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Printable version
Key Statistics - article, April 2003, p. 9-12
A look at the results from the 2001 Household Savings Survey (HSS). This one-off survey was commissioned by the Retirement Commission and collected information on the net worth (assets minus liabilities) of New Zealanders.
The 2001 Household Savings Survey1
The 2001 Household Savings Survey (HSS) was a cross-sectional nationwide survey that collected information on the net worth (assets minus liabilities) of New Zealanders. It was a one-off survey commissioned by the Retirement Commission (RC) and conducted by Statistics New Zealand (SNZ). The survey results provide factual information to feed into the public debate on superannuation, and raise public awareness of retirement issues. The survey results will also be used by the Government for the creation of policy, and by the Retirement Commission for education programmes. While the HSS was developed with a retirement focus, the possible uses of the data are much wider.
The HSS estimated the total net worth of New Zealanders aged 18 years and over at $363.109 billion. This was a total asset value of $435.097 billion and a total liability value of $71.988 billion. The median net worth was $60,000 for total adults2 and $68,300 for total economic units.3 As net worth is accumulated over a lifetime, the distribution of net worth in New Zealand is closely related to age.
The distribution of net worth
The results of the HSS showed that net worth was unevenly distributed across the population. When using a population of total economic units, 16 percent had negative net worth, while 29 percent had net worth over of $200,000. The uneven distribution of net worth, in part, reflects the age of the population. For example, 43 percent of economic units aged 18–24 had negative net worth compared with only 2 percent of those aged 65 years and over. Figure 1 illustrates the distinct unequal pattern of the distribution of median net worth by age groups for economic units.
The distribution of net worth within each age band is also unequal. This can be demonstrated by looking at the proportion of net worth held by the top 20 percent. The HSS found that, in each age group, the top 20 percent of economic units had at least 60 percent of the age group’s net worth. This suggests that age was not the only factor contributing to differences in the distribution of net worth.
Net worth distribution by decile
To further examine the distribution of net worth the population was divided into deciles. That is, the population of economic units was ranked from lowest to highest based on net worth, and then divided into 10 even-sized groups. Decile 1 represents the 10 percent of the population with the lowest net worth, while decile 10 was the 10 percent with the highest net worth. Figure 2 shows the total net worth held by each decile.
The uneven distribution of net worth is apparent in Figure 2. The total net worth held by the lowest decile was -$3,303 million, while the highest decile (decile 10) held $194,500 million.
When only those economic units with positive net worth were put into deciles, nearly 70 percent of all positive net worth was held by those economic units in deciles 9 and 10. In contrast, deciles 1 and 2 only held 0.2 percent of total positive net worth between them.
Assets and debts
The value of total assets held by New Zealanders, as measured by the HSS, was estimated at $435.097 billion (excluding Māori assets). The three most common types of assets held by New Zealanders were bank assets (91 percent of economic units), motor vehicles (77 percent) and the home lived in (48 percent). In terms of the value of assets, homes made up the largest proportion of total asset value (37 percent), followed by farms and businesses, which each made up 9 percent of the value of total assets.
The value of total debt held by New Zealanders as estimated by the HSS was $71.988 billion. The most common debt type held by New Zealanders was credit card debt (46 percent). This was followed by mortgage debt (29 percent) and bank debt (24 percent). In terms of value, the largest debt type held by New Zealanders was mortgage debt, which made up 81 percent of the value of total debt, followed by bank debt at 9 percent.
Net worth by education and occupation
When looking at the impact of education and occupation on net worth, it makes sense to only look at non-partnered individuals. Doing this means that any possible effects of a partner’s qualifications or occupation on net worth are eliminated.
However, there are some demographic factors that are related to the population of non-partnered individuals that will have some possible effect on the distributions. The main factor to impact on the following analysis is the difference in age distribution of the non-partnered individual population compared with that of the couple population.
For example, there is a much higher proportion of the non-partnered individual population aged 18–24, 29 percent compared with 4 percent of couples. As there is higher tertiary participation amongst this younger age group, the following analysis may differ from the distributions that would be produced if the total population (including couples) was used.
Education
In the HSS, respondents were asked to record their highest completed qualification. The highest qualification categories were no qualifications, school qualifications, post-school vocational qualifications,5 post-school degree,6 and other qualifications (those not able to fit into any of the preceding categories).7 Figure 3 shows the median net worth of non-partnered individuals by these qualification categories.
Figure 3 illustrates that the 24 percent of non-partnered individuals who gave ‘post-school vocational’ as their highest completed qualification had the highest median net worth ($20,500). A third of the population of non-partnered individuals gave ‘school qualification’ as their highest completed qualification, this group had the lowest median net worth ($6,300). However, a significant proportion of this group may have been engaged in some form of tertiary study.
As the increase in tertiary education participation is fairly recent in New Zealand, the full extent of its effect on net worth may not yet be evident.
Occupation
Figure 4 shows the median net worth of non-partnered individuals by occupation. The HSS found that median net worth was highest for those non-partnered individuals who identified their occupation as legislators, administrators and managers. As can be seen in figure 4, median net worth for this group was significantly higher than for any other occupation group.
At the other end of the scale, service and sales workers recorded the lowest median net worth ($700). Nineteen percent of all employed non-partnered individuals identified this as their occupation. Age was a major contributing factor to the low median net worth for this occupation group, with over half of the non-partnered individuals employed in this occupation between the ages of 18–24.
The debt ratio
The debt ratio shows how many dollars of debt an individual or couple had for every $100 they had in assets. The debt ratio for the total population of economic units, as measured by the HSS, was $16 for every $100. The debt ratio varied significantly by age.
Figure 5 illustrates the distinctive pattern of decreasing debt ratio with increasing age. Non-partnered individuals aged 25–29 had $96 in debt for every $100 of assets, and couples 18–24 years of age had $74 in debt for every $100 of assets. At the other end of the scale, those non-partnered individuals aged 70 or older, and those couples aged 80 or older had a debt ratio of less than one.
Student loan debt, in particular, had quite a marked impact on the debt ratio of those in the younger age groups (18–24 and 25–29 year olds).
Unlike other debt types, such as mortgage debt, student loans have no corresponding material asset. It is an investment in the borrower’s human capital. This means that no real asset was measured to balance the resulting debt. In contrast, those with a mortgage would have a housing asset that either equals or outweighs the mortgage debt.
The debt ratio of non-partnered individuals also seemed to be significantly affected by the number of dependent children in the household. For non-partnered individuals with three or more dependent children the debt ratio was $56, with one or two dependent children the debt ratio was lower at $25 and the debt ratio for those non-partnered individuals with no dependent children was $16.
Other analysis using HSS data
The New Zealand Treasury has produced a paper titled “Individual net worth in New Zealand: A preliminary analysis based on a new survey”. This paper offers a preliminary look at some initial analysis of HSS data using non-partnered individuals only. Firstly, the paper looks at some of the basic information captured by the HSS, and then explores the key factors that explain differences in the net worth of non-partnered individuals. A preliminary exploration of the effect of the student loan scheme on net worth is also covered, as well as an initial attempt to allow for human capital as an asset. Further analysis looking at couples, economic units, and the adequacy of retirement savings is planned.
Similar international surveys
Other countries have surveys that collect and produce similar information to the HSS. In particular, Canada’s Survey of Financial Security (SFS) and the United States Survey of Consumer Finances (SCF). This makes a rough international comparison possible. In general, net worth data collected in the HSS showed similar distributions to the data collected in Canada and the US. This was especially the case when comparing HSS data to the SFS data. However, any comparisons of HSS data with international data is very limited, due to different social and economic environments, and underlying differences in concepts and collection methods. For example, the Canadian and American surveys collect information about the whole family within a household, while the HSS only collected information about one individual or couple in each household.
Further information
Information on the 2001 Household Savings Survey, including reports, is available at www.stats.govt.nz.
Information about the Survey of Financial Security (SFS) is available at www.statcan.ca.
Information about the Survey of Consumer Finances is available at www.federalreserve.gov.
Footnotes
01HhSavings.pdf (390 Kb)
The downloadable file is in Adobe Acrobat format. If you do not have the Adobe Acrobat Reader you may download the reader to view or print the contents of this file.
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