Melbourne Institute of Applied Economic and Social Research - Research Publications

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http://hdl.handle.net/11343/414

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Measuring Financial Wellbeing with Self-Reported and Bank Record Data

Comerton-Forde, C ; De New, J ; Salamanca, N ; Ribar, DC ; Nicastro, A ; Ross, J (WILEY, 2022-06)

We develop scales of the financial well‐being of customers of a major Australian bank using self‐reported survey data matched to customer financial records. Using item response theory (IRT) models, we develop: (1) a Reported Financial Wellbeing Scale from information about people’s experiences and perceptions of financial outcomes; and (2) an Observed Financial Wellbeing Scale from financial record measures of customers’ account balances, net spending and payment problems. Each scale reliably differentiates between a wide range of outcomes, and the scale components have similar power to discriminate. We confirm the validity of the scales by estimating predictive models using other measurable characteristics.
Proposal of a short form self-reported financial wellbeing scale for inclusion in the 2026 Census

Botha, F ; De New, J (Australian Population Studies, 2021-05-30)

No abstract
Implications of COVID-19 labour market shocks for inequality in financial wellbeing

Botha, F ; de New, JP ; de New, SC ; Ribar, DC ; Salamanca, N (SPRINGER, 2021-04)

Australia's economy abruptly entered into a recession due to the COVID-19 pandemic of 2020. Related labour market shocks on Australian residents have been substantial due to business closures and social distancing restrictions. Government measures are in place to reduce flow-on effects to people's financial situations, but the extent to which Australian residents suffering these shocks experience lower levels of financial wellbeing, including associated implications for inequality, is unknown. Using novel data we collected from 2078 Australian residents during April to July 2020, we show that experiencing a labour market shock during the pandemic is associated with a 29% lower level of perceived financial wellbeing, on average. Unconditional quantile regressions indicate that lower levels of financial wellbeing are present across the entire distribution, except at the very top. Distribution analyses indicate that the labour market shocks are also associated with higher levels of inequality in financial wellbeing. Financial counselling and support targeted at people who experience labour market shocks could help them to manage financial commitments and regain financial control during periods of economic uncertainty.
Keep calm and consume? Subjective uncertainty and precautionary savings

Broadway, B ; Haisken-DeNew, JP (Springer (part of Springer Nature), 2019-07)

This paper estimates the effect of income uncertainty on assets held in accounts and cash, and finds substantial empirical evidence for precautionary savings. Using household-level panel data, it explicitly distinguishes between ‘real’ income uncertainty the household is actually exposed to, and ‘perceived’ income uncertainty. It finds that the latter substantially increases precautionary savings above and beyond the effect of ‘real’ income uncertainty. The effect of subjective economic uncertainty on behaviour has only begun to show up after the Great Recession. The economic crisis appears to have shifted households’ willingness to forgo current consumption for insurance pruposes. Our results imply that households save above their optimal level especially after and during a crisis, potentially exacerbating the economic downturn.
Financial Outcomes in Adolescence and Early Adulthood in Australian Longitudinal Data

de New, J ; Ribar, D ; Ryan, C ; Wong, C (Wiley, 2020-03-01)

This article describes and catalogues person‐specific measures of financial outcomes that are available for adolescents and young adults in three large longitudinal Australian surveys: the Longitudinal Surveys of Australian Youth, the Longitudinal Study of Australian Children, and the Household, Income and Labour Dynamics in Australia Survey. It summarises international research that has been conducted on young people's financial outcomes, illustrating outcomes that have been investigated, research questions that have been asked, and distinctions that have been drawn between adolescents and young adults. It considers the strengths and weaknesses of the three surveys for extending this research into the Australian context.
The Importance of Economic Expectations for Retirement Entry

Broadway, B ; de New, JP (WILEY, 2021-03)

We estimate hazard rates of retirement entry as a function of the option value of work. Individuals’ economic expectations about the future economy are represented as expectations about rates of return on superannuation retirement savings. These are incorporated into the option value of work, through which they can impact on the timing of retirement entry. We find that individuals have an incentive not to leave the labour force when they expect high returns on their pension savings, while still working. In a scenario where individuals expect negative returns, the average annual hazard rate of retirement entry of 6.9 percent is increased by 0.2 percentage points (or 2.9 percent) compared to a scenario where individuals expect strong positive returns. Rudimentary calculations find an implied tax revenue loss of $26.7 million. Given that the expectations in this model are short‐term and merely perceived, holding real economic conditions constant, this effect is sizable.
SOCIAL DEPRIVATION OF IMMIGRANTS IN GERMANY

Haisken-DeNew, J ; Sinning, M (WILEY, 2010-12)
Happiness adaptation to income and to status in an individual panel

Di Tella, R ; Haisken-De New, J ; MacCulloch, R (ELSEVIER SCIENCE BV, 2010-12)