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The Living Standards, Incomes and Accommodation Costs of Older New Zealanders Revisited - WP 05/03

Publication Details

  • The Living Standards, Incomes and Accommodation Costs of Older New Zealanders Revisited
  • Published: Jun 2005
  • Status: Current
  • Authors: Hurnard, Roger; Hyslop, Dean; Tuckwell, Ivan
  • JEL Classification: I32
  • Hard copy: Available in HTML and PDF formats only.
 

The Living Standards, Incomes and Accommodation Costs of Older New Zealanders Revisited

New Zealand Treasury Working Paper 05/03

Published June 2005

Authors: Roger Hurnard, Dean Hyslop and Ivan Tuckwell

Abstract

In 2001 the then Ministry of Social Policy published a comprehensive study of the living standards of older New Zealanders. The current paper revisits the estimated relationship between material well-being and the current income and accommodation costs of older people, and questions the extent to which income and accommodation costs directly affect well-being or proxy for other factors. We first extend the estimated relationship between material well-being and current income to include the source of the income as well as its level. We find that controlling for different income sources roughly halves the estimated associative effect of income on material well-being. Furthermore, for a given level of income, those with higher fractions of either employment earnings or capital investment income have significantly higher material well-being scores, while those with a higher fraction of income from benefit allowances have lower scores. One interpretation is that these factors may proxy for other causal factors, such as health and wealth effects, rather than reflecting a direct income effect. Next, we extend the original specification between material well-being and accommodation costs to, first, include property rates as an accommodation cost and, second, to control for the type of housing tenure (freehold homeowner, mortgaged, renter, and no accommodation costs). We find that, controlling for housing tenure, the estimated effect of accommodation costs (including rates) is, at most, half that originally estimated and, for some specifications, insignificantly different from zero. Furthermore, controlling for the level of accommodation costs, mortgage holders and renters have significantly lower material well-being scores than freehold homeowners. These findings suggest that understanding what influences the material well-being outcomes of older people is not as straightforward as might be suggested by the simple association of certain variables.

Contents

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Abstract

Table of Contents

List of Tables

List of Figures

1 Introduction

2 The Living Standards Survey

3 Empirical Analysis and Results

4 Concluding Discussion

References

Appendix

twp05-03.pdf (421 KB) pp. 1–21

List of Tables

List of Figures

Acknowledgements

Regrettably our colleague Ivan Tuckwell passed away during the finalisation of this paper. We would like to record our appreciation of the skill and knowledge that Ivan brought to all his modelling work.

We also thank Paul Callister, Brian Easton, David Fergusson, John Jensen and seminar participants at Treasury for comments and discussions.

Disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury. The Treasury takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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