HILDA study: Income up but it doesn’t buy happiness

We’re working more, earning more than we were two decades ago, but we aren’t as happy.

Those aged 65 and over report the highest levels of life satisfaction. Picture: Istock

We are working more and earning more than we were two decades ago, but we aren’t as happy.

Older Australians are the shining light, with average household wealth for couples aged 65-plus rising fastest to now top $1m. The over-65s also buck the trend on happiness by having the highest life satisfaction of any age group.

These are among the key findings in the nation’s most comprehensive longitudinal study, the Household Income and Labour Dynamics in Australia survey, which has regularly canvassed the views of more than 17,000 Australians since 2001.

The latest HILDA study finds Australian society changing in some important ways, but staying stubbornly the same in others.

We are certainly financially better off, on average. The average Australian household income has grown in real terms by $23,248 since 2001, and average household wealth has increased to nearly $1m. Wealth inequality has also ­reduced slightly.

Some of this is driven by people working longer before retiring, a significant element is rising property values, and there is also the rapid increase in female workforce participation, up from 64 per cent in 2001 to 73 per cent in 2018. People in Perth, Melbourne and Sydney have the highest average incomes, with Adelaide the lowest.

Income and wealth are one thing, happiness another.

“Overall there has been a slight downward trend in satisfaction with life, and for all groups mean life satisfaction was lower in 2018 than in 2001,” the report says.

Those aged 65 and over report the highest levels of life satisfaction, followed by people aged 15-24. People aged between 55 and 64 have experienced the biggest decline in happiness since 2001 of any age group. And men’s life satisfaction has remained consistently lower than women’s over the 19-year course of the study.

Melbourne Institute research fellow Ferdi Botha, the report’s co-author, said a significant contribution to wellbeing was regular contact with others, something of particular relevance given COVID-19 lockdowns. The HILDA data, and life satisfaction information, was collected ­before the beginning of the pandemic.

“It is clear that the arrival of COVID-19 and the resulting public health measures will have substantially reduced life satisfaction in Australia,” Dr Botha said. ­“Declines in employment, growth in health fears and declines in ­social activities and community sport will all have had substantial adverse effects.”

 

While income is up and happiness down across the 21st century, some things haven’t changed. The HILDA report reveals it has been hard to shift the dial on income mobility, with people who lived in household poverty in childhood continuing to be far less likely to attend university or be in a job in adulthood than those who were never poor.

“For young adults aged 26 to 32 … there is a 29-percentage-point decrease in the rate of full-time employment as we move from those never poor as children (69 per cent) to those severely poor as children (40 per cent),” it says.

But there are significant pockets of society where things have changed, for the worse. For instance in the past four years the median income of single-parent households (adjusted for household size) has declined from $38,000 to $34,000. “Evidence on the economic fortunes of single-parent families in recent years is a concerning trend,” Melbourne Institute deputy director and report co-author Roger Wilkins said.