2901.0 - Census Dictionary, 2006 (Reissue)
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 17/11/2006  Reissue
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Contents >> Glossary >> Household Income - Equivalised (HIED)

Household Income - Equivalised (HIED)

Equivalised household income is total household income adjusted by the application of an equivalence scale to facilitate comparison of income levels between households of differing size and composition, reflecting the requirement of a larger household to have a higher level of income to achieve the same standard of living as a smaller household.

Equivalised household income is derived by calculating an equivalence factor according to the 'modified OECD' equivalence scale, and then dividing income by the factor. The equivalence factor is built up by allocating points to each person in a household (1 point to the first adult, 0.5 points to each additional person who is 15 years and over, and 0.3 to each child under the age of 15) and then summing the equivalence points of all household members.

Equivalised household income can be viewed as an indicator of the economic resources available to a standardised household. For a lone person household it is equal to household income. For a household comprising more than one person, it is an indicator of the household income that would be needed by a lone person household to enjoy the same level of economic wellbeing.

Alternatively, equivalised household income can also be viewed as an indicator of the economic resources available to each individual in a household. Mean equivalised household income is therefore usually calculated by adding the equivalised household income of all persons, and then dividing by the number of persons. This enables people in large households to have the same contribution to the mean as people living alone.

Family income is not equivalised. All people in a household benefit from significant economies of scale in terms of their housing costs, regardless of whether they are in the same family or not. Therefore the most appropriate indicator of the standard of living of a family is still the equivalised income of the household in which they live.

A more detailed explanation is given in appendix 3 of Household Income and Income Distribution, Australia (cat. no. 6523.0).

For the dwelling variable Equivalised Household Income (HIED), where children were absent from the household on Census Night, they were included in the calculation. Visitors and people in 'Not applicable' categories were excluded from the calculation.

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