Response of Households to the Economic Downturn

The CSO has released a report on its recent module in the QNHS that asked households some qualitative questions about the impact of the downturn on expenditure patterns – the report is here.

14 replies on “Response of Households to the Economic Downturn”


It tells me that ordinary folk have a significant fear that getting sick in this country without the fall back of private insurance is a risk too far and they’d prefer to do without in terms of food, new clothes or foreign holidays as a consequence – it might seem odd but people still believe (correctly) that your health is in fact your wealth, and worth preservering and protecting, despite the cost.

Agree YOB whether they are right or wrong to do this is another matter… I wonder
1) if private health insurance firms are capable of surviving long term here.
2) would we not be better as a society with a single health system funded from general taxation
3) with insurance optional but very very expensive and realisticly only affordable by the top 1% of rich people (who would pay their full costs and then some)
4) and it mandatory that anyone working, managing or owning the general/public system must use the system they are collecting their wages from

@ Jagdip Singh,

It tells me that they should have asked “Filter” questions. For example, filter question “Did you purchase health insurance 2yrs ago” if Yes….

Similarly the stats on savings/deposits are hard to interpret. You’d probably want to define an amount above which is considered savings/deposits. I was tempted to make the point that this survey showed consumers were not “hoarding cash”, but the survey doesn’t seem to filter out those who were not saving 2yrs ago or those with (say) less than 3k* in savings accounts. Although I think people aren’t hoarding cash, I wouldn’t base in on this survey.

We should also be a little cautious of the cohorts as respondents may not have been in the same group 2yrs ago (e.g. Unemployed or retired)


The finacial health of any insurer is ultimately dependant on its claims management in financial speak its COR – combined operating ratio i.e. claims costs plus opertaing costs and a percentage of its premiums. If this ratio is more than 100% year after year the buisness of insuring against risks can only be compensated by investment returns on premium income or as Mr Buffett refers to the cash float of the insurer.

Given the nature of asset markets of late and expectations into the future, returns for risk adverse investors such as insurers will be at best pretty dull or non existant in real terms given the likely rising bond yields we should see going forward. (Health insurers can however compensate themselves somewhat as the PV of their long run claims will be lower in a higher bond yield environment so claims provisioning will naturally reduce in a fixed claims inflationary environment).

Given the above the only long term route to profitability maintenance is 1. Fleece your customer base as far as is economically possible 2. Stop the claims rot at every turn humanly possible 3. Run the day to day operations tighter than Ryanair.

Can 1 to 3 above really happen?

My view is that fleecing customers will eventually fail in austerity driven economies (at what price point I don’t know), claims management will eventually hit a brick wall in terms of actuarial long run expectations in line with the wider health market i.e. testing the customers claims goodwill will eventually reach its maximisation point and customer service will be found wanting as operations move to the lowest price point which will lead to customers eventually walking anyway.

So to answer the points above – private health insurers will not survive in the RoI longer term based on the current model. Claims costs need to fall dramatically i.e. pay levels and pricing in the health sector have to fall – if they don’t insurance as we know it will go beyond the reach of the masses.

@ All

A bit off topic but still relevant; what is going to happen in the UK?

Notably (page 26);

“The only more comparable example in the World Bank data of cuts being delivered on a similar (albeit still slightly smaller) scale to those currently planned by the UK government is in Ireland: general government consumption in Ireland was cut by 10.7% over a three-year period from
1987 to 1989. Of course, one cannot conclude from this that it is impossible to deliver such cuts: in most countries, in most periods such cuts will not have been delivered because they will not have been deemed appropriate and therefore will not have been attempted. In addition, some economies have seen relatively large cuts in general government consumption in the most recent year or so (for example, Greece, Iceland and Ireland); if these have persisted in 2011 (and potentially persist beyond that), they may end up being deeper than those planned by the UK government. Greece cut general government consumption by 7.2% in 2010, Ireland has cut it by 6.8% over 2009 and 2010, and Iceland has cut it by 5.1% over the same two years”.

As the report remarks “such cuts will not have been delivered because they will not have been deemed appropriate and therefore will not have been attempted”. Maybe the conclusion to be drawn from this rather pointless survey by the CSO is that Ireland is still suffering, at least for the moment, from ‘hysterity’ rather than the necessary government austerity. The citizenry, being aware of this, are taking the required individual and sensible precautions to guard against the possible worst outcome.

I remember those cuts – they were worse then pointless.
They merely freed up resourses that were subsequently wasted by bank credit “investments”
It was the beginning of the pointless phase in our nation existence.

This is what capitalism is desperatly trying to do now – waste a surplus , any surplus.
Just give us a f$£king surplus……………..

Check out car registrations during that period – that was where much of that surplus was directed.
Pointless ,simply pointless.

88 to 93 was our first boom / bust post Basle fling.

New private cars registered
Y1988 : 61,188
Y1989 : 78,383
Y1990 : 83,420 (peak)
Y1991 : 68,533
Y1992 : 67,861
Y1993 : 60,792 (through)

Back in 1986 nearly everybody was driving 1 litre cars – so post 87 we reduced goverment expenditure and wasted it on 1.4 /6 litres.
Modern credit expansions are all about dragging oil from the future into today.
They do not create wealth , they destroy wealth (oil reserves)
We registered a increase in GDP during those years because consumption increased , core domestic wealth capacity did not increase.
We simply took wealth from Arabia and expressed it as a rise in GDP as import costs were low back then.

The 91 to 93 period was characterised by the first Gulf war mini oil shock and the subsequent EMU crisis.
Consumption rises slow until more oil / gas comes on line.

As for oil consumption in Irish private cars – well even during the mini boom of 1990 things were tame when compared to today.
And despite new lower growth car numbers growth in the early 90s oil consumption in private cars grew every year until the 2007 crisis.

Y1990 : 926KTOE
Y1991 : 981KTOE
Y1992 : 1012KTOE
Y1993 : 1054KTOE
Y1994 : 1114KTOE
Y1995 : 1176KTOE
Y1996 : 1259KTOE
Y1997 : 1348KTOE
Y1998 : 1421KTOE
Y1999 : 1504KTOE
Y2000 : 1562KTOE
Y2001 : 1642KTOE
Y2002 : 1697KTOE
Y2003 : 1746KTOE
Y2004 : 1817KTOE
Y2005 : 1891KTOE
Y2006 : 1977KTOE
Y2007 : 2070KTOE (PEAK OIL / CREDIT)
Y2008 : 2062KTOE
Y2009 : 1974KTOE
Y2010 : 1899KTOE

Residential oil use

Y1990 : 389 KTOE
Y2010 : 1288 (Peak ?) KTOE

So much for that insulation thingy
Just saying like…………

@ seafóid

I agree. I am just amazed at how little comment the situation there is getting and the possible implications for Ireland. Instead, we seem to spend our time chasing our tails on issues such as the PN, the debate on that topic being totally divorced from reality.

UK Nuclear energy – primary production
Y1999 : 24540 KTOE
Y2010 : 16029 KTOE

UK Primary production crude oil
Y1999 : 140721 KTOE
Y2010 : 63948 KTOE

UK Primary production NG
Y1999 : 89198 KTOE
Y2010 : 51464 KTOE

UK primary production coal
Y1999 : 21773 KTOE
Y2010 : 10402 KTOE……. a slight rise from the Y2007 low of 9808 KTOE.

The lack of a Nuclear programme in the UK when they built one fine PWR and then scrapped the programme is the greatest scandal in the History of the UK.
They claimed it was too expensive………..
But when you build one of a kind they tend to be a bit on the expensive side.
Its a economic law somewhere or other.
30 years ago any Dork could have told them the North sea reserves were finite.
Can’t see how they & us are going to pull out of this disaster zone.

UK energy dependence %
Y1999 – 20.4%
Y2009 +26.6 %
This is a emergency : all energy utilties should be immediately nationalised and almost all resourses directed towards a massive nuclear programme on a French 1970s / 80s scale.

@Dork: “30 years ago any Dork could have told them the North sea reserves were finite.”

That dork was J King Hubbard. He told them he was going to tell ’em; told them; then tried to tell ’em he had told them. But their olfactory receptors were slammed shut. It was a dreadful, inconvenient truth.

Albert Bartlett (of exponential infamy) was mistreated in the same way. Edged to the margin. Which is exactly where we are now, in respect of energy. Ironic.

Few are listening, fewer are heeding. Is it my fevered imagination, or is the hubris increasing in intensity?

Comments are closed.