EU-average.

Greece is a worse place to be for some. If you're a single woman, or a single parent, Greece is a pretty tough place to be - mostly it feels like Bulgaria or Romania. If you're a young man who can afford to live on your own, it can be pretty OK (most people who were once in your shoes have been forced back into the family home, so you're probably earning well). Incomes and prices aside, life in Greece can feel like living in a recent accession country in many cases.

But I can't help but wonder how these figures justify the suggestion of a 'humanitarian crisis'. Should Bulgaria or Romania get debt relief until they catch up with the rest of Europe? Should the Czech Republic?

Is it getting worse?

An assumption that underlies all talk of a humanitarian crisis in Greece is that, unless addressed quickly, the current trend (which is assumed to be negative) will either get out of hand, or take forever to reverse on its own. But the evidence for this is assumed to be there, and is assumed to be common knowledge. It actually is neither.

My crisis test is two-fold:

• first, conditions need to have been worse in 2013 than pre-crisis. I use the average of the 2003, 2004 and 2005 readings as the 'pre-crisis' figure, as 2006-7 was the peak of the cycle and it's unfair to use it as a basis for comparison. The figures you see on the table are the % changes between pre- and post-crsisis. To avoid having my results biased in favour of the austerians by a statistical blip, whenever the 2013 reading is better than the 2012 reading I use the average of the two. 
• second, conditions need to have got steadily worse since 2007. For this test, I fit a linear trend between the seven readings from 2007 onwards and the number of years elapsed since 2007, normalise the slope based on the average pre-crisis reading, and multiply by four. It's not robust of course but on the other hand if things are by and large not getting worse post-crisis, we're probably not in humanitarian crisis territory, are we? Please note that, even though I have lazily called this a 'correlation' in the table, it isn't. 

The findings look as per the tables to the right. For the colour coding I had to use some judgment on what is a significant number or not, going back and forth between graphs and formulas - the biggest tweak happened in order to make my assessment of arrears more realistic, since arrears have followed a U-shaped trajectory from 2003 onwards. I did not want my formula to imply that arrears hadn't risen post-crisis when they clearly had.

As you can see, things have got significantly worse since the height of the cycle in many respects, but compared to the pre-peak period only the sense of safety and access to healthcare  (both crucially important, make no mistake) appear to have deteriorated strongly across all demographics. Financial precarity and arrears have risen significantly, but only to roughly pre-crisis levels. This is quite important, as no one has ever suggested early noughties Greece was going through a humanitarian crisis.

To see what this looks like in practice, look at the graphs to your right. For the worst-hit, households with dependent children, the crisis was far from over in 2013. Food poverty and multiple deprivation plateaued, which I guess is good news, but financial stress continued to rise steeply. For single parents, on the other hand, 2013 was an unexpected reprieve across all fronts (see caveat below).

As a rule, households with dependent children and multi-adult households have suffered the most, while pensioners living alone have suffered the least. These findings, however, are misleading, as they reflect the movement of hard-hit individuals back into larger households. In reality, the findings should be read in reverse: only those who have not been hard hit can afford to continue to live alone. The narrative of the young bailing out the old is probably true in Greece - though many of the old are returning the favour by subsidising the young. It's deeply unhealthy, but it's not a humanitarian crisis.

You can download all the data I've used for this analysis from here.

A 2014 Update and a Response to a Critic

The 2014 SILC data are still coming in but some information is already available on a provisional basis. Here's what the 2014 update looks like for families with dependent children based on the data we have. As you can see, financial dimensions of poverty have continued to rise. But food poverty has stopped rising since 2012.

A critic commented on Twitter that this figure means nothing - you'd expect food poverty to be less prevalent than other types, as a result of people's hierarchy of needs. And indeed I would. But note that food poverty has taken a drastically different trajectory from that of financial conditions. I suspect this is due to a combination of forbearance from creditors, falling prices and improved household budgeting. But my critic's point underscores just how ill-suited the term 'humanitarian crisis' is to Greece's situation. The definitions of a humanitarian crisis I've cited above all revolve around a population's inability to cope. The Greek population's continued ability, since 2012, to keep the impact of new financial hardship away from their more basic survival needs suggests precisely such a coping mechanism. Coping does not negate hardship; but it negates a humanitarian crisis. It means the population is able to put their lives back together.

Greece's Shadow Welfare State

This analysis brings me to a vital discussion: how to get more out of the welfare state with (much) less. Greece’s welfare state was never set up to properly address poverty in the first place. According to the latest data, and the older data too, Greece’s welfare state has for years been the worst in the OECD at tackling poverty – in terms of how much it manages to reduce the risk of poverty per Euro spent. This was all pre-crisis studies - the times when we could afford our welfare state.

Ultimately, families were, and continue to be, Greece's de facto welfare state. Eurostat's groundbreaking work on household resource pooling back in 2013 (working on 2010 data) confirms this - with 82% of Greek households having fully pooled resources, Greece was third only to Malta and Romania in terms of household pooling in the EU. Barely half (54%) of all Greeks have full discretion in what they spend, with only Romanians and Bulgarians reporting less discretion. Income pooling was widespread but also flexible ; in 2010 Greece, fewer than 40% of individuals put all of their income into a shared household pool, while another 14.5% didn't chip in because they had no income.

The analysis by @AristosD in his book, Το αόρατο ρήγμα. goes further - Greek families are risk-diversifying, not merely resource-pooling institutions. At the heart of this function is an Anchor Income that was substantial relative to family outgoings and predictable - a solid pension, for instance, or a good professional job. Around this, the different family members diversify the family's income through a collection of low-wage, flexible work; variable entrepreneurial incomes with a significant upside (including incomes from agriculture); and marginal guaranteed income such as a small pension.

The graph to the right groups EU countries into families based on how similar the household income pooling situation was in the 2010 EU SILC figures. Sadly, France is missing due to a methodological issue which meant that answers were not comparable with other member states.

As a rule, the further apart two countries are, the more individuals' access to pooled household funds will differ. This graph will surprise some, because it doesn't fully bear out the core v. periphery, east v west, protestant v. catholic/orthodox narratives. Sure, Greece, Cyprus and Italy are very similar as might be expected. Spain is related to Portugal, though not to the other three peripherals. Ireland is close to the UK, but also to Poland and the Czech Republic, not to mention Bulgaria. Germany is closest to the Netherlands and Denmark, but also to Lithuania and Hungary. This is a deeper, more fundamental order in Europe that we are not exposed to very much these days; Europe's shadow welfare state.

In summary

Life in Greece is worse than macro aggregates such as GDP per capita might suggest, and has by and large got worse post-crisis. For most Greeks, quality of life is the same as a citizen of a recent accession country would expect. As a rule, we have live relatively better when it comes to bare essentials such as food, and the impact of the crisis has been less severe in that respect, but other important inputs such as access to healthcare and the feeling of safety have taken a huge hit. Some elements of poverty, especially fuel poverty, were inexcusably high regardless of austerity, and have got worse for some segments of the population.  But in many respects we're also just back to the pre-crisis normal, and claims of a humanitarian crisis are driven more by the ambient narrative than by hard fact. Having children is a key factor in how people have experienced the depression. Families with children may have not seen the threat of hunger rising in 2013, but their levels of financial stress were still rising.

You'll note I have not discussed incomes in this post. If you want to find out more about how incomes have developed, you can find a very similar but much more rigorous round-up by M. Matsanganis and C. Leventi here.

Greece's 'humanitarian' crisis, I think, is first and foremost the loss of the Greek family's ability to balance out its members' loss of income. It still aims to maintain this function of course; our culture is deeply embedded. But it cannot. It is clear to me that the last few years have seen younger family members (and even their dependents) return to large households, to the point where living on one's own is a sign of financial security. The tax and welfare system can be tweaked to restore some of the risk- and income-sharing function of families and protect single parents. By focusing more resources on the hardest-hit, and those without a family safety net, it really is possible to do a lot more with less.

Epilogue

Predictably, two or three people have responded to this post on Twitter with accusations of treason - apparently I failed to confirm their biases and say that Greece has turned into Darfur. It's sad to see that the Fifth Column narrative, fed by some Greek Government MPs among others, is gaining traction. Ironically, these attacks also come with a dose of cynicism against 'analysts' (i.e. people who bother citing sources). Which begs the question; on what basis do these guys think anti-poverty policies should be developed, when la Revolucion has come and gone and they've cleansed us Fifth Columnists from their midst? Sticking a finger into the air? Dowsing?