Household Wealth in Australia: Its Components, Distribution and Correlates

Article excerpt

Wealth and its distribution are important in understanding modern societies. Wealth is an obvious indicator of position in the social structure, and almost certainly a superior indicator to income-based measures (Podder and Kakwani, 1976), but is not usually incorporated in existing concepts or measures of social location (Adair, 2001; Sorensen, 2000). It is almost certainly closely associated with financial security, poverty and consumption behaviour, and is an important dimension of social inequality. Indeed, research has consistently demonstrated that the distribution of wealth is far more unequal than the distributions of earnings or income Ouster and Smith, 1997; Keister, 2003b; Rodriguez et al., 2002). Furthermore, there are substantial inequalities in wealth that relate to gender, race and ethnicity (Keister, 2000; Straight, 2001; Warren and Britton, 2003; Warren et al., 2001). These inequalities are likely to have consequences for a range of social outcomes including well-being, marital formation and dissolution, retirement and health (Dahl et al., 2003; Huie et al., 2003; Mullis, 1992; White and Rogers, 2000). Finally, wealth may be important in the reproduction of social inequality; it may contribute substantially to children's educational attainment (Conley, 2001; Orr, 2003) or be used directly to provide employment and business opportunities for the next generation (Robinson, 1984).

Data on the wealth of Australian households, however, are limited, and as a result, relatively little research had been conducted on wealth in Australia. While aggregate statistics on wealth holdings have been compiled for some time and are now regularly reported as part of the National Accounts, recent estimates of the distribution of wealth across households have generally been imputed from survey data on income flows. Wealth data collected directly from households are rare. In 2002, however, the Department of Family and Community Services, in association with the Reserve Bank of Australia, funded the inclusion of a wealth module in Wave 2 of the Household, Income and Labour Dynamics in Australia (HILDA) Survey.

This article uses these data to describe the components, distribution and correlates of wealth in Australia. More specifically, this article presents information on: the assets, debts and net worth (wealth) of Australian households; the contribution of housing and other property, business and farm assets, investments, bank accounts, vehicles and other assets to total assets; and the proportions of debt attributable to housing, businesses and farms, the Higher Education Contribution Scheme (HECS), credit cards and other forms of debt. This article also provides estimates of the amount of realizable wealth of Australian households; that is, wealth not held in the form of home equity or superannuation. Finally, and like previous Australian studies of household wealth, this article presents information on the correlations between household wealth and a range of demographic and socio-economic characteristics. The analysis presented here, however, both considers a wider range of correlates of wealth and estimates the size of these relationships with wealth after taking into account its associations with other correlates.

Previous research

Many readers might be surprised to learn that the first serious attempt at collecting wealth data from Australian households occurred as long ago as 1915. Moreover, this collection was based on data collected not from a population sample but from a census--the 1915 War Census conducted by the Commonwealth Bureau of Census and Statistics (see Soltow, 1972). Since that time there has been only one other significant attempt at collecting wealth data directly from Australian households--a university-based survey conducted over the period 1966-8 (see Podder and Kakwani, 1976). The relatively small sample size--just 2757 households--combined with high rates of non-response, however, has meant that relatively few researchers have attached much weight to the results from this survey. …