University of Sydney researchers have recently identified an emerging feature of the economy that they believe needs to be more widely recognised and addressed.
They’ve called it the asset economy, describing it as an economic environment that favours people who own assets. They believe it is even causing the emergence of a new set of social classes in Australia.
“It used to be that if you had a better job, you’d more likely be better off,” says Professor Lisa Adkins from the University of Sydney's Faculty of Arts and Social Sciences. Now we’re in a new socio-economic phase favouring asset ownership."
The problem is that most of the broader economic community is still engaged with the older, job-centred model, a situation which is causing distortions and generating inappropriate economic settings, like tax regimes that drive up house prices so that even people with ‘good jobs’ can’t afford them.
“It’s already apparent that asset ownership is becoming more important – whether you have your own home, whether you will inherit housing or have assets like shares,” says political scientist, Professor Martijn Konings.
Asset ownership also lets people earn new income as wage rises and permanent employment become less dependable. For example, people using their own cars to become Uber drivers, or renting out rooms for Airbnb. It’s a situation that’s creating asset-haves and asset have-nots, most clearly demonstrated by housing affordability in Australian capital cities.
“That’s why we have to leave that old model behind,” says Professor Adkins. “And the best way to do that is to help people recognise and understand what’s happening by thinking about the economy in new ways.”
With this in mind, Professor Adkins is working as part of a research team that includes Professor Konings and Associate Professor Melinda Cooper, who has expertise in sociology and social policy.
The team’s goal is to find the approach that will allow people to talk about and understand the asset economy. They’re also working towards creating resources that can be reference points for news media, commentators, and government and commercial policymakers.
They want to make the asset economy part of the bigger, economic conversation.
Today, rates of home ownership in people up to 35 years old are 22 percent lower than 30 years ago. Parental assets have historically been instrumental for generations of young Australians in building their own futures, and the negative effects of fewer people owning their own homes could fundamentally change economic outcomes for middle Australia.
“It’s also changing how families operate,” Professor Cooper adds. “You hear it often enough – young people are staying with their parents for longer. We want to establish whether this is true. We also want to gather information on things like the transfer of wealth, intergenerational wealth and tax data.”
“It’s important to understand what’s going on with this. Not just for policymakers, but for all of us,” says Professor Adkins.