TORONTO -- This is part one of a three-part series by Environics Analytics Senior Vice President and Practice Leader Rupen Seoni, who takes a deeper look into how the COVID-19 crisis is impacting the Canadian population financially and socially though a segmented system called PRIZM. Today, PRIZM’s five-year rebuild launches, capturing new insights about Canadians from coast to coast.
The COVID-19 pandemic has made large segments of the population vulnerable to different types of hardship beyond the immediate threat of exposure to the coronavirus.
As the economy reopens, it’s important for government, NGOs and businesses to understand who needs support, what kinds of services are required for different populations, and how businesses can best engage vulnerable customers.
Environics Analytics used its vast array of population data and analysis tools—including PRIZM, a segmentation system that classifies Canadians into 67 distinct lifestyle types—to understand who is vulnerable, what these populations are like, and where they can be found.
We looked at two types of vulnerability and expressed them as indexes, which are weighted composite scores of several pertinent variables (details are provided in the notes at the end of this analysis):
- Financial Vulnerability Index – assesses who is likely to have difficulty keeping up with financial obligations following a sudden drop in income
- Social Vulnerability Index – identifies those likely to suffer more from social isolation due to mental health challenges and limited social networks and support systems
The data allow us to create indexes in a variety of ways for any number of topics. As described below, we chose a specific combination of variables to serve as key indicators to help us paint a picture of vulnerability in Canada.
Financial Vulnerability Index (FVI)
Beyond public health, the financial impact of this crisis is on the minds of many in government, social services and private industry. Which Canadians are most likely to be able pay for housing and other necessities and still service debt after a sudden loss of income depends on a range of household financial indicators.
The Financial Vulnerability Index takes these variables into account to score how precarious the finances may be of typical households at the neighbourhood level:
- Availability of savings and liquid assets
- Levels of different types of debt
- Amount of discretionary income
- Debt-to-discretionary income ratio
We looked at the FVI through the lens of Environics Analytics’ PRIZM lifestyle segmentation system to identify the many faces of financial vulnerability at a community and neighbourhood level. Understanding the kinds of populations most likely to be in trouble at a local level allows financial service providers, utilities and governments to respond with initiatives tailored to meet their needs.
For example, proactive payment plans, payment due dates, loans, subsidies or grants can be adjusted to help those most in need. Retailers can also rethink product offerings based on their local communities’ financial position.
The benefits are many-fold: governments can better target their support, reducing waste and subsidies to those who do not need them; utilities and telcos can proactively identify accounts most likely to fall into collections and take measures to assist those customers; and financial institutions and retailers can ensure they are providing products and assistance that take into account a changing level of affordability.
Everyone, both public and private, benefits from positive public sentiment when relevant, effective support is provided in a difficult time.
Eighteen of the 67 PRIZM segments had a FVI of 120 or above (Canadian average is 100). We grouped together similar segments to create a high-level picture of financially vulnerable groups. The table below illustrates the main drivers of high financial vulnerability for each group, the PRIZM segments within each group, and examples of communities where these groups are found in large numbers.
Social Vulnerability Index (SVI)
Some Canadians are more likely to be challenged by physical distancing and stay-at-home orders due to mental health issues and limited social networks. Governments and social service agencies are well aware that some Canadians will inevitably have difficulty coping.
The Social Vulnerability Index in combination with PRIZM helps shed light on who is most likely to experience these difficulties. The SVI can help administrators design program support and communications with specific target populations in mind, focused on the neighbourhoods most at risk.
Every six-digit postal code in Canada has an associated SVI, which we constructed using the following variables:
- Single-person households
- Self-reported rates of poor or fair mental health
- Rates of orientation towards “Community Involvement” (a psychographic variable)
- Confidence in being able to rely on others in the community
- Measures of having close friends and family
- Unemployment rate (pre-COVID estimates)
Nineteen of PRIZM’s 67 lifestyle segments had a Social Vulnerability Index of 115 or more. and as with the FVI, we’ve grouped similar segments together based on key lifestyle attributes. Overall, social vulnerability tends to be more of an urban phenomenon and is more concentrated among those with lower incomes.
But there are pockets of vulnerability in middle-income segments and in suburban and rural Canada where older residents are likely to be struggling. Generally, Young Single Urbanites tend to score above average on all factors that contribute to the index. Newcomers and Aging City-Dwellers especially tend to lack community networks, but they score better on mental health indicators than the younger group.
Notably, with this analysis we see that PRIZM segment 55, Enclaves Multiethniques, scores high on both the FVI and the SVI. This segment is home to younger francophone and English-speaking city dwellers, many of whom are recent immigrants. Their low income levels and sense of isolation make these Canadians particularly vulnerable to the challenges of the COVID-19 pandemic and warrant special attention.
Rupen Seoni is a Senior Vice President and Practice Leader at Environics Analytics
Here are some of the variables used to develop the indexes:
Financial
• Non-RSP & Non-TFSA Chequing & Savings Accounts - Balance
• Credit Card Debt - Balance
• Personal Loans - Balance
• Lines of Credit - Balance
• Households with under $49,999 in Liquid Assets
• Adjusted Average Discretionary Income
• Consumer Debt to Adjusted Discretionary Income (Ratio)
Social
• 1-Person Households
• Unemployment Rate
• 0-2 Close Relatives
• 0-2 Close Relatives in the Same Community
• 0-2 Close Friends
• 0-2 Close Friends in the Same Community
• Low Trust in People
• Know 0 People Well Enough to Ask Favour
• Community Involvement
• Fair or Poor Mental Health (Self-Perceived)
