Deprivation analysis based on Bayesian latent class models

This article seeks to measure deprivation among Portuguese households, taking into account four well-being dimensions – housing, durable goods, economic strain and social relationships – with survey data from the European Community Household Panel. We propose a multi-stage approach to a cross-sectional analysis, side-stepping the sparse nature of the contingency tables caused by the large number of variables considered and bringing together partial and overall analyses of deprivation that are based on Bayesian latent class models via Markov Chain Monte Carlo methods. The outcomes demonstrate that there was a substantial improvement on household overall well-being between 1995 and 2001. The dimensions that most contributed to the risk of household deprivation were found to be economic strain and social relationships.