Material Deprivation, Economic Stress and Reference Groups in Europe: An Analysis of EU-SILC2009

In this paper we take advantage of the recent availability of data from the special module on material deprivation in the 2009 European Union Statistics on Income and Living Conditions (EU-SILC) to develop a more comprehensive understanding of the relationship between material deprivation and economic stress, the mediating role played by cross-national differences in levels of income and income inequality and the implications for competing perspectives on the nature of reference groups in Europe. The paper establishes the critical role of basic deprivation, relating to inability to enjoy customary standards of living, in rising economic stress levels and in mediating the impact of socio-economic conditions. National income levels and inequality had no direct influence on economic stress. However, the impact of basic deprivation was stronger in countries with higher levels of income indicating the crucial role of national reference groups. An interaction between basic deprivation and income inequality was also observed. However, contrary to the expectation that experiencing basic deprivation in a national context of high income inequality is likely to be particularly stressful, the consequences of such deprivation were most negative in low inequality countries. Experiencing basic deprivation where high income levels and lower inequality would lead to the expectation that such deprivation is eminently avoidable exacerbates its impact.