1504.0 - Methodological News, Sep 2003  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 27/02/2004   
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The Socio-Economic Indexes for Areas are a number of indexes summarising information from a large number of variables on the Census. The technique used is Principal Components Analysis, which derives weights to maximise the correlation between all the variables in the analysis. The weights are then applied to standardised raw data to derive the indexes.

The indexes were first officially calculated in 1990 using data from the 1986 Census. At the time, a great deal of work was done on identifying which variables should contribute to an index of disadvantage. Users and academics of the time were consulted to determine which variables to include.

For the 2001 Indexes, a wide ranging review was decided upon, which covered the variables, the method, and the output. The review included a great deal of user consultation, including visits and tele-conferences with users in each State; visits to Commonwealth Public Service departments; representation in information groups; and direct Email with users.

The review started with an issues paper, to put on the table what were thought to be the major issues. This was sent to each of the users and comments were taken. On the basis of these comments, a Position Paper was written, which outlined the issue, analysis, and proposed position on each issue. This position paper was released to users for comment.

Comments on the position paper were fairly positive. However, the position paper did highlight one area of concern (that of dropping the Postcode level index), so the postcode level index was brought back in.

The review highlighted the fact that there is not a variable selection strategy for SEIFA, so a strategy was developed which prioritised variables into three groups: those directly to do with Socio-Economic Status (Income, Education and Occupation); those directly measuring an aspect of disadvantage (disadvantage is a broader concept than socio-economic status, and covers aspects like wealth, language, access to services); and those variables which could be used as a proxy for an aspect of disadvantage. The last group were only included in the Disadvantage Index for the 2001 SEIFA. There was no guarantee they were associated with the aspect of disadvantage which was trying to be measured; and much of the disadvantage could already be captured with other variables. An example is Indigenous persons; it is difficult to pinpoint any additional disadvantages beyond what is already captured with low income and unemployed variables.

This also means the 2001 Disadvantage Index uses the same variables (but different weights) as the 1996 Disadvantage Index, giving a consistent series.

The review also found that very few people used the Urban and Rural Indexes of Advantage, so they have been replaced with one index of Advantage/ Disadvantage. This index is on a continuum from high disadvantage to high advantage; rather than high disadvantage to low disadvantage (which the Disadvantage index measures). In the Advantage/ Disadvantage index, disadvantage variables are offset by advantage.

Additional work is planned before the 2006 Indexes, including how income groups can be equalised for family size; and whether it is necessary to age-standardise any variables.

The indexes will be released in October.

For more information, please contact Robert Tanton on (02) 6252 5506.

Email: robert.tanton@abs.gov.au.