How the Ones in Need Solve Financial Problems in Times of Crisis? The Implication for Government Support Programs

Abstract: After the COVID-19 pandemic ended the war between Ukraine and Russia resulted in further price increases and a decrease in the quality of living of many Europeans. Many groups of citizens must be able to survive on meagre resources — despite being located thousands of kilometers from the war-zone. The two most affected groups are senior citizens and single parents who oftentimes do not have sufficient savings. The government provides financial support (e.g. housing allowance) to those in need after their successfully filling out application forms and proving their crisis situations. These are reviewed for eligibility by the Labor Employment Office. There are several problems inherent in this bureaucratic procedure. Among these are: complex jurisdictional language, external reference requirements, and lengthy forms. All these force — willingly or unwillingly — the individuals to either avoid or fail the application process. In order to investigate statistics aspects of the avoidance aspect of this state of affairs, we collected data from Czech citizens via an online questionnaire at the end of 2022. The questions were specifically aimed at understanding the potential applicants' mechanisms of dealing with their financial crises. We queried respondents' ratings to nine queries about their financial strategies (taking out a loan, use of savings, etc.) and two about their income. All responses were categorical variables.We constructed a contingency matrix and performed a correspondence analysis. This method shows associations, replacing the often-times used erroneous approach of looking for correlations (which do not exist for categorical variables). Furthermore, we can find an a priori unknown number of associations and the fraction of statistical noise in the contingency matrix. We use a clustering algorithm ('spectral' clustering) to find the number of possible associations and construction of concave hulls to aid in analyzing these.We find: (a) the associations explain 91.9% of the square of the Frobenius norm of the contingency matrix; (b) nine queries associate (in four clusters) for certain response categories; (c) two queries do not associate (one is independent of response categories); and (d) one query associates with only one response query.The implications of these associations are as follows: (a) all respondents intend to decrease their outlays; (b) those who earn between 20 and 30 thousand CZK are hesitant to ask for government support; (c) the participants would rather not borrow money from family, bank, nor sell their valuables; (d) the rejection of possible non-bank loans associates with the rejection of selling a property; (e) reliance on savings does not associate with any other query, nor does total household income — nor does finding an extra job. Application of our findings are twofold. First, we see that the strongest statistical signal does not provide support for an association between personal or family income and the proffered solution of government support. Second, the associations we found indicate a crucial and ominous rejection of the Czech government's strategy and expectations. Specifically, we suggest a remedial strategy of matching the application process with the linguistic accessibility of low-income citizens.

Keywords: governance, support, singular value decomposition, housing

DOI: 10.54941/ahfe1004098

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