5.1  The health surveys

Physical functioning (PF) and the Kessler 10-item scale (K10) were used in core models one and two. Over both models, progressively worse health was linked to lower wealth for both physical and mental wellbeing.

Source: SoFIE Waves 1–3, OSMs, longitudinal weights, supplied by Statistics New Zealand

Notes:

1. *=coefficients are significant at the 10% significance level. **=coefficients are significant at the 5% significance level. ***=coefficients are significant at the 1% significance level.
2. Marginal effects are calculated as the increase in net wealth for a change in the variable from the control with all other variables held at their mean.

Based on the marginal effects shown in Table 6 it is apparent that physical and mental wellbeing have differing effects. Those with moderate or high physical discomfort (9% and 6.5% of the longitudinal population respectively) experience similar levels of lower net wealth. Moderate psychological distress (14.5% of the longitudinal population) has a lower effect on net wealth, while high psychological distress (6.4%) has a larger effect. The coefficients for physical discomfort are not significantly different at the 10% level, whereas the coefficients for mental distress are significantly different at the 1% level.

Figure 3 shows the variation in the estimated level of net wealth for different levels of physical and mental wellbeing, with all other variables held at their mean. Net wealth is lower in every case where health status is worse.

Figure 3 – Levels of estimated net wealth by physical discomfort and psychological distress

Source:  SoFIE Waves 1–3, OSMs, longitudinal weights, supplied by Statistics New Zealand

Notes:

1. Levels of net wealth have been estimated for an individual with mean characteristics.
2. The means given here are forecasted means from the core models.
3. The differences between the bars for low and moderate, and for low and high discomfort and distress are identical to the marginal effects given in Table 6.

5.1.1  Health failures and the health surveys

A respondent's health in Wave 3 may not be an accurate proxy for their health in Wave 2. The regressions involving the SF36 and K10 health measures were repeated, with the measures for physical discomfort and psychological distress decomposed by whether the respondent suffered a health failure or not.

Source: SoFIE Waves 1–3, OSMs, longitudinal weights, supplied by Statistics New Zealand

Note:

1. *=coefficients are significant at the 10% significance level. **=coefficients are significant at the 5% significance level. ***=coefficients are significant at the 1% significance level.

Table 7 gives the results after the decomposition. In all cases the impact on net wealth was greater for those recording a health failure. However, coefficient testing showed that only the coefficients for high physical discomfort, with and without health failure, were significantly different, and these only at the 10% level in core model two.

Further investigation revealed that of those who rated their own health fair or poor in Wave 2, over half of them experienced a health failure in the following 12 months, compared with less than a quarter of those who rated their health excellent or very good. This suggests that those who already had worse health were more likely to suffer from injuries in the subsequent year. Wealth may affect the speed at which people recover from injury or illness, so those with greater wealth may have been less likely to be recorded as having experienced health failures, which require the respondent to have an injury or illness lasting seven days or more.

Compared with those not reporting a health failure, those who report a health failure were more likely to report lower self-rated health in Wave 3 than in Wave 2. This holds across all categories of self-rated health. For example, of those with excellent self-rated health in Wave 2, 49% of those who suffered a health failure rated their health worse in Wave 3, while only 34% of those who did not suffer a health failure rated their health worse in Wave 3.[16]