1.9 WEALTH OR NET WORTH
WEALTH OR NET WORTH
Household wealth is represented by the household's net wealth. In the SIH, the term 'net worth' is used in preference to 'wealth' because it more precisely reflects the nature of information captured in the SIH. Net worth is calculated as the difference between the stock of household assets and the stock of household liabilities. Net worth is positive when the value of household assets is more than the value of household liabilities. Likewise, net worth is negative when household liabilities exceed household assets.
While there may be individual ownership of assets, the benefit of asset ownership is shared at least to some extent between members of the household. Therefore it is household net worth that is of most interest in analysing the economic wellbeing of individuals.
Assets can take many forms including:
- produced tangible fixed assets that are used repeatedly and for more than one year, such as dwellings and their contents, vehicles and machinery and equipment used in businesses owned by households
- intangible fixed assets such as computer software and artistic originals
- business inventories of goods
- non-produced assets such as land
- financial assets such as bank deposits, shares, superannuation account balances and the outstanding value of loans made to other households or businesses.
Liabilities are primarily the value of loans outstanding including:
- mortgages
- study loans
- investment loans
- credit card debts
- debt on other loans such as personal loans to purchase vehicles.
In the 2003-04 HES and SIH, some asset and liability data were collected on a net basis rather than collecting for each component listed above. In relation to businesses, if a survey respondent owned or part owned a business, they were asked how much they would receive if they sold their share of the business and paid off any outstanding debts. For more details on various components of wealth see Household Wealth and Wealth Distribution, Australia, 2003-04 (cat. no. 6554.0).
COMPARISON OF WEALTH BETWEEN SIH AND THE AUSTRALIAN SYSTEM OF NATIONAL ACCOUNTS
The concepts of net worth used in the HES and SIH have many similarities to the household net worth definition used in the Australian System of National Accounts (ASNA), but also differ in many respects.
The SIH wealth data are collected from individual households and can be used to analyse the distribution of wealth across the population and to compare levels of wealth between various population subgroups.
The ASNA records the net worth by using many different data sources and provides a comprehensive picture of the household sector as a whole, presented within a national accounting framework.
The sources of data used in the two data sets provide somewhat different decomposition of the aggregate amounts, and detailed item level comparisons between the data sets are difficult. It is therefore only possible to draw broad conclusions about the differences in aggregate wealth provided by the two data sets. A detailed comparison of 2003-04 SIH and ASNA net worth estimates has been published in an Appendix 3 of Household Wealth and Wealth Distribution, Australia, 2003-04 (cat. no. 6554.0).
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