New Zealand, where the kids are alright

The kids are asked about things like the presence at home of books, computers and an internet connection, and also whether they have a room of their own. Illustration / Anna Crichton

Kiwis are better off than you might have thought, suggests a study of teens' living conditions.

New Zealand is normally to be found in the undistinguished, if not downright alarming, zone of international economic-performance rankings.

So it is encouraging when analysis of data that indicates material wellbeing finds us third from the top of the league table.

It is widely accepted that measures like per capita gross domestic product or national income have serious deficiencies as indicators of people's material standard of living.

For instance, Singapore's GDP per capita is more than twice New Zealand's, but how many people would swap living in a New Zealand suburb for a Singaporean apartment block?

So Arthur Grimes and Sean Hyland at economic researchers Motu went looking for some internationally comparable data on living standards.

They found it in supplementary questions that the Organisation for Economic Co-operation and Development (OECD) puts to hundreds of thousands of 15-year-olds. These questions are asked in the course of testing the teenagers' performance in the Programme for International Student Assessment (Pisa) surveys of reading, mathematics and science.

The kids are asked about the presence at home of books, computers and an internet connection, and also whether they have a room of their own, how many bathrooms and cars there are, and whether there is a dishwasher, a DVD player and other consumer durables.

Pisa is looking for correlations between kids' material circumstances and their academic proficiency. The risk is that inequality becomes entrenched between generations.

In that regard, in the 2012 Pisa survey New Zealand did not score well: when the study plotted how well socio-economic status predicted a student's academic performance, New Zealand was well and truly on the wrong (high) side of average, alongside Costa Rica. Not only were we worse than most European countries, but also the United States, which we like to think of as a much more unequal society. And compared with previous surveys, in only four countries has the trend deteriorated more than it has here.

In short, they say, our households (with secondary school-aged children) have amongst the highest material living standards in the world.

But Grimes and Hyland have looked at the data for another reason - as an indicator of material living standards across countries.

As the households in question all have 15-year-old children, they are likely to be at a similar stage of their life-cycles.

The data set is large, covering 800,000 households from 40 countries in three years: 2000, 2009 and 2012.

When the Motu economists converted it into a material wellbeing index, they found New Zealand ranked third highest in the 2012 survey after the US and Canada. In 2000 we were fourth and in 2009 second.

New Zealand's consistently high rankings partly reflect relatively high rates of ownership of cars and bathrooms, apparently second and seventh highest on average respectively in the 2012 survey.

In other categories New Zealand scored lower, however: 23rd for the average number of bedrooms (adjusted for household size) and 24th for the proportion of households with a quiet place for a kid to study. Those rankings might reflect housing pressures in Auckland, Grimes and Hyland suggest.

During the years of economic expansion between 2000 and 2009, their material wellbeing index for New Zealand rose by an average of 2.4 per cent per annum, just above the median for the 40 countries of 2.3 per cent. Between 2009 and 2012 it declined 0.7 per cent a year.

Contrary to the message from per capita production statistics, New Zealand families with secondary school aged children have a high standard of material wellbeing relative to their international peers even in Australia, Britain or Scandinavia, Grimes and Hyland conclude.

New Zealand's very high material wellbeing levels for households that have a 15-year-old child calls into question the oft-cited negative impression of material living standards in New Zealand compared with other developed countries.

Arthur Grimes and Sean Hyland

In short, they say, "our households (with secondary school-aged children) have amongst the highest material living standards in the world.

"New Zealand's very high material wellbeing levels for households that have a 15-year-old child calls into question the oft-cited negative impression of material living standards in New Zealand compared with other developed countries."

Some caveats attach to that cheerful conclusion, however.

We don't rank nearly as well for equality as we do for the average level.

When the Motu economists also interrogated the Pisa data for what it says about inequality, they found New Zealand households (at least those with a 15-year-old) in the middle of the pack: 20th among the 40 countries covered, between the US and Britain.

As in all but two of the 40 countries, inequality reduced between 2000 and 2012, even with a "negligible" decrease between the 2009 and 2012 surveys.

The reasons for that inequality and the associated "long tail" of educational under-performance are no doubt complex. But Grimes and Hyland point to the fact that inequality reduced between 2000 and 2009 as evidence that the problems are not intractable and improvements are possible.

Secondly, the data compare households with a 15-year-old, not households generally. Cross-country comparisons of other household types might not be so flattering.

Among the households the Pisa data give an insight into, attitudes towards debt or access to credit differ materially from one country to another. It might be that New Zealanders have an unusually hearty appetite for debt.

Income varies over an individual's life cycle and it is desirable to dampen fluctuations in consumption by borrowing and saving.

So Grimes and Hyland argue it is a strength of their measure of wellbeing that it reflects that, when static income-based measures do not.

They found some variation in the level of material wellbeing among countries with a similar level of gross national income per capita. In particular, the English-speaking "settler" countries - the US, Canada, Australia and New Zealand - recorded higher scores in their material wellbeing indices than did countries with similar national incomes per capita.

That variation, they found, is best explained by differences in access to credit, which makes it easier for households in those countries to afford better housing earlier, and easier to buy cars.