6  Results from logistic models

The use of logarithms to transform the dependent variable in the above analysis excluded all respondents with zero or negative scores. To provide a fuller picture and to consider those respondents with zero or negative responses, a pair of logistic models was constructed.

6.1  The likelihood of negative or zero net wealth

This logistic model gives an idea of the characteristics associated with those individuals whose liabilities exceed their assets. These results should be considered in conjunction with the results for net wealth.

After the regression the only control variables significant at the 10% level were age, geographic region, ethnicity and being a current smoker. The mean longitudinal respondent has a 2.6% chance of having non-positive net wealth. In absolute terms few coefficients had a percentage point effect of 2% or greater. However, in relative terms, a percentage point effect of 2.0% is significant as the likelihood of having non-positive net wealth close to doubles. Within the sensible bounds of the model, no individual in the longitudinal population can be estimated to have more than a 22% likelihood of having negative or zero net wealth.

To provide some context for the results below it is useful to know that being a current smoker results in a percentage point increase of 1.1 to the probability of having non-positive net wealth; being of Māori or Pacific Island descent results in percentage point increases of 1.6 and 2.4 respectively; ageing from 42 to 47 results in a 0.7 percentage point decrease. The logistic model, before the inclusion of health descriptors, can be found in Appendix C, Appendix Table 20.

The health descriptors were included in this logistic model in the same form as they were included in the core models. Table 11 gives the coefficients of the health survey descriptors and their percentage point effects. Percentage point effects for the health variables should be used for comparison as the coefficients are not directly comparable.

As an illustration of how to interpret the percentage point effects in Table 11, consider the effect of an increase in psychological distress on the probability of having non-positive net wealth: the probability of a person with average characteristics without any psychological distress of having non-positive net wealth is 2.32%. The probability of the same person but with high levels of psychological distress is 4.48%. The difference between these two (4.48 - 2.33) is 2.15; this is the percentage point difference shown in the table.

As in the core models the health surveys were decomposed by whether or not the respondent had experienced a health failure in the previous 12 months. There was no significant difference between the coefficients before and after the decomposition. For self-rated health, none of the adjacent categories are significantly different from each other at the 5% level.

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

Notes:

1. *=significant at the 10% significance level. **=significant at the 5% significance level. ***=significant at the 1% significance level.
2. Percentage point changes are calculated as the increase in percentage points of the probability to have non-positive net wealth for a change in the variable with all other variables held at their mean. For categorical variables this is a change from the control.

Many health variables were significant and resulted in at least a 1 percentage point increase on the likelihood of non-positive net wealth.[21] The health variables that were not significant in the logistic regression were those that were either not significant or had smaller marginal effects in the core models. The exceptions to this are diabetes and stroke, which have the greatest standard error of the chronic conditions.

The results from the core and logistic regressions show that worse health is associated with lower wealth and a higher likelihood of negative or zero net wealth. This suggests that the costs of ill health can exceed an individual's ability to meet them and could potentially draw them into undesirable debt.