There's more to socioeconomic status than housing
Measuring socioeconomic status of individuals, families, households, and geographic areas, is not straightforward.
Given socioeconomic status is generally unobserved, proxy measurements are therefore required.
The Australian Bureau of Statistics has recently sought to provide an insight into the perhaps old-fashioned measurement that defines relative socioeconomic advantage and disadvantage.
Income, consumption, wealth, education and employment are among the common concepts considered.
However, their relative importance can change substantially through time and across populations.
Whether a house has or doesn’t have broadband internet connection could now be used as a measure of socioeconomic advantage/disadvantage, albeit a relatively recent phenomenon.
On the other hand, colour televisions have become so ubiquitous that not having one is now more likely to be a choice made by households, as opposed to measuring material wealth.
The lack of access to a car may be highly relevant to socioeconomic status in much of Australia, but in the places where public transport is widely available and many amenities are close by, it is of less relevance.
Ultimately income, consumption, wealth, education and employment are the concluded key concepts used to measure socioeconomic status, according to the ABS.
One concept that predates socioeconomic status is poverty. Those in absolute poverty are generally considered unable to afford basic needs like food, clothing and shelter, whereas those in relative poverty tend not to have access to the minimum economic resources that one would expect in the particular society or economy. The ABS suggests poverty is a slightly different concept than socioeconomic status, as those in poverty are likely to have low socioeconomic status.
However, there are also likely to be a number of people who would be accorded low socioeconomic status based on other indicators, but who would not be considered as being in poverty using a more restricted set of indicators.
Wellbeing, on the other hand, sits as a broader concept than both poverty and socioeconomic status. According to the ABS, wellbeing is “a state of health or sufficiency in all aspects of life”. So, while a person’s socioeconomic status would tend to be a component of his or her wellbeing, a person’s interaction with the natural, built and social environments, as well as physical, mental and emotional health, are also vital components.
A third related concept is that of social exclusion, whose definition is often highly contested and may be interpreted very differently in different contexts.
However, a useful definition of social exclusion is “an individual is socially excluded if he or she does not participate in key activities of the society in which he or she lives”.
Social exclusion, therefore, focuses on a person’s activities or actions, whereas socioeconomic status refers to a person’s access to social and economic resources.
A fourth alternative concept, human development, focuses on ensuring that people have the capabilities to lead lives that they value. Without basic capabilities, such as health care and education, many opportunities in life are inaccessible.
"This is also known as capability deprivation, which is a concept initiated by Amartya Sen as an alternative measure of poverty. Capabilities are influenced by an individual’s characteristics such as age, sex, disability status and educational attainment. Some characteristics, such as having a disability or illness, being on older person or having low educational attainment, can then lead to particular population groups earning lower incomes, which, in turn, lead to being deprived of some basic capabilities and, therefore, potentially to a lower quality of life," the ABS report says.
When it comes to the wealth of housing, the ABS notes it is one of the most commonly used wealth measures.
It points out while not owning one’s own home is a reasonable indication, on average, of low household wealth, the indicator for home ownership misses a large amount of the variation in wealth across Australian households.
It misses remaining assets including superannuation, savings held in a bank and financial equities.
Secondly, it does not take into account the actual value of the home, nor the amount that is still owed on the home.
As this information is not available from most data sources, the ABS acknowledges the limitations of commonly used variables for wealth should be kept in mind when calculating the socioeconomic status of particular households.
It concludes it is often the case that administrative data records include limited person-level information. While some datasets capture age, sex and occupation, they may not have details on income, family composition or educational attainment. Often administrative data sets contain limited demographic information. Without this demographic detail, it becomes difficult to use the administrative datasets for socioeconomic analysis.
For the above reasons, among others, the ABS also undertakes a range of sample surveys. The aim of these surveys is to obtain information from a nationally representative sample on a single topic or range of topics.
There will be perhaps a clearer indication from the Survey of Income and Housing, which will be issued in August.
The SIH is a household survey that collects the amount of income receivable through each source of income, wealth information, housing characteristics and demographic and person-level information for household members. Income data are collected on both a current basis and for the previous financial year. The primary purpose of the survey is to inform on the social and economic welfare of Australians, including the distribution of household income and wealth.
In addition, the data collected contribute to the compilation of key performance indicators for housing affordability that have been agreed by the Council of Australian Governments.
Collecting demographic indicator data and details about the dwelling and the residents in the household is important.
But it is equally important to detect trends such as the fact that over recent decades, households have tended to become smaller as the number of families with relatively large numbers of children has fallen and the number of elderly couples and number of elderly people who live alone have both increased, according to the ABS.
These household compositional changes have generated far greater demand for housing than might be expected from population growth if average household sizes had remained the same. They have also given rise to demand for different housing options.
Details, such as main source of household income, number of employed persons in the household, value of dwelling and household type, provide contextual information required to help plan our collective housing future.
The ABS review involved input from Dr Nicholas Biddle, Research Fellow in the Centre for Aboriginal Economic Policy Research (CAEPR) at the Australian National University.
