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This paper draws upon literature from economics, and the human capital and equity fields in order to present a theoretical framework for a new multidimensional measure of poverty for Australia. Poverty is about having low living standards; but its measurement has traditionally focused only on an individual's income or on other dimensions of living standards that are not appropriate for contemporary Australian society, such as calorie intake. There are two additional capabilities individuals require for adequate living standards: health and education. Each of these is required for basic functioning within modern society, but have traditionally been ignored by measures of poverty. This paper argues that health is a basic capability people need for a fulfilling life, allowing individuals to participate in activities essential in modern society, and that education can also be seen in this light. As such it is vital that health and education be included in measures of poverty. In order to move Australian poverty measurement forward and build upon the work of the past, poverty measurement must move its focus away from only looking at low income, and take a holistic focus on the living standards of individuals by incorporating assessments of health and education. [ABSTRACT FROM AUTHOR]

This paper explores which measures of health accurately reflect the functional capabilities of individuals -- that is, in what measures of health do those classified as having poorer health actually have poorer functional outcomes. Using the 2003 Survey of Disability, Ageing and Carers, cross-tabulations, chi-squared analysis, and logistic regression models were used to identify the relationship between functional outcomes (core activity limitations and employment and education participation) and various measures of health and disability (composite disability measure, health utility scores and general health assessment). Both the composite disability measure and the health utility score accurately capture individual functional capacity -- with both measures being related to employment participation, employment and education restrictions, and core activity imitations. The health utility scores can also be divided into a categorical measure and still reflect this functional capacity. The general health assessment measure is also related to functional capacity and can potentially be used in the place of both the composite disability measure and the health utility score. [ABSTRACT FROM AUTHOR]