Measuring multi-dimensional wellbeing in poverty helps inform more effective policy

Published on the 04 March 2026

Happy, smiling grandson hugs his grandmother

A new poverty framework from the ACOSS/UNSW Poverty & Inequality partnership prioritises multi-dimensional poverty measures. Photo: Adobe Stock images.

Evidence-led direct measures that examine poverty’s impact on people’s lives enable a more nuanced policy response.

A new poverty framework from the ACOSS/UNSW Poverty and Inequality Partnership highlights the need to include measures of inadequate living standards alongside income-based indicators to address poverty and inequality.

Defining poverty to reflect individual experiences and measure the things that matter to people is complex, says research co-lead Dr Yuvisthi Naidoo from the UNSW Social Policy Research Centre (SPRC).

“Income-based measures – such as poverty lines – measure economic resources or the minimum needed to avoid poverty; they identify people who are likely to face poverty.

“More direct measures of poverty – for example, inadequate diet, insecure housing, poor health – focus on the experience of living in poverty. These two measures are mutually reinforcing [feeding and cumulatively exacerbating people’s experiences of poverty].”

Dr Naidoo is an expert in the measurement and understanding of living standards. Her research explores poverty, inequality, material deprivation, costs of living and wellbeing.

Including more direct measures – the outcomes of inadequate economic resources – across different domains of living standards is essential for understanding and addressing poverty, she says.

“They help us to benchmark what constitutes unacceptably low living standards and inform policy development to ease poverty beyond income support, including through housing, health and educational assistance.

“Our research maps a framework for government consultation with experts, advocates and people directly affected to develop a set of poverty measures across these two dimensions.

“A dual approach using income-based metrics complemented by direct or multidimensional measures will ensure a more nuanced understanding of poverty, its scale and persistence.”

The argument for multi-dimensional measures of poverty is outlined in Poverty measurement: A poverty and inequality partnership position paper. It was published in a special edition of the Australian Economic Review commemorating the 50th anniversary of the Henderson Commission of Inquiry into Poverty in Australia.

Dr Naidoo co-authored the papers with Associate Professor Bruce Bradbury (SPRC) and Dr Peter Davidson, Policy Advisor from ACOSS.

The multi-dimensional measures are based on consultations with research partners, ACOSS members and national poverty academics. The recommendations will also inform the partnership’s research plans and methodology going forward.

Developing national poverty measures critical to meeting UN’s SDG poverty goals

The position paper reflects the growing consensus amongst scholars, economists and government of the need to include multi-dimensional poverty measures and the lived expertise of people at risk of poverty for effective policy reform, Dr Naidoo says.

“If we’re serious about making a difference, we need to centre the voices of those who live with uncertainty and insecurity, who are directly impacted by poverty and disadvantage.”

One in seven adults and one in six children in Australia are living in poverty. Australia has the 15^th highest poverty rate of the 34 wealthiest countries in the Organisation for Economic Co-operation and Development (OECD).

“Our adoption of the United Nations Sustainable Development Goals requires us to reduce poverty in relation to a national definition,” Dr Naidoo says.

“But unlike most countries, Australia lacks an official poverty measure. By informing the development of this – by using evidence-led approaches to illuminate poverty’s impacts on people’s lives – the paper helps close a critical gap in national progress indicators.”

Examining material deprivation makes evident poverty’s impact

The paper draws on the ACOSS/UNSW partnership’s recent research on material deprivation. The report Material Deprivation in Australia: The Essentials of Life was co-authored by Dr Naidoo, Dr Melissa Wong and Dr Ciara Smyth (SPRC), and Dr Davidson.

“Material deprivation relates to essential items or activities people have to go without, because they cannot afford them,” she says. “While we had rich qualitative insights into people’s experiences of poverty, we didn’t know what they were missing out on.

“Material deprivation asks, can you afford rent, healthy food or a trip to the doctor? Can your kids join in on school activities? Do your social security payments cover enough for you to participate fully in society?” she says.

“It shows it’s not just people identified as living in income poverty who are experiencing material deprivation.”

The positioning paper advocates for defining people as ‘living in poverty’ if their incomes are less than 50% of median equivalent household disposable income, and as used by the OECD, supplemented with a ‘risk of poverty’ measure based on 60% of median income.

While 14.6% of Australians lived below this poverty line (after housing costs are excluded) in 2022, people on a JobSeeker Payment were five times more likely to miss out on essential items, for example, dental treatment, to be able to keep at least one room warm, or to be able to save $500 for emergencies, the research found.

“Such inequities demonstrate the need to capture a more complete picture of poverty.”

Using budget standards as an adequacy measure

The paper draws on SPRC’s research on budget standards to inform and validate income-based measures. Budget standards are minimum household budgets developed to calculate the cost of essential goods and services.

“They provide the choice and price of an itemised basket of goods – clothing, housing, food – that families or individuals in metropolitan areas need to have a decent quality of life.”

In 2022, Dr Naidoo and colleagues at the SPRC were commissioned by the Fair Work Commission to update budget standards, leading to an increase in the national minimum wage. In 2024, the Economic Inclusion and Advisory Committee (EIAC), an independent advisory body to government, commissioned them to provide budget standards for one rural area (Fitzroy Crossing) for the first time.

Drawing on international best practice identified in the review, the 2024 paper recommends budget standards research be undertaken at least every five years to validate poverty thresholds. “The budget standards are a practical tool used to ascertain the adequacy of social security benefits,” Dr Naidoo says.

“For example, whether child-support payments are sufficient when parents separate or the cost of raising a child in out-of-home care. The measure is instrumental in guiding strategic policy.”

From deficit frames to considering wellbeing and a ‘good’ life

When you’re living below the poverty line, when you can’t afford your basic needs, there are consequences to your overall wellbeing, Dr Naidoo says.

“It affects your capacity to participate in society – all those things that are important for your mental and physical health and your emotional wellbeing.”

Subjective and financial wellbeing measures offer another dimension of the impacts of poverty, she says. The partnership research on material deprivation looked at life satisfaction, financial satisfaction and financial stress.

“People experiencing material deprivation, living below the poverty line or living with very low wealth are more likely to report lower life satisfaction, lower financial satisfaction and increased financial stress.

“On average, sole parent families, unemployed households, First Nations people and households renting social housing report elevated levels of financial dissatisfaction and elevated levels of financial stress.”

Dr Naidoo’s dissertation research has identified a social indicator wellbeing framework to measure the economic standard of living and multi-dimensional well-being of individuals at risk of poverty.

“On an individual level, wellbeing requires economic stability (or a lack of financial stress), physical health, good personal relationships, community participation and a supportive neighbourhood environment.

“It’s about the impact of your geography, your climate, your freedoms, your capacity to make choices, of having opportunities available that you can embrace.”

In July 2023, the Federal Government launched Australia’s first national wellbeing framework. Measuring What Matters aims to track progress towards a more healthy, secure, sustainable, cohesive and prosperous Australia.

At this stage, the wellbeing framework fails to consider poverty and its impacts, but it represents a positive shift, Dr Naidoo says. “The landscape of disadvantage is complex, but when we look at the dynamics of poverty, of inequality, these seemingly intractable problems are in fact problems with social policy.”

While policies can’t remedy these issues overnight, they’re opportunities to provoke change, she says. “When we look at poverty or disadvantage, this is inevitably a deficit frame; we’re asking how social policies and systems can reduce those gaps.

“But in doing this, we can move towards a more positive model, to ask what it means to have a good life, to identify the living standards we want for everyone, and to support this through effective evidence-led policy.”