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TECHNICAL NOTE 2 DATA RELIABILITY


SAMPLE ERROR

1 For each of 2001-02 and 2002-03, the economic activity survey was, in part, a sample survey designed primarily to deliver national estimates for most industry divisions. Experimental estimates at the national level for industry class and at the state and territory level for industry division were also produced.

2 The majority of data contained in this publication have been obtained from a sample of businesses. As such, these data are subject to sampling variability; that is, they may differ from the figures that would have been produced if the data had been obtained from all businesses in the population. The measure of the likely difference as used by the ABS is given by the standard error, which indicates the extent to which an estimate might have varied by chance because the data were obtained from only a sample of units. There are about two chances in three that a sample estimate will differ by less than one standard error from the figure that would have been obtained if the data had been obtained from all units, and about 19 chances in 20 that the difference will be less than two standard errors.

3 The standard error can also be expressed as a percentage of the estimate, and this is known as the relative standard error (RSE). RSEs at the industry division level for Australia for selected data items representing the full range of data contained in this publication are shown in Technical Note 3. Detailed relative standard errors can be made available on request.

4 The size of the RSE may be a misleading indicator of the reliability of some of the estimates for industry value added (IVA) and operating profit before tax (OPBT). This situation may occur where an estimate may legitimately include positive and negative values, reflecting the financial performance of individual businesses. In these cases, the aggregated estimate can be small relative to the contribution of individual businesses, resulting in a standard error which is large relative to the estimate.

5 Some estimates presented in this publication rely on techniques in which proportions and relationships from data collected by the Australian Bureau of Statistics (ABS) are applied to business income tax (BIT) data sourced from the Australian Taxation Office (ATO), in order to provide estimates of items not available from the ATO BIT files. This technique, known as proration, has implications for reliability of the relevant RSEs as a measure of quality. Items appearing in this publication and which are derived by proration are:

Average industry value added
Average sales and service income
Cost of sales
Gross fixed capital formation
Income from services
Industry value added
Interest income
Investment rate value added
Other operating expenses
Other selected income
Rent, leasing and hiring income
Sales and service income
Sales of goods.

7 The RSEs presented or annotated in this publication are based on calculations that do not distinguish between prorated and non-prorated items. The ABS is currently investigating methodologies that will allow more reliable RSEs to be derived for prorated items for future editions of this publication. Based on this work, the table below gives an indicative comparison between RSEs for representative prorated items using the existing methodology and those that would result from a methodology that specifically takes proration into account. RSE values relate to 2002-03 estimates only, and are expressed in terms of the ranges that are used to annotate the tables in this publication. Please note that this alternative methodology is not suitable for some industries, because of the design of the surveys that relate to them; hence, they are not included in the table.

	Sales of goods	Income from services	Sales and service income(a)	Industry value added
Industry division(b)	%	%	%	%
RSE RANGE using existing methodology(c)
Agriculture, forestry and fishing	. .	. .	. .	. .
Wholesale trade	. .	. .	. .	. .
Retail trade	. .	. .	. .	. .
Accommodation, cafes and restaurants	. .	. .	. .	. .
Transport and storage	. .	. .	. .	. .
Communication services	. .	. .	. .	. .
Property and business services	. .	. .	. .	. .
Education (private)	10 to <25	. .	. .	. .
Health and community services (private)	10 to <25	. .	. .	. .
Cultural and recreational services	. .	. .	. .	. .
Personal and other services	. .	. .	. .	. .
RSE RANGE using proration-based methodology(c)
Agriculture, forestry and fishing	. .	10 to <25	. .	25 to <50
Wholesale trade	. .	10 to <25	. .	10 to <25
Retail trade	. .	. .	. .	. .
Accommodation, cafes and restaurants	. .	. .	. .	10 to <25
Transport and storage	10 to <25	. .	. .	. .
Communication services	. .	. .	. .	. .
Property and business services	10 to <25	. .	. .	. .
Education (private)	10 to <25	. .	. .	. .
Health and community services (private)	10 to <25	. .	. .	. .
Cultural and recreational services	10 to <25	. .	. .	. .
Personal and other services	10 to <25	. .	. .	10 to <25
. . not applicable
(a) Includes rent, leasing and hiring income.
(b) For scope details, see Explanatory Notes paragraphs 11-13.
(c) Excludes RSEs of less than 10%.

ANZSIC class experimental estimates

8 Experimental estimates at the ANZSIC class level are shown in Chapter 3 of this publication. This is the finest level of classification in the ANZSIC. It is only the incorporation of ATO BIT data that has made it feasible to produce estimates to this degree of industry detail, as the relatively small sample size of the EAS (directly collected) collection does not allow for the compilation of reliable estimates generally below the ANZSIC subdivision level. A broad general indication of the reliability of estimates at the ANZSIC class level is provided by the RSEs shown in Technical Note 3 for the industry division to which the class belongs.

9 Approximately 97% of the ANZSIC class level estimates for total income have RSEs of less than 25%. As annotated in table 3.1, some of the RSEs are relatively large and, therefore, the estimates to which they relate should be used with extreme caution.

State/territory experimental estimates

10 The design of the EAS sample does not take into account state/territory, and this could affect the size of the sample error at the state/territory level. To some extent, this is offset by the use of BIT data, which effectively increases the sample size, resulting in a broader coverage of units for each state/territory.

NON-SAMPLE ERROR

11 The imprecision due to sampling variability, which is measured by the standard error, should not be confused with inaccuracies that may occur because of inadequacies in available sources from which the population frame was compiled, imperfections in reporting by providers, errors made in collection such as in recording and coding data, and errors made in processing data. Inaccuracies of this kind are referred to collectively as non-sampling error and they may occur in any enumeration, whether it be a full census or a sample.

12 While it is not possible to quantify non-sampling error, every effort is made to reduce it to a minimum. Collection forms are designed to be easy to complete and assist businesses to report accurately. Efficient and effective operating procedures and systems are used to compile the statistics. The ABS compares data from different ABS (and non-ABS) sources relating to the one industry, to ensure consistency and coherence.

13 There are also non-sampling errors associated with the BIT data sourced from the ATO. For example, the ATO treats any non-response by either bringing forward the previous year's data for a non-responding business, or imputing the data as zero if there are no previous data to use.

14 Differences in accounting policy and practices across businesses and industries can also lead to some inconsistencies in the data used to compile the estimates. While much of the accounting process is subject to standards, there remains a great deal of flexibility available to individual businesses in the accounting policies and practices that they adopt.

15 The class level estimates in this publication can sometimes differ from those produced by the ABS's Service Industries program of surveys, which deliver detailed data of industry structure and performance for individual ANZSIC classes. For details, see Appendix 2.

16 Because direct collection has not been used to apportion EAS estimates to states and territories, some non-sample error will result from the techniques used to produce state/territory experimental estimates. For full details of the methodology used to allocate estimates to states and territories, please refer to Technical Note 1 paragraphs 13-18.

17 The above limitations are not meant to imply that analysis based on these data should be avoided, only that the limitations should be borne in mind when interpreting the data presented in this publication. This publication presents a wide range of data that can be used to analyse business and industry performance. It is important that any analysis be based upon the range of data presented rather than focusing on one variable.