Australian Institute of Health and Welfare (2021) Material deprivation and financial stress., AIHW, Australian Government, accessed 08 December 2021
Australian Institute of Health and Welfare. (2021). Material deprivation and financial stress. Retrieved from https://www.aihw.gov.au/reports/children-youth/material-deprivation-and-financial-stress
Material deprivation and financial stress. Australian Institute of Health and Welfare, 25 June 2021, https://www.aihw.gov.au/reports/children-youth/material-deprivation-and-financial-stress
Australian Institute of Health and Welfare. Material deprivation and financial stress [Internet]. Canberra: Australian Institute of Health and Welfare, 2021 [cited 2021 Dec. 8]. Available from: https://www.aihw.gov.au/reports/children-youth/material-deprivation-and-financial-stress
Australian Institute of Health and Welfare (AIHW) 2021, Material deprivation and financial stress, viewed 8 December 2021, https://www.aihw.gov.au/reports/children-youth/material-deprivation-and-financial-stress
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Material deprivation and financial stress are components of economic wellbeing that can shed light on young people’s living standards and experiences of economic hardship.
This section builds on Income: household and individual by reporting on the prevalence and characteristics of material deprivation and financial stress among young people in Australia.
Data on material deprivation and financial stress are from the Household, Income and Labour Dynamics in Australia (HILDA) survey. The HILDA is a longitudinal household study that collects information about economic and personal wellbeing. Data on material deprivation are collected at the household level, with 1 respondent answering questions on behalf of the household. Since 2014, the module has been completed every 4 years, with the latest available data from 2018.
Data on financial stress are collected at the individual level, and responses from young people are available in each wave (except in 2010), with the latest data available for 2018.
Responses to questions on material deprivation may not necessarily reflect the perspectives of young people in that household about what is considered essential for an acceptable standard of living. Surveys designed specifically for young people may be better suited to report on how young people perceive and experience disadvantage.
For both material deprivation and financial stress, there are limitations to measuring a person’s individual level of deprivation or stress by counting items and experiences. Similarly, going without meals may be a better indicator of financial hardship than having to pawn or sell something for money. An alternative is to place greater weight on certain items—either those deemed essential by a larger proportion of people (material deprivation), or those with greater impacts on wellbeing (financial stress).
According to the HILDA, in 2018:
The material deprivation module in the HILDA is derived from previous studies conducted by the Social Policy Research Centre on material deprivation among adults (Saunders et al. 2007; Saunders & Wong 2012). The module asks a respondent from each household to specify whether they consider each of the following items essential, whether they have it and, if not, whether it is because they cannot afford it:
Of the 25 items presented in the module, 23 were considered essential by a majority of respondents in 2018. The items not considered essential by a majority of respondents were: ‘a week’s holiday away from home once a year’ and ‘buying presents for immediate family or close friends at least once a year’. ‘Access to the internet at home’ was not considered essential by a majority of respondents in 2014 but was considered essential in 2018.
This approach is often referred to as the ‘consensual’ approach as it relies on a common understanding of what constitutes an acceptable standard of living. A person’s individual level of deprivation can be determined by the number of essential items their household does not have and cannot afford. Deprivation levels can be used to calculate the average number of items people are deprived of across a group, also referred to as the mean deprivation score.
This section uses a 2-item measure of deprivation to allow for responses errors. A person is considered to be living with material deprivation if they do not have, and cannot afford, at least 2 essential items.
This approach gives equal weight to each item and does not account for the seriousness of different forms of deprivation. The impact of not being able to afford ‘getting together with friends or relatives for a drink or meal at least once a month’ may differ substantially from being deprived of ‘getting medical treatment when needed’ (McLachlan et al. 2013).
In 2018, the mean deprivation score for young people was 0.5 items. The most common essential household items young people did not have and could not afford were:
Between 2014 and 2018:
In 2018, material deprivation among young people varied across household types and socioeconomic areas:
For young people, the differences in experiences of material deprivation according to remoteness areas or country of birth were not statistically significant.
Financial stress indicators can be used to illustrate how a person experiences economic hardship (Box 3). Financial stress is often associated with low income, and can have severe short- and long-term consequences for individuals, families and the community. Young people, in particular, are at increased risk of financial stress, and have lower financial literacy to navigate cash flow problems or difficulties (Steen & Mackenzie 2013).
In the HILDA survey, financial stress is measured by asking respondents over 15 years of age: ‘Since January [survey year], did any of the following happen to you because of a shortage of money?
Respondents are asked to indicate which of these 7 events had occurred. Experience of any 1 of these events can be considered an experience of financial stress, although some events (such as going without meals) can indicate more severe stress than others (such as inability to pay bills on time). Two or more of the indicators must be experienced for a person to be classified as being in financial stress (Wilkins et al. 2019).
According to the HILDA, 1 in 10 (10%, or 337,000) of respondents aged 15–24 experienced financial stress in 2018.
In 2018, the most common forms of financial stress experienced by young people aged 15–24 were:
Between 2008 and 2018, the proportion of young people experiencing financial stress remained steady (10.4% to 10.0%, respectively).
For young people, financial stress varied according to household type and socioeconomic area:
Financial stress was also higher among those living in material deprivation:
The differences in financial stress according to remoteness areas, country of birth or Indigenous status were not statistically significant.
For information on:
Indigenous young people and income, see Section 2.08, Income in Aboriginal and Torres Strait Islander Health Performance Framework (HPF) report 2020 and Section 3.3, Income in Aboriginal and Torres Strait Islander adolescent and youth health 2018.
For information on how material deprivation can affect children aged 0–14, see:
Material deprivation in Australia’s children.
For general technical notes relating to this report, see also Methods.
McLachlan R, Gilfillan G & Gordon J 2013. Deep and persistent disadvantage in Australia. Working paper. Canberra: Productivity Commission.
Saunders P, Naidoo Y & Griffiths M 2007. Towards new indicators of disadvantage: deprivation and social exclusion in Australia. Sydney: Social Policy Research Centre, University of New South Wales.
Saunders P & Wong M 2012. Promoting inclusion and combating deprivation: recent changes in social disadvantage in Australia. Sydney: Social Policy Research Centre, University of New South Wales.
Steen A & MacKenzie D 2013. Financial stress, financial literacy, counselling and the risk of homelessness. Australasian Accounting, Business and Finance Journal 7:31–48.
Wilkins R 2016. The Household, Income and Labour Dynamics in Australia Survey: selected findings from waves 1 to 14. Melbourne: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
Wilkins R, Laß I, Butterworth P & Vera-Toscano E 2019. The Household, Income and Labour Dynamics in Australia Survey: selected findings from waves 1 to 17. Melbourne: Melbourne Institute of Applied Economic and Social Research, University of Melbourne.
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