Estimates of poverty and social exclusion in Australia: a multidimensional approach

• Weiping Kostenko, Roger Wilkins, Rosanna Scutella
• Melbourne Institute of Applied Economic and Social Research

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19 January 2010The extent of poverty and social exclusion in Australia is measured using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. For each individual, the authors construct a measure of social exclusion that recognises its multidimensionality, including its potential variability in depth at a point in time and in persistence over time. They distinguish seven dimensions or domains: material resources; employment; education and skills; health and disability; social; community; and personal safety. For each of these seven domains, several indicators of social exclusion are produced. A simple ‘sum-score’ method is then used to estimate the extent or depth of exclusion, with a measure a function of both the number of domains in which exclusion is experienced and the number of indicators of exclusion present within each domain.

Sensitivity of findings to alternative weighting regimes for the indicators and to alternative methods, proposed by Capellari and Jenkins (2007), is examined. Persistence of exclusion is also briefly considered. The exclusion measure identifies 20 to 30 per cent of the Australian population aged 15 years and over as experiencing ‘marginal exclusion’ at any given point in time. Four to six per cent are ‘deeply excluded’, and less than one per cent are ‘very deeply excluded’.

The authors find that, although there are commonalities in the demographic composition of the socially excluded and the income poor, there are also some important differences. For example, persons 65 years and over represent a much smaller share of the most ‘excluded’ group than they do of the ‘poorest’; and couple and single families with children represent a larger share of the excluded than they do of the poor.