Disagreement in Australian Partners' Reports of Financial Difficulty

Abstract

We use unique data in which both partners report about household finances to demonstrate that there is often disagreement about whether the household has experienced financial difficulty in the past year. Four alternative explanations for this disagreement are tested using the data. The results indicate that disagreement may be related to the severity of the underlying material hardship rather than to gender differences or individual (as opposed to household) views of financial difficulty. We find limited evidence that for some couples information asymmetries contribute to explaining disagreement about financial difficulty. This implies that standard surveys which collect information about the household's financial position from a representative individual may fail to completely characterize the nature of material hardship.