Refining policies for financial stress

Rohan Best*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Household financial stress is a persistent problem that can be exacerbated by shocks such as the COVID-19 pandemic. This paper finds that assets are more important than income for explaining financial stress using the Household Expenditure Survey, conducted by the Australian Bureau of Statistics. Households in the bottom quintile for net assets are more likely to experience many dimensions of financial stress, with a magnitude of approximately 3 percentage points in most cases. Total income often has no identifiable impact on financial stress, all else equal, although the component of income based on investments may be a better predictor of financial stress. Further, there is a positive relationship between liabilities and financial stress. In addition, substantial financial stress is observable for recipients of payments for unemployment or disability, with lower impacts suggested for some other welfare groups. Three policy options are refining asset tests to provide higher benefits for low-wealth households, raising benefits for particular welfare types including for those receiving unemployment and disability payments, and promoting financial literacy to avoid excessive liabilities.

Original languageEnglish
Pages (from-to)531-548
Number of pages18
JournalAustralian Journal of Public Administration
Issue number4
Early online date22 Mar 2022
Publication statusPublished - Dec 2022

Bibliographical note

© 2022 The Authors. Australian Journal of Public Administration published by John Wiley & Sons Australia, Ltd on behalf of Institute of Public Administration Australia. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.


  • asset
  • financial stress
  • income
  • means test
  • unemployment


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