5.4 Assets and liabilities
Net wealth was decomposed into total assets and total liabilities. The aim was to determine how much of the change in net wealth was owing to changes in total assets or changes in total liabilities. The regression results for total assets follow a very similar form to net wealth, with all significant coefficients having the same sign and similar relative magnitude. Total liabilities were not as well explained by the core models as net wealth and total assets.[19] Only the results from core model one are considered here.
The marginal effects on net wealth are not equal to the difference between the marginal effects on assets and liabilities. This occurs as the use of logarithms to transform the dependent variable results in different sample populations for each regression. To obtain such a model would require using the same sample population or solving all three regressions at once using simultaneous equations.
It is common to observe a rise in assets with a rise in liabilities or a fall in assets with a fall in liabilities associated with the same descriptor. Only age, living in a dwelling owned without a mortgage and having children under five report assets and liabilities moving in opposite directions where both coefficients are significant.[20]
5.4.1 Assets, liabilities and health descriptors
Table 10 gives the marginal effects of health on wealth, assets and liabilities. Marginal effects are used as they are more comparable between regressions than coefficients. However, the comparison is still flawed as the marginal effects are calculated from regressions with different samples.
Lower net wealth owing to ill health appears to be associated with lower total assets. Most of the coefficients for the amount of debt held are not significant at the 10% level, and the magnitude of the marginal effects for total liabilities with significant coefficients is often less than one-tenth the size of the corresponding marginal effects for total assets. The logistic model for having liabilities, in Section 6.2, suggests only certain measures of ill health are associated with whether people are in debt or not.
| Dependent variable: Log net wealth |
Wealth $ |
Assets $ |
Liabilities $ |
|---|---|---|---|
| Physical discomfort (low discomfort is control) | |||
| Moderate discomfort | -11,330*** | -13,120*** | -1,730** |
| High discomfort | -12,890*** | -12,640** | -870 |
| Psychological distress (low distress is control) | |||
| Moderate distress | -5,330* | -7,930*** | -560 |
| High distress | -28,850*** | -33,080*** | -100 |
| Self-rated health (excellent health is control) | |||
| Very good health | -11,400*** | -12,910*** | -50 |
| Good health | -25,760*** | -33,010*** | -1,690*** |
| Fair health | -35,500*** | -45,330*** | -2,210** |
| Poor health | -53,000*** | -70,280*** | -2,520** |
| Chronic conditions (not having the condition is control) | |||
| Asthma | -4,070 | -5,020 | 220 |
| High blood pressure | -3,940 | -5,180* | -260 |
| High cholesterol | -5,120** | -7,340** | 820 |
| Heart disease | -10,930*** | -15,330*** | 100 |
| Diabetes | -13,910*** | -22,810*** | -2,160** |
| Stroke | -12,520** | -17,130** | -1,240 |
| Migraines | -5,700** | -5,550 | 10 |
| Depression or schizophrenia | -19,150*** | -25,730*** | 70 |
Source: SoFIE Waves 1–3, OSMs, longitudinal weights, supplied by Statistics New Zealand
Notes:
- *=coefficients are significant at the 10% significance level. **=coefficients are significant at the 5% significance level. ***=coefficients are significant at the 1% significance level.
- Marginal effects ($) are calculated as the increase in the dependent variable for a change in the variable with all other variables held at their mean. For categorical variables this is a change from the control.
The liability model is conditional on having non-zero liabilities. These results should be considered with the logistic model for whether people have or do not have liabilities.
Notes
- [19]Net wealth reported a goodness-of-fit of 0.5982 from core model one. Total assets reported 0.6103 and total liabilities 0.3651.
- [20]Geographic region and being of Māori descent also report opposing changes in assets and liabilities but have coefficients that are not significant at the 10% level.
