Report

Financial Stress and Household Consumption: Exploring households’ commitment to contractual payments

Antonia Settle

Melbourne Institute of Applied Economic and Social Research | Published : 2020

Abstract

In a context of increasing attention to growing fixed payments, slim buffers, and unstable incomes in the household sector, this analysis considers the degree to which households prioritise contractual payments. The study uses Australian household expenditure data to examine which expenditure categories are prioritised when households enter into financial stress. The analysis finds that financially stressed households maintain basic expenditure and contractual payments by reducing expenditure on insurance along with more conventional discretionary spending. These findings suggest that insurance is effectively considered a luxury good. The findings thus point towards a sharp rise in risk expo..

View full abstract