1287.0 - Standards for Income Variables, Jun 2015  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 30/06/2015   
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Statistical units

This section outlines the main statistical units used for income data in household collections and the reference period to which the statistics refer.

Statistical units are the basic units for which information is sought and for which statistics are compiled and analysed. Income data may be collected, compiled and analysed in respect of the following statistical units: persons, income units, families, and households.

A short description of each of the statistical units is provided below. The operational definitions are detailed in the ABS standards for Family, Household and Income Unit Variables (cat. no. 1286.0).

(i) Person

The person unit relates to the individual members of households.

Income of persons is not usually a good proxy indicator or measure of economic wellbeing. This is because there is usually some sharing of income within families and households and the income of each member will affect the standard of living of the whole group to some extent.

(ii) Income unit

The ABS nominal definition for 'income unit' is 'a group of two or more related people in the same household assumed to pool their income and savings and to share the benefits deriving from them equitably; or one person assumed to have sole command over their income, consumption and savings.' The income unit is similar to the unit used in determining the eligibility of people for many government pensions and allowances.

(iii) Family

The ABS nominal definition of 'family' is 'two or more related people who usually live together.' This definition is more restrictive than the usually accepted notion of the term 'family' which includes relatives whether they live together or not. This is because for statistical purposes it is necessary to place some physical boundary around the extent of family for the purely pragmatic purpose of being able to collect family data.

(iv) Household

The ABS nominal definition of a 'household' is 'one or more persons usually resident in the same private dwelling'.

Household income, rather than personal or income unit income, is generally the preferred measure for analysis of people's economic wellbeing as the major determinant of economic wellbeing for most people is the level of income they and other family members living in the same dwelling receive. While income is usually received by individuals, it is normally shared between partners in a couple relationship and with dependent children. To a lesser extent, it may be shared with other children, other relatives and possibly other people living in the same household, for example through the provision of free or cheap accommodation. Even when there is no transfer of income between members of a household, nor provision of free or cheap accommodation, members are still likely to benefit from the economies of scale that arise from sharing a dwelling.

When the household is used as the unit of analysis for income, adjustments to the actual incomes of households should be made to enable analysis of the relative wellbeing of households of different sizes and composition (see Equivalised household income for further information).

Reference period

The international standards state that household income statistics should relate to a full-year accounting period to take into account seasonal variations in incomes. Annual income is income obtained from all sources over a period of a year. It has the advantage of being less sensitive to short term variations in income, such as a person having little or no current income for a short period of unemployment but adequate resources from past employment or prospective employment to avoid economic hardship. There are, however, some major disadvantages and practical difficulties in using annual income in practice:

    • given that it is necessary to collect annual income for the previous financial year (after records have been finalised for taxation purposes), the data may be quite old by the time it is released,
    • respondents to surveys may have difficulty recalling the income received over a period as long as a year, in particular those with periods of employment and unemployment, casual work and part-time work, and
    • income received in the previous financial year may not relate directly to the socio-economic and other characteristics of the household at the time a particular survey is run.
Therefore, for most purposes, the ABS prefers to collect 'current' income, that is, income being received at the time the data are collected from respondents. Current income provides the most up to date information available and in some cases the most accurate information available. It also relates most closely to the characteristics of persons and households at the time of the collection.