Living Standards Measurements Study - Serbia 2002 - 2007

Table 1.4. Subjective evaluation of the current financial standing of households, 2002-2007
2002 2007 Change
Very bad 23.5 15.4 -8.0
Bad 32.7 28.3 -4.4
Neither bad nor good 32.9 38.0 5.1
Good 8.4 15.9 7.5
Very good 1.0 1.5 0.4
Don’t know 1.5 1.0 0.6
Total 100.0 100.0
As in most countries, subjective poverty in
Serbia was higher than the objective one in both
years (Graph 3). In 2007, twice as many Serbians
were subjectively poor compared to the objective
assessment (13 percent compared to 6.6 percent
respectively). However, the graph shows that
subjective poverty also declined in the 2002-2007
period, although much less than the poverty
measured according to the actual expenditures of
population.
A subjective evaluation of the current financial
situation of households also points to the
citizens’ living standard growth, especially among
the most affected groups (Table 4). The percentage
of population who assess their cur-rent financial
situation as “very bad” has been significantly
reduced, from 23.5 percent in 2002 to 15.4 percent
in 2007. The percentage of population who assess
its financial state as “bad” was also reduced. On the
other hand, in the same period the percentage of
population who consider the household’s financial
situation as “good” and “very good” significantly
increased.
1.4. Growth incidence curve
In the first part, we have seen that consumption
growth led to a considerable poverty decline. In this
part, we will provide a more elaborate analysis as to
how the benefit of aggregate growth of consumption
was distributed compared to the initial consumption
in 2002, or which categories of population had the
largest benefit from the economic growth. In order to
demonstrate that, we will define a curve featuring an
annual real growth rate of consumption (y axis) by
consumption percentiles (x axis), (growth incidence
curve). That curve is presented in Graph 4, separately
for Serbia, and separately for urban and rural areas.
The largest benefit from economic growth, i.e.
consumption growth, was experienced by the poorest
sectors of the population. The graph clearly shows
that the consumption of the population with the
lowest consumption has seen a faster growth than
total consumption, which indicates that the changes
in consumption distribution had a stronger positive
effect on the poor, as well as on the population in the
first three deciles, as compared to wealthier layers of
the population. Middle-income population groups
have benefited the least. In other words, the
population has experienced a progress in all segments
of consumption distribution, i.e. a con-sumption
growth, but the poorer layers of population had
relatively higher benefit from the consumption
growth that the rest of the population. It is primarily
due to a real increase in salaries, pensions and other
social transfers in the observed period, which account
for the largest part of income made by the poorest
(see Graph 5.2 with income structure by deciles).
In rural areas, the poorest layers of population
had the largest benefit from economic growth, i.e.
from consumption growth. The growth incidence
curve in the 2002-2007 period reflects a declining
trend, which means that the consumption growth rate
declines as the consumption of the population
increases. Almost a half of the population in rural
areas with the lowest consumption has seen an
above-average consumption growth. It may be
explained, inter alia, by the introduction of one-off
aid to non-commercial farms in 2006 in the amount
of 40 000 dinars to all household members who have
agriculture as the sole source of revenue and who are
over 55 years of age. The majority of such
beneficiaries are coming from the areas that are less
favourable for agri-cultural production 2 , thus falling
into the most affected categories of population.
14 Living Standards Measurements Study - Serbia 2002 - 2007