2  The Living Standards Survey

The 2000 Survey of New Zealanders aged 65 and over was designed to help develop a measure of material living standards using a deprivation approach. In this section we provide a brief review of the background to the Fergusson et al (2001a&b) report on the living standards of older New Zealanders, and the results from that report. Our discussion here is obviously not intended to provide either a detailed or complete coverage of the issues considered in this report, and the interested reader is encouraged to read the original source for such discussion. Following this, we turn to the issues that are the focus of the current analysis.

2.1  The original survey analysis

The research defined the living standards of an older New Zealander or couple[5] as their material conditions and consumption. More particularly from a deprivation point of view “material well-being” was taken to be adversely impacted by material conditions and consumption that are wanted but not able to be met because of economic restrictions.[6] Despite the inclusion of many deprivation-type questions, the intention behind the survey was to measure living standards outcomes for older people across a continuum from hardship to comfort and not to focus solely on the poverty end of the scale.

Living standards were measured by construction of a “Material Well-being Scale” (MWBS), estimated using confirmatory factor analysis, which assumes that material well-being is a latent variable that is reflected in a set of observable sub-scales or aggregate indicator variables. The subscales selected by the researchers comprised: ownership restrictions – items respondents wanted to own but could not because they could not afford them; social participation restrictions – social activities that respondents wanted to do but could not because of a lack of money; economising behaviours – the extent to which respondents reported making economies in key areas; severe financial problems – the extent to which respondents had faced severe financial problems in the last 12 months; and self-assessments – respondents’ self-ratings of living standards and the adequacy of their income.

The material wellbeing scores were scaled to have a mean value of 100 and a standard deviation of 10. However, the questionnaire’s focus on the hardship end of living standards resulted in a distribution of scores that is quite skewed. For example, the maximum material well-being score was 115, 63% of respondents had material well-being scores at or above the mean of 100, and 9% of respondents had scores of at-least 109, while 5% had scores less than 80 (see Figure 6.1, page 86). Thus, the scale is not very effective in discriminating among living standards that are above average and, more accurately, may be considered to be primarily a “deprivation index”[7].

Information was also collected on a range of variables that might be important correlates or predictors of variation in the material well-being scores. These variables included demographic characteristics (such as age, ethnicity and educational qualifications), health status, income, accommodation costs, whether people had experienced certain adverse life events, and so on. The report used regression methods to assess the correlation or predictive content of these factors for the material well-being index.[8]