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Money doesn't buy happiness

in Family Law by Matthew Bilsborough on

Relationship breakdown has a substantial negative impact on the income and assets of the separating parties, in particular women, and also leads to social exclusion and related detriment to mental health. The impact of these issues is analysed in detail in a report funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs.

In 2001 Melbourne University’s Faculty of Business and Economics began the Household, Income and Labour Dynamics in Australia Survey (HILDA), a national survey to collect data on Australian households relating to issues of family relationships, employment, health and well-being  HILDA took a large sample of Australian households as participants which has formed the basis of the households to be interviewed in each subsequent year.

The annual report released in 2012 examines the nine ‘waves’ of data collected annually between 2001 and 2009. This data formed the basis for a research paper by the Australian Institute of Family Studies (AIFS),[1] which examined the consequences of relationship breakdown on men and women.

This article examines a very select part of the HILDA survey and AIFS research paper by focusing on the impact of relationship breakdown on income and mental health. The survey and research paper include a much broader analysis of the issues within the wider social context.

The AIFS research paper used three principal measures of financial wellbeing to examine how men and women aged less than 55 years were impacted following divorce:[2]

  1. the equivalised household income[3],
  2. net household assets and
  3. government payments received.

In relation to household income, the impact of relationship breakdown is evidenced by the reduction in household income itself and also by the slower rate of income growth in the years following divorce compared to that if the relationship had not broken down.

For women who did not divorce, household income increased by 12.3% in the first four years of the study from $37,102 to $41,668. Women who were divorced had an income of just over $33,000 immediately before their divorce, and within one year their household income had decreased sharply to $26,168. Over the next four years, their income increased steadily at a rate of 2.9% to $34,061, and the data from the 2012 HILDA survey shows that women’s incomes continued to increase at a similar rate over the second four year period.

For men who did not divorce, household income increased by 12.1% in the first four years from $36,699 to $41,157. Like their female counterparts, men who were divorced had an income of just over $33,000 immediately before their divorce. However, in stark contrast to the women, the men’s income increased in the first year following divorce, and of greater significance, it continued to increase at a rate of 12.5% over the next four years. Again, the data from the 2012 HILDA survey shows that men’s incomes continued to increase at a similar rate over the second four-year period.

These statistics paint a clear picture of the financial disparity between men and women in the years following divorce, most importantly a 10% difference in the rate of increase in their incomes. The figures also illustrate the higher rate at which both men’s and women’s incomes may have increased had they not divorced. However, this comparison should be treated with caution since the demographic of the participants in the survey who were divorced, including their education and professional qualifications, were different from those who did not divorce.[4]

While the financial consequences of relationship breakdown are more easily quantified and form the central focus of most studies, the impact of divorce on the health and wellbeing of men and women is often overlooked. The HILDA survey collected data relating to the mental health, social activity, loneliness and life satisfaction of men and women who were not divorced and also those following a divorce.

The mental health of survey participants was assessed by completing the SF-36 Health Survey, which uses a 36 item questionnaire intended to measure health outcomes from a patient point of view and place them on a scale of zero to 100, with the higher score representing a better state of health and well being.

From 2001 to 2009, the mean scores for non-divorced men under 55 years of age fluctuated between 70 and 75, but always remained above 70. By comparison, those men who divorced obtained a mean score of 64 immediately before their divorce, which then dropped rapidly to 57 in the year after. It remained below a score of 60 for a period of approximately two years, before gradually increasing to a score of 63 four years after divorce.

The mean score for non-divorced women under 55 years of age maintained a score just above 70 for a majority of the period of the study, similar to that of non-divorced men. In relation to the female participants in the survey who were divorced, their mean score was just above 60 immediately before divorce and dropped slightly to just below 60 after divorce. Within the next three years, the mean score of the divorced women increased sharply to a score of 65, before a gradual decline to a similar mean score to that of the divorced men at around four years after divorce.

The greatest contrast is in the three years immediately following divorce, during which the mental health of women significantly improves, compared with that of men, which stagnates and then gradually improves to be on par with women at around four years after the divorce.

Similarly, amongst the women who divorced, around 12% reported feeling isolated immediately before their divorce and this percentage did not change in the two years after their divorce. In stark contrast, for men who divorced the percentage who reported feeling isolated increased from 13% before divorce to 23% within the two years after their divorce. While there was some fluctuation in the following years, a greater percentage of men than women consistently reported feelings of loneliness and isolation across the period of the study from 2001 to 2009. During the same period, there was little distinction amongst non-divorced men and women under 55, with just under 10% of both sexes reporting feeling isolated.

This selective analysis serves to highlight the different way in which relationship breakdown impacts on men and women.

In relation to property division following relationship breakdown, Family Law makes provision for parties with greater future needs and lesser income earning capacity. In addition, government addresses the negative economic consequences through social protection systems, including benefits paid on an income and asset tested basis, which seek to remedy the long term economic impacts faced by separated parties, and in particular single parent families.

The mental health and well being of divorced men and women forms part of a broader social issue, with assistance for those suffering the ‘invisible illness’ resting on the ability of government to adequately fund education and support services in light of a growing social need and changing social landscape.

For more information, see Family Law.

 

[1] The financial consequences of relationship breakdown and the implications for the Australian social protection system, David de Vaus, Matthew Gray, Lixia Qu & David Stanton, Australian Institute of Family Studies.
[2] Throughout this article, the term ‘divorce’ is used to refer to both marriage and de facto relationship.
[3] Equivalised household income is total household income adjusted to facilitate comparison of income levels between households of differing size and composition.
[4] The effect of relationship breakdown on income and social exclusion, David de Vaus,  Matthew Gray, Lixia Qu and David Stanton, 8 July 2009, page 9.
 

 

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