1287.0 - Standards for Income Variables, 2010
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 15/03/2010
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PERSON AND HOUSEHOLD DATA

22. When household income is adjusted according to an equivalence scale, it can be used for comparing the economic circumstances of households as well as comparing the economic circumstances of individuals.

23. '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 need to be received by a lone person household to enjoy the same level of economic wellbeing as the household in question.

24. Alternatively, 'Equivalised household income' can be viewed as an indicator of the economic resources available to each individual in a household.

MEASURES OF INCOME DISTRIBUTION

25. The preferred output categories for 'Equivalised household income' statistics divide the population into quantiles. Quantiles are derived by ranking persons (or any other units) from the lowest to the highest on the basis of some characteristic such as their household income (including units with zero or negative incomes). When the population is divided into five equally sized groups, the quantiles are called quintiles. Thus the first quintile will comprise the first two deciles and the first 20 percentiles.

26. 'Equivalised household income' quantiles should each comprise the same number of persons. This is because it is the number of people who belong to households with particular characteristics, rather than the number of households with those characteristics, that is of primary interest in measuring income distribution and leads to the preference for the equal representation of those persons in such analysis. For example, if the person is used as the unit of analysis rather than the household, then the representation in the income distribution of each person in a household comprising four persons should be the same as that for each person in a two person household. In contrast, if the household were to be used as the unit of analysis, each person in the four person household would only have half the representation of each person in the two person household.

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