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Publié le
Vendredi 17 Mars 2023
To what extent does the place where households live in affect their purchasing power? And where are located the most well-off households and those with the tightest budgets? To answer these questions, we build an indicator of purchasing power, the 'spendable income', which takes into account households' income, their needs and the prices they face. The spendable income is defined as what is left in households’ budget after food, transport and housing (FTH) expenses. These three items represent, on average, more than half of French households’ income, and considerably more for the poorest households.
NA 118 - Restes à dépenser et territoires - Image principale

Firstly, we neutralize the effect of households resources through a case study approach: where is the most financially advantageous place to live for a household with given socio-economic characteristics? We show that, for a given income and family structure, the living place has a minor influence on the spendable income. Paris region is an exception, due to the very high cost of housing.

But the average level of resources is not the same from one location to another. When this reality is factored in, the results are very different. It is in the Paris region that the spendable income after FTH expenses is on average the highest, due to much higher incomes and despite the fact that housing is substantially more expensive. Elsewhere, average levels of spendable income follow average levels of living standards. The poorest households in terms of both living standards and spendable income are more often located in the center of the employment area, or, on the contrary, in locations that are the most distant from their centers (see the graph below). These results remain valid when spendable income is derived not from actual households’ expenditures, but from an expenditure norm that aims to restrict the scope of expenses to “basic needs”.

However, the level of expenses does not tell the whole story. In locations where housing costs are very high, households not only pay more, they also live in smaller and/or lower quality homes. When this downside is accounted for, Parisian households no longer seem to benefit so much from their location: if they have a higher average spendable income after FTH expenses than elsewhere, it is both because their incomes are on average higher and because they make significant sacrifices in their housing conditions.

Note d'analyse 118 - EN - Graphique 1
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Pierre-Yves Cusset
Société et politiques sociales
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