Household projections by the headship rates method: The case of Serbia
Authors: Vasic Petar 
Published: January 2018

The headship rates method (HRM) of household projections based on the share
of household heads in the total population of the same demographic
characteristics (age, sex, nationality, marital status, etc.) is the most
commonly used method, especially by statistical institutes and planning
institutions. The specific rates of household heads by age are calculated by
dividing the number of household holders of a certain age with the total
number of residents of the appropriate age. The future number of households
is then simply projected on the basis of population projections by age and
assumptions about the future changes of HR. The HRM is based on the
projection of the future age structure of the population. In that sense, the
choice of methods of population projection, as well as the method of
projecting HR-s have determining impact on the outcome of household
projections. Given the methodological inconsistency typical for official
population projections in Serbia and significant differences in addressing
uncertainty of the future population change between deterministic and
probabilistic approach in making population projections, the decision to use
a probabilistic projection of the population of Serbia as the basis for
calculating the future number of house-holds and their structure according to
the age of the household head proved to be a logical choice. However, as the
basic aim of this article is to show the simple method of household
projections, the above-mentioned stochastic projection is used in utterly
deterministic manner. The median of the prediction interval of the population
distributed across age is interpreted as the most probable future, or as a
prognosis. The HR-s based on the age structure estimates and estimated number
of households by age of the household head from Household budget survey (HBS)
are used for the purpose of HR projecting so that the number of observations
would be large enough for calculating inclination parameters. The obtained
rates show a tendency to decline during the observed period, however, in
certain age categories, the rates are expressed by extreme values that are
certainly the result of random sampling in the HBS for the purpose of
analyzing consumption rather than analyzing the demographic characteristics
of households, and must be taken with a certain reserve. Although the
tendency of declining rates in most age categories is not unexpected, surely
the intensity of decline is unexpected. For this reason, in the formation of
the regression function, the extreme values of the rates are intentionally
excluded in the following way: after calculating the regression line
parameters, all the values of the rates that deviate from the regression
values by more than 20 per cent are rejected, after which the regression
parameters are recalculated. On the basis of the second calculation of the
regression line, parameters are obtained. However, as the obtained parameters
led to unexpectedly large HR changes according to the age of the household
head until the end of the projection period (2040), it was assumed that the
inclination parameter (b) would be reduced by 10 per cent annually compared
to the start year of the regression line. On the basis of the rates according
to the 2011 census data and the hypothesis on the slowdown of the observed
trends in the future, future HR-s are calculated. Furthermore, based on the
projected HR-s by age and future age structure of the population, the number
of households by the age of the household head for the projection years is
calculated. Based on the results of the projection, the total number of
households will be reduced on average by over 11 thousand households per
year. Also, compared to the 2011 census, it can be expected that the number
of households in all age groups will be reduced by the end of the projection
period, except in the category of household heads aged 65 and over that
stabilizes to around 900 thousand households by the end of the projection
period. Due to the decline in the number of households, the average household
size will be reduced by 0.18 members in 2040 compared to 2011, from 2.89 to
2.71. The largest number of households in Serbia are family households, the
share of single person households in the population under the age of 50 is
small, and the structural barriers to the establishment of an indigenous
household in persons under the age of 30 are significant. All of this makes
it difficult to withdraw parallels with other European populations in terms
of a possible path that the population and households in Serbia should follow
in the projection period. Some of the projections of households produced by
the HRM of a newer date for populations also found in the post-transition
demographic stage show that the age at which the household is based, the
mechanisms that affect the generation, change, and extinguishing of the
household, which are characteristic for each society, result in significantly
different values of age-specific HR-s. Of course, HR-s by age vary
considerably among different populations. It is obvious that the key
differences in Serbia in relation to other countries occur precisely at the
age when individuals base their own household. The existence of postponing
marriages and parenting that is recognized as key life-changing milestones in
the transition to adulthood and the founding of one?s own household, the
chronic lack of systematic housing policy towards young people and high youth
unemployment are the main causes of the late establishment of their own
household and the maintenance of low HR-s for persons under 30 years of age
in Serbia. Nevertheless, during the first decade of the 21st century, there
is a certain shift in the financial independence of young people, which gives
some hope that in the future HR-s in the category between the ages of 30 and
39 can be slightly increased, which is confirmed on the basis of the sample
of households from the HBS for the period 2006-2013. Namely, the tendency of
a slight increase in the value of the rate for persons aged between 30 and 39
years is certainly the result of an increase in the age at which the
household is based, which can be noticed on the basis of the reduction in
rates for persons under the age of 30. On the other hand, a certain decline
in the value of the rate characteristic for the households of the holders in
their middle age (between 40 and 64 years of age) has an explanation in the
increase in number and share of multi-family households in the period
1991-2011, especially in urban areas. During the 1990s, in the conditions of
a deep socio-economic crisis, with the continuation in the next decade during
the transition of the economic system, in conditions of significant poverty
and the phenomenon of the retraditionalization of partnership arrangements
within multi-family households, it is obvious that a significant number of
families in the middle of their life cycle lived in within parental
households whose carriers are aged 65 and over. In fact, as the increase in
the HR-s during the thirtieth year of age is the result of deprivation of
rates in younger persons, this is, by and large, a rise in rates for persons
aged 65 and over due to a reduction in rates among carriers aged between 40
and 64 years. The presented method of household projections is not
characterized by methodological sophistication, elegance and precision in
reflecting changes in the structure of households according to the family
composition and a detailed presentation of changes in the family status of
individuals, but it certainly represents an simple way of household
projecting according to the age distribution of carriers, the average size
and the number of households. It seems that this approach, based on the
stability of age-specific rates of household heads, without getting involved
in the field of sociology, is quite precise in the medium term, especially
given the simplicity in household projecting based on HRM.