4. Subjective poverty

4.1 Bivariate relationships
4.2 Effects on subjective poverty

Subjective poverty is an understudied aspect of poverty. The rationale for examining subjective poverty is that people's own opinions about their financial situation should be given some consideration.

The percentage of households that described themselves as poor or very poor was small: 5.3 per cent in Wave 1 and 4.5 per cent in Wave 2. The proportion that indicated they were poor or very poor in both waves was only 2.0 per cent (Table 8). The small percentage that considers themselves in poverty in both waves reflects the only moderate stability of respondents' judgements of their level of prosperity (see Table 16).

4.1 Bivariate relationships

The rates of subjective poverty by social groups are presented in Table 8. Men are more likely to indicate they are in poverty than women, contrasting with the higher rates of women in before and after-housing income poverty (see Table 2 and Table 3). Subjective poverty does not show the strong age differences apparent in before-housing income poverty. Compared to older cohorts, the youngest age cohort were more likely to say they were poor in Wave 1 but not in Wave 2, and the percentage of the youngest cohort who indicated that they were in poverty in both waves was lower than the average for all cohorts. Generally, there is little difference among cohorts except that the level of subjective poverty among the oldest cohort is very low, at less than 2 per cent in each year and less than 1 per cent in both years.

As was the case for income poverty, subjective poverty is highest among lone parents. In Wave 1, 13.0 per cent of lone parents saw themselves as poor or very poor, and in Wave 2, 9.5 per cent. However, even among lone parents, feeling poor is often transitory: only 4.5 per cent of lone parents see themselves as in poverty in both waves. Despite the considerable financial outlays involved in bringing up children, very few couples with young children see themselves as poor: 3.1 per cent in Wave 1, 2.7 per cent in Wave 2 and less than 1 per cent in both waves. Slightly higher percentages of couples with older children (15 years and older) judge themselves as poor or very poor. Single-person and other (usually shared) households are more likely to indicate they are in poverty than couple households.

Marriage is associated with lower levels of subjective poverty. Less than 3 per cent of those who were legally married saw themselves as in poverty in each year and only 1 per cent in both years. This contrasts with 5.3 and 4.3 per cent of the divorced and separated groups. Low levels of subjective poverty were also observed among those in de facto relationships. Subjective poverty among those who have never married and were not in de facto relationships is only a little lower than the divorced and separated groups.

Education is also associated with subjective poverty. Subjective poverty tends to be highest among those who did not complete school. It is lowest among the groups with bachelor degrees or postgraduate qualifications. However, the differences in subjective poverty across education levels do not appear as great as for the before and after-income poverty measures.

Labour force status has a strong relationship with subjective poverty. Nearly 20 per cent of the unemployed saw themselves as in poverty compared to less than 3 per cent of full-time workers. Subjective poverty among part-time workers is only slightly higher at around 4 per cent. The group not in the labour force but marginally attached had moderate levels of subjective poverty, whereas the not in the labour force, not marginally attached group had much lower levels. Subjective poverty is very low among full-time workers and only a little higher among part-time workers.

Table 8: Percentage in subjective poverty (poor and very poor) by demographic and other factors
Characteristic	Wave 1	Wave 2	Waves 1 and 2
All	5.3	4.5	2.0
Sex
Male	5.9	5.1	2.6
Female	4.8	4.2	1.5
Age cohort
18–24	7.2	4.4	2.3
25–34	4.7	4.8	1.9
35–44	6.2	6.3	2.8
45–54	5.5	4.1	1.6
55–64	6.3	6.1	3.2
65–70	4.6	2.3	0.3
>70	1.9	1.4	0.7
Household type
Couple without children	2.9	2.2	0.9
Couple with children < 15	3.1	2.7	0.9
Couple with children > 15	2.7	4.2	1.3
Lone parent	13.0	9.5	4.5
Single person	7.6	7.2	3.6
Other	6.9	4.6	2.2
Marital status
Legally married	2.6	2.4	0.8
De facto	5.1	5.2	2.0
Separated	11.0	9.2	4.3
Divorced	13.0	10.9	5.3
Widowed	2.5	1.7	0.8
Never married and not de facto	9.6	8.2	4.2
Highest education level
<Year 12	6.6	5.9	2.5
Year 12	4.8	4.5	2.0
Certificate	6.5	5.4	1.9
Advanced certificate	6.3	4.4	2.2
Diploma/advanced diploma	4.0	3.7	1.7
Bachelor degree	3.3	2.6	1.0
Postgraduate qualification	2.1	2.9	1.6
Labour force status
Working full-time	2.4	2.2	1.0
Working part-time	4.3	4.7	2.2
Unemployed, looking for full-time work	19.5	18.2	6.0
Unemployed, looking for part-time work	20.4	10.7	8.3
Not in the labour force, marginally attached	13.6	11.8	4.6
Not in the labour force, not marginally attached	6.3	5.1	2.2

Table 9 presents the means and medians for the groups who judged themselves as poor or very poor and those who did not.

On average, those who see themselves as poor are slightly older. This is because the level of subjective poverty among 35 to 64 year-olds is slightly higher than for the other age cohorts. It is not because the oldest age group judges themselves as poor.

There is no consistent relationship between subjective poverty and the number of children. In Wave 1, the subjective poverty group had a slightly higher mean level of children than the Wave 2 group. The median numbers of children are identical for both waves.

Differences in occupational status are very similar to the differences observed for before and after-housing income poverty; the average occupational status of the in-poverty group is about 10 units lower than for the comparison groups. As was the case for income poverty, the groups in subjective poverty in both waves did not have a particularly low occupational status.

There are only small differences in socioeconomic origins. The socioeconomic backgrounds of those in poverty are only 3 to 4 score points lower than the comparison groups not in poverty. Subjective poverty is not closely associated with parental occupational status; there are only small differences in mean and median parental occupational status.

Subjective poverty is more strongly associated with income. The mean and median personal and household incomes are much lower in the subjective poverty groups. Their mean household income was about $30,000, compared to about $60,000 for the comparison groups. The equivalised annual disposable income of the in-poverty groups was about $16,000, compared to about $27,000 for not-in-poverty groups. The income differences are, of course, smaller than those for income poverty, since income poverty is defined by household income. The mean and median equivalised incomes of the group in subjective poverty in both waves are about $2,000 lower than for the group that was in subjective poverty only in Wave 2.

Household wealth is more strongly associated with subjective poverty than with income poverty. The average wealth of the subjective poverty group in Wave 1 was about $100,000 and in Wave 2 about $107,000. The comparative figures for income poverty are around $240,000 and $270,000. The small group in subjective poverty in both years had a mean household wealth of $71,000, which is less than half that of the group that was in income poverty in both years. Mean household wealth of the subjective poverty groups is about 25 per cent that of the comparison groups. Median wealth differences are even larger. In contrast, income differences for subjective poverty are much less than for income poverty. Therefore, judgements about whether one is in poverty are to a large extent influenced by household wealth.

Interestingly, the subjective poverty groups are not characterised by large debt. The average debt of these groups is consistently smaller than that of the comparison groups.

Table 9: Characteristics of households in and not in subjective poverty (poor and very poor)
Factor	Wave 1				Wave 2				Waves 1 and 2
	Means		Medians		Means		Medians		Means		Medians
	Poverty	Not in poverty	Poverty	Not in poverty	Poverty	Not in poverty	Poverty	Not in poverty	Poverty	Not in poverty	Poverty	Not in poverty
Age	45.1	47.8	44.0	46.0	44.1	48.0	42.0	46.0	44.7	48.4	43.0	47.0
Number of children	2.1	2.0	2.0	2.0	1.8	1.9	2.0	2.0	1.8	1.9	2.0	2.0
Occupational status	35.9	44.2	31.7	39.5	36.0	44.3	32.1	39.5	37.6	44.2	33.7	39.5
Parental occupational status	39.6	41.6	39.5	40.5	39.9	42.1	37.3	40.5	39.8	42.1	40.5	40.6
Personal income ($)	18.8	31.2	12.0	24.3	17.7	33.7	13.1	26.1	16.6	33.3	12.6	25.6
Personal disposable income ($)	15.8	24.2	11.9	20.4	15.3	26.0	12.9	21.7	14.6	25.6	12.6	21.2
Household income ($)	30.1	58.3	21.7	47.8	30.2	60.8	22.3	49.3	23.3	59.9	17.6	48.1
Equivalised household income ($)	25.2	45.2	20.4	38.8	25.4	46.8	20.4	39.7	20.5	46.2	17.2	38.8
Equivalised disposable household income ($)	16.2	26.8	12.7	23.1	16.7	28.3	13.8	24.7	14.7	27.9	12.5	24.3
Equivalised disposable household income after housing costs ($)	12.2	23.0	9.7	19.6	12.6	24.4	10.6	20.8	10.7	24.1	9.2	20.6
Household wealth $ (Wave 2 only )	99.6	447.2	21.8	262.3	107.5	429.8	32.3	244.0	71.3	428.9	11.5	247.0
Household assets $ (Wave 2 only)	124.1	519.0	34.1	333.5	133.5	500.3	57.1	314.0	91.8	497.9	21.4	317.0
Household debt $ (Wave 2 only)	24.5	72.7	3.5	10.5	31.3	70.8	3.7	11.0	20.5	69.1	4.0	10.5

Note: All dollar amounts are in thousands of dollars.

4.2 Effects on subjective poverty

Table 10 presents the results from regression analyses of the influences on subjective poverty in Wave 2. The results for identical analyses of subjective poverty in Wave 1 are presented in Appendix 3 (Table A14). The modelling procedure is the same as that for income poverty, except that the final model includes equivalised disposable household income. Details on the measures used, the modelling procedure and the interpretation of the coefficients are presented in Section 2.

Table 10: Effects on subjective poverty (poor and very poor), Wave 2
Variable	Background		+Education		+Marital Status		+Work		+Income and wealth
Intercept	-3.38	***	-3.69	***	-3.18	***	-3.36	***	-4.12	***
Male	0.21		0.27	*	0.29	*	0.39	*	0.40	*
Age	-0.16	***	-0.20	***	-0.14	*	-0.09		0.01
Number of siblings	0.06	*	0.05	*	0.04		0.03		0.03
Not living with both parents at age 15	0.62	***	0.62	***	0.51	**	0.48	**	0.47	*
First language not English	0.21		0.30		0.47	**	0.33		0.22
Indigenous	0.80	*	0.75	*	0.51	*	0.32		0.20
Parental occupational status (10s)	-0.04		0.00		0.01		0.02		0.03
Catholic school	-0.33		-0.23		-0.27		-0.21		-0.21
Independent school	-0.24		-0.10		-0.07		-0.18		-0.12
Postgraduate qualification	-		-0.13		-0.07		0.26		0.44
Bachelor degree	-		-0.38		-0.37		-0.06		0.01
Diploma	-		0.12		0.05		0.26		0.33
Advanced certificate	-		0.19		0.16		0.22		0.27
Certificate	-		0.47		0.44		0.29		0.32
<Year 12	-		0.68	*	0.65	**	0.47		0.43
Married	-		-		-1.43	***	-1.26	***	-0.78	***
De facto	-		-		-0.55	*	-0.49	*	-0.19
Separated	-		-		-0.09		0.06		-0.03
Divorced	-		-		0.26		0.37		0.40
Widowed	-		-		-1.69	***	-1.74	***	-1.58	***
Number of children	-		-		0.13	**	0.10	*	0.08	*
Occupational status (10s)	-		-		-		-0.09	*	-0.02
% time in work (10s)	-		-		-		-0.09	***	-0.05
% time unemployed (1s)	-		-		-		0.02	***	0.02	***
Wealth ($100,000)	-		-		-		-		-0.24	***
Equivalised disposable household income ($10,000)	-		-		-		-		-0.03	***
Rescaled R square	0.03		0.04		0.11		0.13		0.18

Note: ***p<0.001, **0.001<p<0.01, *0.01<p<0.05.

The extent to which these variables accounted for differences in subjective poverty is generally less than the before-housing income poverty measure, but comparable to the after-housing measure. Socioeconomic background factors accounted for only about 2 per cent of the variation in subjective poverty. The addition of educational qualifications increased this figure marginally to 3 or 4 per cent. There is a more substantial increase to around 11 per cent with the addition of marital status and number of children. Occupational status and labour market experiences add little, but there is a substantial increase to around 18 per cent with the addition of wealth and equivalised disposable household income. The same pattern is found for Wave 1 (Appendix 3, Table A14).

Men are more likely to judge themselves as poor or very poor than women. In the initial models, the effects are not particularly large; the odds of men seeing themselves in poverty are about 1.2 times the odds for women. However, the odds ratio increases to around 1.6 with the inclusion of occupational status and labour market experiences. Therefore, men's judgements of subjective poverty are more sensitive to their position in the labour market. The addition of wealth and income does not change the differences between the sexes. In the final two models, differences between the sexes for subjective poverty are greater than for income poverty.

In the initial model, a 10 year increase in age decreases the odds of subjective poverty by about 1.2 times. The effect does not change substantially when controlling for education, but declines with the addition of marital status and number of children. There are no significant age differences after controlling for occupational status and labour market experiences. This result implies that age differences in subjective poverty can be largely attributed to differences in labour market experiences.

A higher number of siblings are associated with increased odds of subjective poverty. Compared to having no sibling, one sibling increases the odds of subjective poverty by a factor of 1.06, and two siblings by 1.12. As was the case for income poverty, this effect is weak and is not statistically significant when controlling for educational qualifications and marital status.

For Wave 2, 'not living with both parents at age 15' is associated with subjective poverty. For Wave 1, the effects just fail to reach statistical significance (p=0.055 for the initial two models). In analyses of Wave 2 data, this effect is reasonably large. In the initial model, 'not living with both parents at age 15' increases the odds of subjective poverty by about 1.8 times. The effect remains significant with the addition of other variables. According to the final model, the odds ratio is about 1.6.

For Wave 2, a non-English speaking background is not significantly associated with subjective poverty, except in the third model. In contrast, analyses of Wave 1 data suggest that this group are more likely to see themselves in subjective poverty. The inconsistency can be attributed to the small sample sizes for the non-English speaking background and subjective poverty groups.

Such inconsistency is also apparent for the Indigenous group, where significant effects are found for Wave 2 but not for Wave 1. In analyses of Wave 2, the odds for Indigenous Australians being in subjective poverty are 2.2 times the odds for non-Indigenous Australians. As was the case for income poverty, the effect is not significant when controlling for occupational status and labour market experiences.

Parental occupational status and type of school attended are not associated with subjective poverty in either wave.

Educational qualifications have a much weaker influence on subjective poverty than on income poverty. For before-housing income poverty, the effects for postgraduate, bachelor degree and diploma qualifications are large. On the after-housing measure they are smaller but still substantial. In contrast, these qualifications have no effect on subjective poverty, with the exception of postgraduate qualifications in Wave 1. However, non-completion of school is associated with a sizeable increase in the odds of subjective poverty. The odds for non-school completers indicating they were poor or very poor were almost twice the odds for school completers. This difference was not significant in Wave 2 when differences in occupational status and labour market experiences are taken into account.

Similar to income poverty, marital status is strongly associated with subjective poverty. Marriage reduces the odds of subjective poverty by about 4.0 times. This effect declines only marginally to 3.5 times when controlling for occupational status and labour market experiences. The effect for marriage is still substantial (an odds ratio of 2.2) when controlling for wealth and income. The effect for being in a de facto relationship is weaker although still substantial. The odds of this group being in subjective poverty are about 1.7 times less than for single persons. In Wave 2 analyses, the effects for a de facto relationship disappear when controlling for wealth and income.

Widows and widowers are particularly unlikely to judge themselves as in poverty. The effects for widowhood are large, with odds ratios around 5.0. This effect for subjective poverty is much larger than for income poverty and does not decline substantially with the addition of control variables.

Children are associated with subjective poverty. Each child increases the odds of subjective poverty slightly by about 1.1 times. Obviously, a large number of children will substantially increase the likelihood of subjective poverty; one, two or three children do not have a large impact.

Higher occupational status (of present or previous job) reduces the odds of subjective poverty. Its effects are of a similar magnitude to its effects on income poverty, reducing the odds by about 1.1 times for each 10-unit difference in the occupational status scale. As expected, lower occupational status jobs are associated with subjective poverty, although the relationship is not particularly strong. When controlling for income and wealth, its effect on subjective poverty is no longer statistically significant, suggesting that its influence is mediated through these variables.

The effect of experience in the work force on subjective poverty is about half its effect on income poverty. The effect is not significant when controlling for wealth and income. In contrast, the effect of time unemployed on subjective poverty is similar to its effect on income poverty and survives controls for income and wealth. Therefore, subjective evaluations of poverty are more sensitive to experiences of unemployment than to time spent working.

Confirming the bivariate analyses presented in Section 4.1, regression analyses indicate that subjective poverty is sensitive to household wealth. A $100,000 difference in wealth decreases the odds of subjective poverty by 1.4 times, and a $200,000 difference by 1.9 times. The coefficient for wealth on subjective poverty is about 5.0 times larger than the coefficient for wealth on before-housing income poverty.

Equivalised disposable household income also affects subjective poverty, but much more weakly than wealth. A $10,000 difference decreases the odds of subjective poverty by 1.03 times, and a $20,000 difference by 1.06 times. A $100,000 difference in equivalised disposable income—a very large difference—decreases the odds by about 1.3 times.

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