Measuring Financial Wellbeing

The Melbourne Institute of Applied Economic and Social Research, along with colleagues from the Department of Finance, at the University of Melbourne (UoM) are collaborating with Commonwealth Bank (CBA) to develop and analyse scale measures of the financial wellbeing of CBA’s customers and Australians generally.

The collaboration is developing its outcome measures [“scales”] of financial wellbeing with data from customers’ financial records and self-reported data from customers. The scales will help CBA, other organisations, and policymakers design policies, products, and services to improve Australians’ financial wellbeing.

Researchers have previously considered various aspects of financial wellbeing, but no definition or metric has been universally adopted. In addition, no financial wellbeing scale combines objective data from customer records with self-reported information from personal responses.

In August 2017, CBA conducted an on-line survey of nearly 6,000 customers that asked about their financial wellbeing and their financial and personal circumstances. The CBA/UoM team obtained consent to link the survey responses to CBA customer records of people’s financial positions and financial transactions and is using these data to develop many novel measures of customers’ financial wellbeing.

The team is quantitatively analysing the combined survey and customer-record data to study how household circumstances, economic events, and personal behaviours affect financial wellbeing.

Investigators

Professor David Ribar,Melbourne Institute of Applied Economic and Social Research

Professor John Haisken-DeNew, Melbourne Institute of Applied Economic and Social Research

Associate Professor Carston Murawski, Department of Finance

Nicolás Salamanca, Melbourne Institute of Applied Economic and Social Research

Sam Tsiaplias, Melbourne Institute of Applied Economic and Social Research