The impact of poverty on self-efficacy: an Australian longitudinal study

Background: People with strong feelings of 'self-efficacy', i.e. how much a person feels they have control over their life, perform better in the workplace. However, little is known about negative influences on feelings of self-efficacy. In view of the increasing number of people whose income places them below the poverty line despite being in employment, poverty may negatively influence feelings of self-efficacy and hence workplace productivity.

Aims: To assess whether falling into poverty lowers self-efficacy.

Methods: Longitudinal analysis of waves 7 to 11 of the nationally representative Household, Income and Labour Dynamics in Australia (HILDA) survey, using linear regression models.

Results: Those who fell into multidimensional poverty (income poverty plus poor health or insufficient level of education attainment) had significantly lower self-efficacy scores (up to 18% lower (95% CI -31% to -1%, P < 0.05)) than those never in poverty, after accounting for initial self-efficacy score and other confounding factors. Income uniquely accounted for 3% of the variance in self-efficacy scores, physical health for 10%, mental health for 78% and education for 1%.

Conclusions: Given the known links between self-efficacy and workplace productivity, workers who are below the poverty line may be at risk of poor productivity due to the experience of poverty. In addition to the poor outcomes from the employer's perceptive, this may also lead to a negative spiral for the employee.