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1301.0 - Year Book Australia, 2002  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 25/01/2002   
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HOUSEHOLD INCOME, LIVING STANDARDS AND FINANCIAL STRESS


INTRODUCTION


An important focus of public policy is to ensure acceptable living standards for all Australians. A key element in assessing people’s living standards is their command over goods and services which they consume to support their standard of living. In Australia’s context such an assessment usually rests not on absolute measures of minimum standards, such as might exist in an economy where getting enough food to survive was a critical challenge, but on a relative measure such as societal expectations of a reasonable Australian standard of living.

In the 1998-99 Household Expenditure Survey (HES), the ABS included, for the first time, some questions which might indicate that households were experiencing some degree of deprivation or financial stress. However, interpreting responses to individual questions in isolation can potentially be misleading. This article explores some of the issues in measuring relative living standards using these data and presents some preliminary analysis of the characteristics of households which indicated varying levels of deprivation and financial stress.


Income and standards of living

While a household’s command over goods and services may in part be affected by issues of access, such as for remote communities, it is most often a question of families having the financial resources to acquire goods and services in the market. Also, for most people the most important economic resource available to support their standard of living is regular income received, whether it be income earned from a job, income provided by government as benefits and allowances, or income such as interest, rent or dividends flowing from the ownership of assets. It is because income is so important that income distribution and measures of income inequality are analysed to assess relative advantage and disadvantage in the community. For example, while average incomes may be rising, and the average standard of living rising with them, significant proportions of the population may have steady or falling incomes, resulting in their absolute and/or relative standard of living declining over time.

The ABS has been producing household income statistics for many years to support the analysis of income distribution. Summary measures are published in Income Distribution, Australia (6523.0). However, income is not a perfect predictor of the standard of living of households if it is measured by what people consume. People can save some of their income instead of spending it all on goods and services now, so that they shift their consumption to future periods when they will draw down their savings, or spend the income received as returns from their invested savings. At times the saving may not be discretionary, for example, when it is used to repay loans taken out at an earlier time to support earlier consumption. On the other hand, expenditure can be greater than income. Additional expenditure can be financed by running down savings made in earlier times, by selling an asset, by borrowing, or by using money received from a non-income source such as an inheritance.

While measuring income is a very good starting point in the analysis of the standard of living of the Australian community, additional measures are needed to determine how changing income levels affect the pattern of consumption of the basics of everyday Australian life, and whether other influences restrict access to these basics. This article explores aspects of deprivation and financial stress in relation to income, expenditure and various characteristics of the population, by drawing on information collected in the 1998-99 HES.


Development of deprivation and financial stress indicators

While income and wealth statistics can describe the economic resources available to people to provide command over goods and services in aggregate, and expenditure statistics can describe people’s associated consumption patterns, there are other issues relevant to understanding living standards. For example, a person’s poor state of health or limited access to education facilities may lead to greater expenditure addressing their particular situation, and relatively less expenditure on other basic necessities of life than is achieved by other people who earn similar incomes or who are spending, in aggregate, about the same amount. The 1998-99 HES therefore collected data designed to give a more direct indication of financial stress and deprivation in low income households.

There are no precise definitions or an internationally agreed set of questions that can be drawn on to measure deprivation or financial stress. The ABS has drawn heavily on previous Australian work that has been done on living standards. This work includes a survey by Travers and Richardson in 1987, followed by a study by the Australian Institute of Family Studies in 1991, and a 1995 report by Travers and Robertson as part of a Deprivation Standards Project looking at social security recipients. The ABS also carried out a pilot study prior to the 1998-99 HES to ensure that the questions to be asked worked in the field, i.e. that respondents could both understand the questions and give meaningful replies.

Because there are no objective measures of deprivation or financial stress, the topic has been explored by the ABS in a number of ways. Some of the 1998-99 HES questions required objective responses, but the interpretation of the responses as indicators of deprivation or financial stress is still subjective. Other questions were inherently subjective in nature.


Deprivation indicators

The specific indicators of deprivation - i.e. the items of expenditure considered to be some of the ‘basics of life’ that deprived households may not be able to afford - that were used in the 1998-99 HES are:

  • Could not afford a holiday for at least one week a year
  • Could not afford a night out once a fortnight
  • Could not afford friends or family over for a meal once a month
  • Could not afford a special meal once a week
  • Could only afford second hand clothes most of the time
  • Could not afford leisure or hobby activities

It is important to note that the indicators included in the 1998-99 HES are not the most fundamental ‘basics of life’, since they do not include indicators relating to, for example, medical treatment or access to facilities such as baths or showers. However, earlier work by researchers (see, for example, Travers and Robertson 1995) has shown that relatively few people do not have access to those most basic facilities or services and, most importantly, that such people are highly likely to also show deprivation against some of the indicators listed above. Therefore the indicators included in the 1998-99 HES act collectively as a point of differentiation between the deprived and the more fortunate in society.

Given the nature of the indicators chosen, care needs to be exercised in interpreting individual responses in isolation from other responses provided. All individuals have their own priorities and consumption preferences and may choose quite different patterns of expenditure from a socially accepted norm of the basics of life. For example, a household may observe that it ‘cannot afford’ items specified in one or more of the chosen indicators (e.g. meals out or hobbies) because it devotes a considerable proportion of its budget to saving for an overseas holiday. If the household can afford an overseas holiday, however, it is difficult to envisage the household as deprived, even if it chooses to forego expenditure that other households might consider basic.

The relevance of the selected indicators as a measure of deprivation to selected population groups can also be tested by observing the take up rate of the indicators by households with higher incomes. In establishing whether households could afford each of the selected 'basics of life' activities, the survey first asked whether or not households usually had the basic item and, if not, whether it was because they could not afford it or because they did not want it. However, significant changes in income levels did not always significantly increase the take up of some of these ‘basics of life’. For example, for households where age and disability support pensions were the principal source of income, the proportion who stated that they could not afford a night out once a fortnight drops from 33% in the lowest income quintile (i.e. the bottom 20% of households in terms of income) to 15% in the third quintile (i.e. the middle 20% of households in terms of income). At the same time, the proportion of these welfare recipient households engaging in this activity only rose from 29% in the lowest quintile to 36% in the third quintile, with a larger increase in those not wanting it (up from 19% to 28%). If only 36% of these income recipients in the third quintile engage in the activity, nearly as many do not want it and only 15% say they cannot afford it, how ‘basic’ is it? It is possible that the answer of ‘can’t afford it’ may be a default answer for lower income groups which do not need to consider preferences across a wide range of activities that cannot be afforded, but such a default response becomes less relevant as incomes rise. Therefore the deprivation indicators chosen may not be an independent test in themselves to benchmark against income, and the nature of the answers given may be very highly correlated to income levels.

In light of the potential ambiguities in the results for individual deprivation indicators, the analysis in this article is focused more broadly at the patterns of responses to the deprivation indicators combined with financial stress indicators discussed below.


Financial stress indicators

The financial stress questions asked in the 1998-99 HES related to cash flow problems and financial resources. The specific indicators are:

  • Household spends more money than it gets (over the past 12 months)
  • Unable to raise $2,000 in a week for something important
  • Could not pay electricity, gas or telephone bills on time
  • Could not pay car registration or insurance on time
  • Pawned or sold something
  • Went without meals
  • Could not afford to heat home
  • Sought assistance from welfare/community organisations
  • Sought financial help from friends or family

However, just as some of the six ‘deprivation’ indicators on their own may not be a good indicator of deprivation, some of the nine financial stress indicators on their own are equally problematic. For example, for the indicator ‘could not pay electricity, gas or telephone bills on time’, table S2.1 shows that this indicator was reported by a relatively large proportion of households in the higher income quintiles, which suggests that the item does not necessarily reflect absolute incapacity to pay so much as a short deferral of payment. For many people it might be chosen as a short term cash flow management technique if there is no immediate penalty when payment is made a little late. Similarly, the indicator that households have spent more than they received over the past 12 months is clouded by prospects for adjusting expenditure over time by saving/borrowing and on its own is not a good indicator.

On balance, while some of the indicators (such as seeking assistance from welfare/community organisations) are more severe than others, it is difficult to rank or weight them in order to derive a single measure of intensity of reported financial stress. For this analysis, therefore, all financial stress indicators are given equal weight together with the deprivation indicators, with the results presented according to the total number of indicators reported.


Findings from the 1998-99 HES

In the results that follow, the household is the unit of analysis, chosen because where all members of the household are members of the same family there is likely to be a very high degree of sharing of income and other economic resources. Where the household comprises people who are not all in the same family, there is likely to at least be significant joint expenditure on basics such as food and housing.

The income measure used in this analysis is equivalent disposable income. Disposable income is derived for each household by adding income from employment, own business, investment, property, government benefits and allowances, and any other regular income source, and then deducting estimates of income tax paid. Disposable income is adjusted to an ‘equivalent’ basis in recognition that people in a larger household will generally need less income per person to achieve the same standard of living as people in a smaller household. This is because some costs such as housing costs tend not to increase proportionately in larger households and because children’s needs tend to be lower than adults’ needs. The 1982 OECD equivalence scale is used to make the adjustment (the more recent OECD scale would make little difference to the results). It assigns a weight of 1 to the first adult in the household, 0.7 to each subsequent adult or non-dependent child, and 0.5 to each dependent child. For more information see Appendix 2 of Income Distribution, Australia, 1999-2000 (6523.0). Households are assigned to income quintiles by ranking them from lowest to highest equivalent disposable income and then designating the lowest 20% as quintile 1, the next 20% as quintile 2, and so on.

In these findings no distinction is drawn between deprivation and financial stress, with equal weight given to all 15 indicators. Therefore, for simplicity of presentation in the rest of this article, the term ‘financial stress’ is used to reflect a measure of observed incidence of any of these indicators.

Table S2.1 shows these 15 indicators of financial stress and their incidence in relation to income levels. In all cases the incidence of the indicators is significantly greater in the lower income quintiles than in the higher quintiles, although for four of the 15 indicators there is an incidence of 5% or more households in the highest quintile. As would also be expected, the more severe indicators such as ‘went without meals’ have a lower incidence in all quintiles than do the less severe indicators such as ‘could not afford holiday for at least one week a year’.

While the patterns of incidence are along the lines that might be expected, they do raise the issue of whether it is useful to label any groups falling into the higher income quintiles as ‘financially stressed’. Without doubt high income households may be in a situation where they have trouble meeting financial obligations, but that will normally result from obligations which they made a discretionary choice to enter. They will also usually have a way of leaving the obligation; for example, if they are committed to an expensive mortgage they could sell the property and buy something cheaper.

S2.1 INCIDENCE OF FINANCIAL STRESS INDICATORS, By Income Quintile - 1998-99

Income quintile

Lowest
Second
Third
Fourth
Highest
All
households
Indicator of financial stress
% of households reporting indicator
%
'000

In the last 12 months spent more money than received
22
20
16
9
6
15
1,050
Unable to raise $2,000 in a week for something important
36
28
15
12
5
19
1,357
Could not pay electricity, gas or telephone bills on time
26
22
15
11
6
16
1,144
Could not pay car registration or insurance on time
10
8
7
5
2
7
465
Pawned or sold something
9
6
3
2
*1
4
300
Went without meals
5
5
*2
1
*1
3
195
Could not afford to heat home
5
4
1
*1
-
2
158
Sought assistance from welfare/community organisations
8
6
*2
*1
-
3
247
Sought financial help from friends or family
16
12
9
8
4
10
704
Could not afford holiday for at least one week a year
45
38
28
17
8
27
1,949
Could not afford a night out once a fortnight
32
30
20
11
3
19
1,386
Could not afford friends or family over for a meal once a month
11
9
4
2
-
5
374
Could not afford a special meal once a week
22
18
11
5
2
12
830
Could only afford second hand clothes most of the time
24
20
9
4
2
12
838
Could not afford leisure or hobby activities
18
14
7
4
1
9
647

'000
'000
'000
'000
'000
%
'000
Estimated number of households
1,425
1,424
1,424
1,424
1,425
100
7,123

* estimate has a relative standard error of 25% to 50%.

Source: Australian Economic Indicators, June 2001 (1350.0)).


The reporting of financial stress indicators does not, therefore, necessarily imply that the household is in a situation of unacceptably low living standards which might warrant government or other intervention. Nevertheless, it is of interest to compare the characteristics of higher income and lower income households which reported experiencing one or more of the financial stress indicators, and within higher and lower income groups to compare the characteristics of those who reported financial stress indicators with those who did not.

In defining any level of financial stress it is obvious that incidences of just one indicator are not likely to be significant. Analysis reveals that those indicators which might be regarded as usually pointing to more serious issues of deprivation both had relatively few people reporting them, and also were those most likely to be reported in conjunction with other indicators, as is shown in table S2.2.

S2.2 MULTIPLE REPORTING OF INDICATORS OF FINANCIAL STRESS - 1998-99

Number of indicators reported by households
reporting this indicator
1
2 to 4
5 or more
1 or more
Indicator of financial stress
% of all households(a)
%(a)
'000

In the last 12 months spent more money than received
4.2
4.9
5.6
14.7
1,050
Unable to raise $2,000 in a week for something important
2.0
8.0
9.0
19.0
1,357
Could not pay electricity, gas or telephone bills on time
0.9
6.4
8.7
16.1
1,144
Could not pay car registration or insurance on time
*0.2
2.3
4.0
6.5
465
Pawned or sold something
*0.1
0.9
3.2
4.2
300
Went without meals
-
0.3
2.3
2.7
195
Could not afford to heat home
-
0.3
1.9
2.2
158
Sought assistance from welfare/community organisations
-
0.4
3.0
3.5
247
Sought financial help from friends or family
0.7
3.4
5.7
9.9
704
Could not afford holiday for at least one week a year
4.8
12.2
10.4
27.4
1,949
Could not afford a night out once a fortnight
2.0
8.4
9.0
19.5
1,386
Could not afford friends or family over for a meal once a month
*0.1
1.2
4.0
5.3
374
Could not afford a special meal once a week
0.7
4.0
7.0
11.7
830
Could only afford second hand clothes most of the time
0.5
3.8
7.4
11.8
838
Could not afford leisure or hobby activities
0.2
2.7
6.2
9.1
647
Total households reporting at least one indicator
16.5
21.2
12.6
50.3
3,583

'000
'000
'000
%
'000
Estimated number of households
1,176
1,509
897
50.3
3,583


* estimate has a relative standard error of 25% to 50%.
(a) Per cent of estimated total number of households in Australia, i.e. 7,123,000 households.

Source: Australian Economic Indicators, June 2001 (1350.0).


A scale of financial stress is therefore established where the incidence of just one indicator being reported is disregarded. This scaling reflects a natural break in the incidence of indicator reporting, with 17% of households reporting just one indicator, dropping steeply to only 9% for two indicators and then falling more slowly to three (7%) and four (5%) indicators being reported (see graph S2.3). Therefore, for the purposes of this article, 66% of Australian households are not considered to be in financial stress.





For the remaining 34% of Australian households reporting multiple incidences of the stress indicators, and therefore classified in this article as financially stressed, a simple two way split of moderate and higher stress was used. The boundary between the two levels of stress was chosen to reflect a natural break in the incidence of multiple reporting of indicators, particularly for average to high income households (those in the third, fourth and highest income quintiles) (see graph S2.4). A household was labelled as being in ‘moderate financial stress’ if it reported two to four indicators, while the incidence of five or more indicators was labelled as ‘higher financial stress’.



On the basis of this grouping of 2 to 4 indicators (moderate stress), and 5 or more indicators (higher stress), nearly 900,000 (13%) Australian households indicated higher financial stress, and about 1.5 million (21%) indicated moderate stress. These overall stress levels, based on multiple reporting of indicators, differ substantially from the single indicator measures (e.g. they are much higher than the severe indicator of seeking help from welfare or community organisations (3%), and higher than the less severe indicator of seeking financial help from family or friends (10%)).

One way of testing the validity of these measures of moderate and higher stress is to look a little more closely at the reporting of grouped indicators. For example, suppose that all of the less severe indicators (say, all deprivation indicators except the ability to buy new clothes and the two financial stress indicators of 'spend more than receive' and 'don’t pay bills on time') were accorded much lower weight than the remaining indicators, would this change the incidence of measured financial stress? By excluding those households that only reported the less severe categories, the proportion of households in moderate stress would fall from 21% to 14%, but the proportion in higher stress would remain relatively unchanged at 12%.

As can be seen in table S2.5 and graph S2.6, there is a distinct correlation between level of income and the level of financial stress indicated. Those households indicating higher stress are heavily clustered in the lowest two quintiles. The moderately stressed are also more likely to be in these two quintiles, with their proportion falling away between the second and third quintiles, but less precipitously than for the higher stressed group. Nevertheless, nearly half of the lowest income quintile did not indicate any stress, while there were substantial levels of stress indicated in the higher income quintiles.

S2.5 LEVEL OF FINANCIAL STRESS, By Income Quintile - 1998-99

Income quintile

All households
Level of stress indicated
Lowest
Second
Third
Fourth
Highest

% of households reporting indicator
%
'000
Higher stress
5.3
4.1
1.9
0.9
0.3
12.6
897
Moderate stress
5.5
5.6
4.7
3.7
1.6
21.2
1,509
No stress(a)
9.2
10.2
13.3
15.4
18.1
66.2
4,717
Total
20.0
20.0
20.0
20.0
20.0
100.0
7,123

(a) Only one or no stress indicators reported.

Source: Australian Economic Indicators, June 2001 (1350.0)).





Characteristics of the financially stressed

Tables S2.7 to S2.10 provide some insights into the incidence of financial stress reported by various groups in the population, and comparisons between households that indicated financial stress and those that did not.

In terms of the life cycle groups of special interest shown in table S2.7, the group indicating the greatest level of financial stress was lone parents with dependent children only, with 41% showing higher stress and a further 32% showing moderate stress. In contrast, single people and couples over 65 years of age showed the lowest levels of stress.

The pattern of financial stress for households by principal source of income is shown in table S2.8. Just over 40% of households principally dependent on ‘other’ government pensions and allowances, which includes many lone parents, showed higher stress. The only group with a greater proportion of households in this higher stress category comprised households principally dependent on unemployment, education and sickness allowances, with 45% indicating higher stress. In contrast, for households largely dependent on age and disability support pensions, the proportions were lower in both stress categories, with 16% indicating higher stress and 25% moderate stress. Households with other principal sources of income (except for the relatively small population group with ‘other private income’) had lower incidences of moderate or higher stress.

A relatively small group of approximately 100,000 households reported zero or negative income. Contrary to what might be expected, they indicated a well below average proportion of households with higher stress and about average proportion with moderate stress, providing an extreme example of where income is not a good indicator of standards of living. This group comprises households in which losses from their unincorporated businesses or investments equalled or were greater than their income from any other sources. In general this population can draw on economic resources other than income to maintain their standard of living, at least in the short term.

S2.7 SELECTED LIFE CYCLE GROUPS, By Level of Financial Stress - 1998-99

Higher stress
Moderate stress
No stress(a)
All households
Selected life cycle group
%
%
%
%
'000

Lone person, under 35 years
21.0
21.8
57.2
100.0
327
Couple with dependent children only
13.7
24.5
61.9
100.0
1,697
One parent with dependent children only
40.8
31.5
27.6
100.0
382
Couple, reference person 65 years or over(b)
4.2
15.3
80.6
100.0
594
Lone person, 65 years or over
7.3
17.4
75.3
100.0
622
All households
12.6
21.2
66.2
100.0
7,123

(a) Only one or no stress indicators reported.
(b) Reference person is normally the higher income recipient of the couple. Where incomes are the same, it is the older person.

Source: Australian Economic Indicators, June 2001 (1350.0).


S2.8 PRINCIPAL SOURCE OF INCOME, By Level of Financial Stress - 1998-99

Higher stress
Moderate stress
No stress(a)
All households

Principal source of income
%
%
%
%
'000

Wages and salaries
7.9
20.7
71.5
100.0
4,083
Self employed
5.6
16.1
78.3
100.0
422
Superannuation
-
*10.2
89.8
100.0
232
Investment (including account interest and rental income)
*1.6
8.5
89.9
100.0
267
Other private income
*19.7
28.4
51.9
100.0
83
Age and disability support pensions
16.1
24.8
59.2
100.0
1,093
Unemployment, education and sickness allowances
44.6
31.2
24.1
100.0
260
Other government pensions and allowances
40.1
26.1
33.8
100.0
585
Household has zero or negative income
*5.6
23.4
71.1
100.0
99
Total
12.6
21.2
66.2
100.0
7,123

(a) Only one or no stress indicators reported.
* estimate has a relative standard error of 25% to 50%.

Source: Australian Economic Indicators, June 2001 (1350.0).


Tables S2.9 and S2.10 compare some characteristics of the households indicating different levels of financial stress, and also contrast the two lower income quintile households with the higher income quintile households.

S2.9 AVERAGE WEEKLY HOUSEHOLD EXPENDITURE, By Income and Level of Financial Stress - 1998-99

Two lower income quintiles
Three higher income quintiles
Expenditure category
Higher stress
$/week
Moderate stress
$/week
No stress(a)
$/week
Higher stress
$/week
Moderate stress
$/week
No stress(a)
$/week
Total
$/week

Goods and services -
- Current housing costs
89.57
79.75
59.06
121.68
127.47
111.06
97.43
- Domestic fuel and power
17.05
15.91
15.53
19.40
18.46
19.24
17.87
- Food and non-alcoholic beverages
91.10
100.61
101.52
121.72
137.96
149.08
126.99
- Alcoholic beverages
7.07
8.95
12.43
19.00
24.47
28.40
20.43
- Tobacco products
15.52
10.49
5.91
19.08
16.29
10.08
10.74
- Clothing and footwear
15.31
17.80
20.75
28.87
32.39
43.34
31.90
- Household furnishings and equipment
21.10
28.92
34.21
39.33
41.38
53.35
42.22
- Household services and operation
34.69
30.91
34.04
46.31
45.62
46.77
41.26
- Medical care and health expenses
11.88
17.48
28.47
25.32
32.31
42.36
32.47
- Transport
57.41
71.42
79.97
130.92
147.87
149.42
117.82
- Recreation
34.73
48.61
64.10
73.34
86.76
121.04
88.81
- Personal care
6.72
8.67
10.23
11.25
13.13
18.10
13.73
- Miscellaneous goods and services
29.79
30.38
34.60
62.49
72.29
75.13
57.31
Total goods and services expenditure
431.94
469.90
500.82
718.72
796.40
867.37
698.97
Selected other payments -
- Income tax
16.47
26.63
19.37
149.40
198.60
303.75
175.09
- Mortgage repayments - principal
7.89
12.26
13.74
*21.25
35.09
39.75
27.58
- Superannuation and life insurance
2.64
5.04
6.63
17.62
21.12
38.89
22.98

* estimate has a relative standard error of 25% to 50%.
(a) Only one or no stress indicators reported.

Source: Australian Economic Indicators, June 2001 (1350.0).


Within the lower income quintiles, the households indicating financial stress were much more likely on average to contain dependent children, while the households not indicating stress were much more likely to comprise people over 65 years of age. Consistent with their different demographic composition, 66% of the lower income households not indicating stress own their own home without a mortgage, compared to only 19% of the higher stressed. The higher stressed households within the two lower income quintiles, on average, spent $90 per week (20% of their total expenditure on goods and services) on current housing costs, whereas the corresponding expenditure for those not indicating stress was only an average of $59 per week. The latter group spent significantly more on alcoholic beverages, medical care and health expenses, and recreation, but significantly less on tobacco products.

S2.10 CHARACTERISTICS OF HOUSEHOLDS, By Income and Level of Financial Stress - 1998-99

Two lower income quintiles
Three higher income quintiles
Selected characteristics
Higher stress
Moderate stress
No stress(a)
Higher stress
Moderate stress
No stress(a)
Total

$
$
$
$
$
$
$
Household financial characteristics -
- Average weekly income
373
392
307
881
1,026
1,293
874
- Weekly average of irregular receipts(b)
26
40
73
**55
50
97
73
- Average value of loans outstanding
12,531
15,538
11,474
29,709
41,706
34,589
26,455
Household member characteristics -
no.
no.
no.
no.
no.
no.
no.
- Average number of employed persons in household
0.5
0.6
0.6
1.4
1.7
1.7
1.2
- Average number of persons in the household -
- Under 18 years
1.27
0.93
0.52
0.78
0.79
0.50
0.66
- 18 to 64 years
1.50
1.43
1.06
1.91
1.96
1.86
1.63
- 65 years and over
0.15
0.36
0.72
**0.05
0.07
0.21
0.30
- Total
2.92
2.72
2.30
2.74
2.83
2.57
2.60
Household composition (% of households) -
%
%
%
%
%
%
%
- Couple, one family
- Couple only
10.6
19.5
33.9
10.8
18.8
27.0
24.6
- Couple with dependent children only
27.3
26.6
18.4
21.6
28.5
23.9
23.8
- Other couple, one family households
7.7
6.7
7.5
13.7
13.2
15.2
11.8
- One parent, one family with dependent children
23.9
11.9
3.5
13.7
6.5
2.3
6.4
- Other family households
3.7
5.2
3.3
*8.3
8.9
5.6
5.4
- Lone person
26.1
27.7
31.3
26.8
17.2
21.3
24.2
- Group
**0.6
*2.3
2.2
*5.2
6.9
4.7
3.8
- Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Household tenure type (% of households) -
- Owners without a mortgage
19.0
36.6
65.6
14.2
18.4
40.1
39.7
- Owners with a mortgage
18.0
22.3
16.3
30.9
43.4
36.4
29.7
- Renters from State or Territory housing authority
19.6
13.5
4.8
*10.1
3.5
1.0
5.4
- Renters - other
40.5
24.7
9.6
41.2
32.6
20.8
22.7
- Other
*2.8
3.0
3.8
*3.7
*2.2
1.7
2.5
- Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Broad geographic area (% of households) -
- Capital city
59.0
59.2
54.1
70.5
65.3
68.8
63.6
- Other urban
29.1
29.7
29.4
22.0
27.5
23.8
26.4
- Rural
11.9
11.1
16.5
*7.5
7.3
7.4
10.0
- Total households
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Estimated number of households in population -
'000
'000
'000
'000
'000
'000
'000
- Capital city
396.5
470.0
748.1
158.4
466.9
2,293.1
4,533.0
- Other urban
195.5
235.7
407.4
49.5
196.4
792.8
1,877.2
- Rural
79.9
88.4
228.1
*17.0
52.0
247.4
712.6
- Total households
672.0
794.0
1,383.5
224.8
715.3
3,333.2
7,122.8

* estimate has a relative standard error of 25% to 50%.
** estimate has a relative standard error greater than 50%.

(a) Only one or no stress indicators reported.
(b) Includes receipts such as inheritances and gifts.

Source: Australian Economic Indicators, June 2001 (1350.0).


In total, within the two lower income quintiles, the households indicating higher stress spent less on goods and services per week ($432) than those not indicating stress (which spent $501), even though they had higher incomes ($373 per week compared to $307). The discrepancies can be explained, at least in part, by the lower level of irregular receipts such as inheritances and gifts received by the households indicating higher stress (an average of $26 per week compared to $73 received by those not stressed) and because the households comprising older people can be expected, on average, to have more savings that can be drawn upon to maintain higher standards of living.

Little difference is observed in the incidence of all levels of financial stress between households in capital cities, other urban and rural areas within each income grouping. However, 56% of rural households fall into the two lower income quintiles, compared to 36% of capital city households and 45% of other urban households.

Within the three higher income quintiles, the households indicating financial stress are not so clearly differentiated from the households not indicating stress, although some of the differences are similar to those for the lower income quintiles. For all levels of stress, households in the higher income quintiles are more likely to be owners with a mortgage, that is, they are buying their own home. Households indicating moderate stress levels have the greatest proportion buying their own home (43% compared to 31% for those indicating higher stress and 36% for those not indicating stress) and they have a correspondingly higher average value of loans outstanding. Interestingly, in both lower and higher income groupings, households indicating higher stress have a lower average value of loans outstanding than do those indicating moderate levels of stress.


Conclusion

The deprivation and financial stress indicators collected in the 1998-99 HES can be used to provide an insight into the standard of living of various groups in the Australian community that goes beyond simple comparisons of relative income. This article has tabulated some results using these indicators in combination with income levels.


References

Brownlee, H. 1990, Measuring Living Standards, AIFS Australian Living Standards Study, Paper no. 1, Australian Institute of Family Studies, Melbourne.

Travers, P. and Robertson F. November 1995, Deprivation Standards Project, The Flinders University of South Australia, Report prepared for the Department of Social Security.

Travers, P and Richardson S. 1993, Living Decently - Material Well-Being in Australia, Oxford University Press, Melbourne.

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