7  Living Standards

In this section we summarise the key factors associated with a range of measures designed to capture overall living standards. Table 7-1 reports two measures: the Economic Living Standard Index (ELSI) described in Section 3.3, and a measure of hardship. The latter is defined in terms of the number of measures taken to reduce costs in the previous year and includes elements such as staying in bed to reduce heating costs, postponing visits to a doctor, not buying fresh fruits, etc.

Notes:
¹ Only those explanatory variables that were statistically significant are shown in this table.
+++ or --- = significant at the 1% level; ++ or -- = significant at the 5% level; and + or - = significant at the 10% level.
² The table of full results is given in Appendix Tables C.5-6.

Better physical and mental health are strongly associated with higher living standards as captured by these two measures. Māori have a significantly lower ELSI than NZ European, and take significantly more measures to control household expenses than do NZ Europeans. Recipients of NZS have a significantly lower score for the ELSI, in contrast to those with other forms of superannuation. Higher incomes and wealth predictably are associated with higher living standards and less deprivation.

Table 7-2 summarises the most salient results associated with a person’s self-rated standard of living and the extent to which they are satisfied with their current material standard of living, expanding on the results in Figure 3. Both measures are binary variables formed from categorical responses. Those rating their living standards as high, fairly high or medium were coded as 1, while a 0 was assigned to those responding that they rated their living standards as fairly low or low. Similarly, those who were very satisfied or satisfied with their material standard of living were assigned 1, while those who were neutral, dissatisfied or very dissatisfied were coded as 0.[22]

Notes:
¹ Only those explanatory variables that were statistically significant are shown in this table.
+++ or --- = significant at the 1% level; ++ or -- = significant at the 5% level; and + or - = significant at the 10% level.
² The table of full results is given in Appendix Tables C.7-8.

A person's assessment of their living standards is a subjective judgement and depends on a wide set of personal attributes, many of which are unobservables. Of the variables included in the models represented in Table 7-2, many are found to have no significant association with how an individual views their standard of living. The main exceptions are that higher income and wealth are strongly associated with a higher assessment of living standards. Better physical and mental health are associated with greater satisfaction with an individual’s material standard of living. In short, health and wealth matter. Other observable attributes show no systematic association with subjective assessment of living standards.

The next analysis relates to the impact of retirement. This is based on two questions. First, all respondents were asked whether they expected their living standards in retirement years to change (relative to their current living standards). Those expecting increased or similar living standards were coded 1, while those expecting their living standards to decline were assigned a code of 0. The results are presented separately for those who are working, and for respondents who were retired at the time of the survey. In the case of working respondents, the question relates to their expectations about their future retirement. In the case of those who are retired, the responses refer to the expectations they held before retirement. Highlights of the results for both groups are summarised in Table 7-3.

Notes:
¹ Only those explanatory variables that were statistically significant are shown in this table.
+++ or --- = significant at the 1% level; ++ or -- = significant at the 5% level; and + or - = significant at the 10% level.
² The table of full results is given in Appendix Tables C.9-10.