Vulnerability to life events: introduction of the vulnerability score and application to labor market demotion in Japan

The purpose of this study is to introduce a vulnerability score for measuring an individual’s potential to experience damage from negative life events as socially embedded hazards and to show analytical examples of this using data from the 2015 Social Stratification and Mobility survey (SSM survey), a national survey in Japan. The vulnerability score is defined as the product of the probability of the occurrence of an event and the degree of impact expected for individuals, given their specific social and demographic statuses. This definition also corresponds to a simple definition of risk. The scores can be decomposed into sub-categories of the event and can also measure the contribution of a sub-category to overall vulnerability to an event. The scores can be understood in the framework of causal inference under the assumption of weak unconfoundedness. As an example of the application of this score, we analyze data from the 2015 SSM survey (valid sample size 7817). Focusing on the demotion of an individual to marginal status in the labor market as a trigger event, we estimate the potential impact of this event on the individual’s general happiness as a particular dimension of subjective well-being and measure how vulnerability varies based on different individual characteristics.