RDP 2022-06: Do Australian Households Borrow to Keep up with the Joneses? Appendix B: Robustness Checks

Kim Nguyen

November 2022

Table B1: Probability of Holding Debt – Extensive Margin
Effects of a 1 standard deviation increase in Gini coefficient
  Total Mortgage Non-mortgage
Total Home Other property
Gini coefficient 0.00
(0.01)		 −0.00
(0.00)		 0.00
(0.00)		 −0.01**
(0.00)		 0.00
(0.01)
No of observations 7,646 7,646 7,646 7,646 7,646
  Non-mortgage
  Credit card Hire purchase Car Business Investment
Gini coefficient −0.01
(0.01)		 0.00
(0.00)		 0.01***
(0.00)		 0.00
(0.00)		 0.00
(0.00)
No of observations 7,646 7,646 7,646 7,646 7,646
Household covariates Y Y Y Y Y
SA3 covariates Y Y Y Y Y
SA3 time trends Y Y Y Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B2: Household Debt Accumulation as a Share of Initial Income
Effects of a 1 standard deviation increase in Gini coefficient – using Heckman selection model
  Total Mortgage Non-mortgage
Total Home Other property
Gini coefficient −5.35
(15.21)		 −8.70
(6.19)		 −4.24
(5.82)		 −4.47
(3.88)		 3.35
(14.00)
No of observations 18,010 18,010 18,010 18,010 18,010
  Non-mortgage
  Credit card Hire purchase Car Business Investment
Gini coefficient −2.03
(13.09)		 −0.01
(0.13)		 0.50
(1.32)		 1.15
(4.53)		 3.32***
(0.88)
No of observations 18,010 18,010 18,010 18,010 18,010
Household covariates Y Y Y Y Y
SA3 covariates Y Y Y Y Y
SA3 time trends Y Y Y Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B3: Heckman Selection First Stage
Marginal effects of selected variables on probability not moving out of initial SA3
Variables in t–4 Coefficient Standard errors
Intention to move −0.62 0.03
Satisfaction with neighbourhood 0.01 0.03
Satisfaction with community 0.14 0.03
Age 0.00 0.00
Age squared 0.00 0.00
Male −0.03 0.02
Married −0.19 0.04
Number of children 0.04 0.02
Number of adults 0.20 0.02
University degree −0.21 0.03
Employed 0.21 0.10
Not in the labour force 0.01 0.10
Self-employed 0.02 0.05
Gross income 0.00 0.00
Assets 0.00 0.00
Financial assets 0.00 0.00
Liquid net worth 0.00 0.00
No of observations 18,010
Lambda 53.01 73.01
Rho 0.06
Sigma 874.82  

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B4: Household Debt Accumulation as a Share of Initial Income
Effects of a 1 per cent increase in top 10 per cent share of local income
  Total Mortgage Non-mortgage
Total Home Other property
Gini coefficient 3.02
(2.03)		 −0.96
(1.52)		 −1.36
(2.00)		 0.38
(1.74)		 2.59***
(0.78)
No of observations 7,631 7,631 7,631 7,631 7,631
  Non-mortgage
  Credit card Hire purchase Car Business Investment
Gini coefficient −0.11
(0.09)		 0.00
(0.05)		 0.33**
(0.16)		 0.02
(0.43)		 2.22***
(0.31)
No of observations 7,631 7,631 7,631 7,631 7,631
Household covariates Y Y Y Y Y
SA3 covariates Y Y Y Y Y
SA3 time trends Y Y Y Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B5: Household Debt Accumulation in Thousands of Dollars
Effects of a 1 standard deviation increase in Gini coefficient
  Total Mortgage Non-mortgage
Total Home Other property
Gini coefficient −1.26
(3.78)		 −6.05*
(3.49)		 −2.86
(1.99)		 −3.19
(3.81)		 4.79***
(1.78)
No of observations 7,646 7,646 7,646 7,646 7,646
  Non-mortgage
  Credit card Hire purchase Car Business Investment
Gini coefficient −0.25***
(0.09)		 0.03
(0.13)		 0.44***
(0.14)		 0.30
(1.43)		 3.87***
(1.31)
No of observations 7,646 7,646 7,646 7,646 7,646
Household covariates Y Y Y Y Y
SA3 covariates Y Y Y Y Y
SA3 time trends Y Y Y Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B6: Household Debt Accumulation – Not Self-employed
Effects of a 1 standard deviation increase in Gini coefficient
  Total Mortgage Non-mortgage
Total Home Other property
Gini coefficient 7.13*
(4.03)		 −0.60
(2.78)		 −1.19
(2.81)		 0.53
(2.28)		 5.75***
(2.13)
No of observations 6,794 6,794 6,794 6,794 6,794
  Non-mortgage
  Credit card Hire purchase Car Business Investment
Gini coefficient −0.14*
(0.08)		 0.05
(0.05)		 0.18
(0.31)		 −0.13
(0.51)		 3.93***
(1.33)
No of observations 6,794 6,794 6,794 6,794 6,794
Household covariates Y Y Y Y Y
SA3 covariates Y Y Y Y Y
SA3 time trends Y Y Y Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B7: Household Debt Accumulation – No Household Structure Change
Effects of a 1 standard deviation increase in Gini coefficient
  Total Mortgage Non-mortgage
Total Home Other property
Gini coefficient 5.29
(5.10)		 −4.71
(4.18)		 −5.68
(4.22)		 0.97
(4.16)		 5.49***
(1.50)
No of observations 6,764 6,764 6,764 6,764 6,764
  Non-mortgage
  Credit card Hire purchase Car Business Investment
Gini coefficient −0.22
(0.22)		 0.02
(0.10)		 0.50**
(0.22)		 0.71
(1.15)		 3.84***
(1.12)
No of observations 6,764 6,764 6,764 6,764 6,764
Household covariates Y Y Y Y Y
SA3 covariates Y Y Y Y Y
SA3 time trends Y Y Y Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B8: Household Debt Accumulation – No Change in Occupation
Effects of a 1 standard deviation increase in Gini coefficient
  Total Mortgage Non-mortgage
Total Home Other property
Gini coefficient 17.57***
(6.72)		 0.35
(5.12)		 −2.60
(5.87)		 2.95
(2.63)		 13.07**
(5.44)
No of observations 4,737 4,737 4,737 4,737 4,737
  Non-mortgage
  Credit card Hire purchase Car Business Investment
Gini coefficient −0.11
(0.11)		 −0.02
(0.07)		 0.28
(0.38)		 0.32
(3.13)		 6.06**
(3.04)
No of observations 4,737 4,737 4,737 4,737 4,737
Household covariates Y Y Y Y Y
SA3 covariates Y Y Y Y Y
SA3 time trends Y Y Y Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B9: Heterogeneous Debt Accumulation by Total Income Ranking
Effects of a 1 standard deviation increase in Gini coefficient
  Investment Car
1st quartile 0.40
(0.74)		 0.11
(1.91)
2nd quartile 1.74**
(0.84)		 0.20
(0.44)
3rd quartile 8.79**
(5.46)		 1.14***
(0.39)
4th quartile 3.38
(2.99)		 0.28
(0.21)
No of observations 7,568 7,568
Household covariates Y Y
SA3 covariates Y Y
Group × SA3 interactions Y Y
SA3 time trends Y Y

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B10: Heterogeneous Debt Accumulation as a Share of Initial Income – Simplified Model
Effects of a 1 standard deviation increase in Gini coefficient
  Investment Car   Investment Car
Local income ranking Self-perceived prosperity
1st quartile 0.84
(0.88)		 0.44
(1.77)		 Very poor 1.33
(2.02)		 1.87
(2.05)
2nd quartile 1.43***
(0.50)		 −0.12
(0.23)		 Poor 1.75***
(0.58)		 0.07
(0.74)
3rd quartile 11.00**
(4.89)		 0.96***
(0.36)		 Just getting along 1.80***
(0.65)		 −1.29
(1.37)
4th quartile −0.24
(1.46)		 0.76**
(0.33)		 Reasonably comfortable 6.49**
(2.84)		 1.06
(0.74)
      Very comfortable 1.77
(1.50)		 1.01***
(0.37)
      Prosperous −0.05
(3.48)		 2.87***
(0.58)
No of observations 7,568 7,568 No of observations 6,952 6,952
Life cycle Housing tenure
20 ≤ Agei,t–4 ≤ 39 2.32***
(0.66)		 −0.69
(0.82)		 Renters 0.86
(0.65)		 −0.30
(1.01)
40 ≤ Agei,t–4 ≤ 64 4.79**
(2.09)		 1.25***
(0.43)		 Mortgagors 9.01***
(3.16)		 0.75
(0.76)
Agei,t–4 ≥ 65 0.75
(0.93)		 0.29
(0.31)		 Outright home owners 1.84
(2.74)		 1.23*
(0.72)
No of observations 7,395 7,395 No of observations 5,958 5,958
Hand-to-mouth Ability to raise emergency fund
Hand-to-mouth 1.41*
(0.77)		 −0.50
(0.35)		 Cannot raise easily 1.77*
(0.97)		 −0.11
(0.26)
Not hand-to-mouth 3.79***
(1.33)		 0.75**
(0.33)		 Can raise easily 4.54***
(1.21)		 0.62
(0.39)
No of observations 7,631 7,631 No of observations 6,883 6,883
Financial attitude
Not taking financial risk 1.41
(0.88)		 0.21
(0.83)		      
Taking financial risk 12.81**
(5.47)		 1.56
(1.23)		      
No of observations 4,645 4,645      
Household covariates Y Y Household covariates Y Y
SA3 covariates and time trends Y Y SA3 covariates and time trends Y Y
Group × SA3 interactions N N Group × SA3 interactions N N

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0
Table B11: Heterogeneous Home and Other Property Debt Accumulation
Effects of a 1 standard deviation increase in Gini coefficient
  Home Other property   Home Other property
Local income ranking Self-perceived prosperity
1st quartile 4.31
(17.73)		 −29.15
(24.19)		 Very poor −36.06
(24.63)		 71.70*
(39.67)
2nd quartile −6.46
(6.33)		 2.68
(4.40)		 Poor −6.65
(13.69)		 0.81
(5.29)
3rd quartile −6.05
(6.30)		 4.92
(7.12)		 Just getting along 6.13
(7.30)		 4.09
(5.20)
4th quartile −7.34
(5.55)		 −0.06
(5.46)		 Reasonably comfortable −1.74
(8.36)		 −6.45
(15.22)
Very comfortable −8.09*
(4.54)		 −6.23
(4.98)
      Prosperous −19.74
(17.67)		 15.94
(18.38)
No of observations 7,568 7,568 No of observations 6,952 6,952
Life cycle Housing tenure
20 ≤ Agei,t–4 ≤ 39 3.09
(4.43)		 −1.61
(8.80)		 Renters −0.61
(2.77)		 −53.03
(54.60)
40 ≤ Agei,t–4 ≤ 64 −1.28
(5.48)		 −17.34
(30.12)		 Mortgagors 0.51
(8.54)		 4.57
(9.09)
Agei,t–4 ≥ 65 −9.12
(10.59)		 12.31
(25.93)		 Outright home owners −1.47
(4.77)		 2.94
(12.41)
No of observations 7,395 3,158 No of observations 5,958 2,972
Hand-to-mouth Ability to raise emergency fund
Hand-to-mouth −0.98
(6.15)		 41.17*
(23.74)		 Cannot raise easily 1.07
(4.68)		 −2.75
(14.11)
Not hand-to-mouth −4.98
(4.79)		 −7.02
(19.13)		 Can raise easily −3.01
(5.07)		 −6.06
(23.12)
No of observations 7,631 3,209 No of observations 6,883 2,955
Financial attitude
Not taking financial risk −0.44
(6.51)		 0.99
(11.77)		      
Taking financial risk −1.59
(11.57)		 −24.19
(88.29)		      
No of observations 4,645 1,883      
Household covariates Y Y Household covariates Y Y
SA3 covariates and time trends Y Y SA3 covariates and time trends Y Y
Group × SA3 interactions N N Group × SA3 interactions N N

Notes: Clustered standard errors at SA3 level are in parentheses. ***, ** and * denote statistical significance at the 1, 5 and 10 per cent levels, respectively.

Sources: ABS; Author's calculations; HILDA Survey Release 19.0