WHY ARE THE GREEKS SO GLOOMY?

Because I'm not very smart, I ventured onto Reddit the other day. A user (whom I'm not naming to avoid harrassment) was questioning why every Greek they speak to is so negative about the state of the economy when things look like they're getting better. 

The user linked to this article, written by one Michalis Argyrou, the Chair of Greece's Council of Economic Experts - which casual readers might not realise is a body directly appointed by the Greek Minister of Finance. Here, Argyrou focuses on a recent (Oct 2024) Eurostat publication on subjective poverty, and asks a very interesting question: 

How is it that Greeks rate themselves subjectively as 'poor' much more frequently than one would expect from common indicators of material poverty? Why do their subjective perceptions fail to reflect the significant improvements in employment and other economic indicators? 

You could put this down to extreme partisanship; it certainly reads as though Argyrou is rage-baiting certain parts of the Greek internet. Except, there are receipts. Apparently 67% of Greeks see themselves as poor. Fewer than 19% are at risk of poverty as this measure is defined by Eurostat.  

More importantly, Greece really stands out from the rest of Europe in this regard: Argyrou points to a shocking graph, not purpose-built by some ND partisan but included in the original Eurostat publication, which shows how much of a deviation there is between self-assessed poverty and 'objective' poverty across different European countries. Greece practically needs its own secondary axis. 

Worse, the two figures are comparable - they come from the same study, SILC, which veteran readers will recognise as one of this blog's favourite surveys. SILC is where all European poverty statistics come from and it's been surprisingly robust to the rise of non-response across Europe.

You don't have to share Argyrou's institutional perspective or have particular sympathies for the current government to raise an eyebrow. I did too - and the fact that Balkan countries seem to dominate the ranks of poverty over-estimators seemed to point to a kind of cultural bias - a 600-yr-old legacy of treating all state institutions as predatory and only grudgingly acknowledging them if they can be weaponised against one's enemies.   

So is Argyrou right? 

To get to the facts, we first need to understand what people mean by 'subjective' and 'objective' poverty, and how Eurostat figures are used to approximate them. 

First -subjective poverty. 

You can read the questionnaire from which this measure is derived here.  The precise wordings in English and Greek are as follows. If you say you can only make ends meet 'with difficulty' or 'with great difficulty', then that makes you 'subjectively poor'. If you're not convinced that's how Eurostat calculates this, see Eurostat's explanation here and the actual data for C5 here and add the two responses up for yourself. 

To my eyes at least, we have a bit of a methodological issue here. The Greek and English versions of this item are not semantically identical. That's always a risk with international surveys but here I think the deviation is significant. The Greek version literally asks 'how do you meet the usual needs of your household?'. There is no negatively charged word in it. The English version asks people whether they can make ends meet, which to the best of my understanding of English, does have a slightly negative energy. One can ask even a wealthy person how they 'meet the needs of the household' and get a complex answer. The bar for saying 'I make ends meet with difficulty' in English is higher than the bar for saying 'I meet the needs of the household with difficulty' in Greek.  

If this does not convince you, you needn't worry. My conclusions do not rely on this observation. 

How is Argyrou's 'objective' poverty measured? As you can see here, it is the % of persons 'at risk of poverty' (not the more common but, in this case, less appropriate 'at risk of poverty or social exclusion'). 

Specifically, a person is 'at risk of poverty' if their income, after  tax and other deductions such as national insurance contributions, and after social benefits received, and adjusting for household size, is lower than 60% of the country's median income. This is a standard definition which feeds into a lot of EU policy and Eurostat figures. It's also baked into SILC statistics, so we can cross-tab almost every poverty statistic in Europe against this. 

You are probably already guessing what's behind the conundrum:

First, 60% of Greeks above the 'at risk of poverty' threshold are subjectively poor. Can that really be?
Second, it seems as though Greeks above the threshold are about as likely as those below the threshold to be subjectively poor (though the balance of 'with difficulty v 'with great difficulty' shifts). Again, can that really be? 

The answer is that it can. You won't see above-poverty-line households struggling to eat, or experiencing housing difficulties, and even the percentage of such above-the-line households that struggle with heating/fuel prices is modest. So, what gives? 

The answer presents itself clearly once you consider debt and arrears. Above-the-line Greeks are much more likely than any of their European above-the-liners to have unpaid bills, unpaid rent payments, etc. Nearly half of them have such unpaid liabilities. If you assume that someone who keeps getting rent or mortgage demands they can't pay immediately is likely to say they can't make ends meet very easily, the mystery is solved.  

So here is my thinking on this problem. Greeks responding to the SILC survey are not stating that they are poor. Eurostat ascribes to them a 'subjective poverty' status. What those respondents are in fact saying, much more commonly than other Europeans do, that they find it hard to meet household needs with their income. The slight different in wording matters, but what really makes a difference is the reality on the ground.

Greeks are much more likely than other Europeans to be struggling with debt. I take no view on whether they have more debt in some objective sense, but clearly they're struggling to pay it back. This debt overhang creates what looks, to Argyrou and most casual readers, like a bias in favour of thinking of oneself as poor. It is not. It's a piece of solid (or not solid, in another sense) economic fundamentals that Greece's Council of Economic Experts should be treating as a high priority risk - not dismissing as mere snowflakery. It creates a reluctance to form households, or have children, or save, invest, start businesses, indeed even to consume. 

Perhaps all these people deserve some hard times. Maybe they were not prudent enough in the spending or their consumption. It's possibly that many fit this description. But in macro terms, the rights and wrongs of indebtedness do not matter. The resulting economic anemia will hurt even those folks that one considers virtuous and thrifty.