Index of Household Advantage and Disadvantage methodology

The Index of Household Advantage and Disadvantage (IHAD) was first produced as an experimental index in 2018, based on 2016 Census of Population and Housing (Census) data and funded by the ACT government. The updated 2021 IHAD is funded by the Australian Government Department of Education (AGDE).

The Index of Household Advantage and Disadvantage (IHAD) is an analytical index developed by the Australian Bureau of Statistics (ABS) that provides a summary measure of relative socio-economic advantage and disadvantage at the household level. IHAD utilises information from the Census on the characteristics of individual dwellings and the people living within them.

IHAD complements the area level rankings given by Socio-Economic Indexes for Areas (SEIFA) Index of Relative Socio-economic Advantage and Disadvantage (IRSAD), by allowing the relationship between area level advantage/disadvantage and household level advantage/disadvantage to be explored. 

SEIFA IRSAD index values are assigned to areas, not to persons or households. Within any area there are likely to be households with different characteristics to the overall population of that area. For example, a relatively disadvantaged area is likely to contain households that are relatively advantaged; likewise, a relatively advantaged area is likely to contain households that are relatively disadvantaged. IHAD quantiles summarise the diversity of area level advantage and disadvantage at household level, adding value to the use of SEIFA IRSAD for research and planning.

Because IHAD is derived at household level it can be cross classified with other Census variables not included in the index. This could be used to assist in exploring advantage and disadvantage for different population groups. 

The concept of household level socio-economic disadvantage for IHAD relates to the individual access to resources of people living within households and their ability to collectively share these resources in order to participate in society (Wise and Williamson, 2013). 

In most households, members often pool their income and resources, and share similar living characteristics. A household can still be advantaged overall as a unit even if it contains some less advantaged members. This support isn’t restricted to economic aspects; for example, children within households containing people with higher levels of education may be more advantaged in educational outcomes than children in households containing people with lower levels of education.

The data items or variables included in IHAD are constrained by what is collected in the Census; they include income, education, employment, occupation, housing, and family structure.

Variables from the Census were included in the initial candidate variable list for IHAD if they were deemed to be related to the definition of advantage and disadvantage that the IHAD is intending to capture.

IHAD is constructed from 2021 Census data, with variables derived as binary indicators. Variables typically relate to persons but also relate to families or dwellings. Family and person level variables have been derived at the household level. For example, for the candidate variable ‘households where the person with the highest educational attainment has a Bachelor Degree or above’, the highest qualification for all in scope persons in the household is considered and if one person has a Bachelor Degree or higher, the derived variable has a value of 1. If no people in the household have a Bachelor Degree or higher, the value is 0. For the candidate variable ‘households where all people aged 15 years and over are unemployed’ if all in scope people aged 15 years and over in the household have labour force status unemployed, the derived variable will have a value of 1, otherwise it will have a value of 0.

The scope of the IHAD is private dwellings that were occupied on Census Night. Non-classifiable occupied private dwellings (e.g. dwellings that only contained visitors) and unoccupied private dwellings were excluded. This accounted for approximately 1.6 million dwellings or 14.5% of all private dwellings. Approximately 1.0 million (9.6%) were unoccupied private dwellings; 0.5 million (4.9%) were non-classifiable occupied private dwellings. Non-private dwellings, offshore, migratory, and shipping were also excluded. Note that residents in boarding houses and hostels are not included as these are classified as non-private dwellings.

Data quality considerations for construction of an index at household level centre on the level of non-response to Census questions. Households with 10 or more missing candidate variable responses did not receive an IHAD score (approximately 0.5% of in scope households). The proportion of households with three or fewer missing candidate variable responses was approximately 97%. For areas that did not receive an IRSAD score, IHAD quantile proportions are also not provided.

The measure obtained for IHAD is a weighted combination of Census variables. The method used to determine the weights and final variable composition is known as Principal Component Analysis (PCA). The weights describe the relative importance of each variable. If the weight determined by PCA for a variable is below a threshold, the variable would not meaningfully contribute to the index, so is excluded.

The variable weights are derived from a consistent, data-driven method and are not determined subjectively. 

Once the variable weights have been finalised, they are used together with the binary indicators to create index scores for all included households. For more detail, please see the Technical paper.

IHAD is checked to ensure the index is measuring the desired concept and that the results make intuitive sense. 

Validation includes:

• comparing IHAD 2021 results with IHAD 2016 results
• comparing IHAD 2021 results with SEIFA IRSAD 2021 results

• IHAD 2021 largely uses the same method as IHAD 2016. Where available, IHAD 2021 uses the same candidate variables as IHAD 2016.
• The ‘Does any member of this household access the internet from this dwelling?’ question was not asked in the 2021 Census, so the NONET variable (derived from the output NEDD - Dwelling Internet Connection variable) could not be used when calculating the IHAD scores.
• Occupation variables are based on the Australian and New Zealand Standard Classification of Occupations, Version 1.3 (ANZSCO).
• Variables using cut-off values as part of their specification, such as high and low income (INC_HIGH and INC_LOW), were updated.

A household is defined as one or more persons, at least one of whom is at least 15 years of age, usually resident in the same private dwelling. All occupants of a dwelling form a household. For Census purposes, the total number of households is equal to the total number of occupied private dwellings (Census of Population and Housing: Census Dictionary, 2021). This report refers to ‘household’ rather than dwelling, as the index is designed to represent advantage and disadvantage at household level. 

The Australian Statistical Geography Standard (ASGS) was used in the development and analysis of the index. Information about the ASGS is presented in Australian Statistical Geography Standard (ASGS): Edition 3.

The IHAD is constructed at the household level, based on the assumption that economic and other resources are generally shared within households, and therefore persons within households will share similar levels of socio-economic advantage and disadvantage. However, this may not always be the case, particularly for multi-family households, group households, and households containing lodgers or boarders. It is possible for a relatively advantaged person to be a resident in a relatively disadvantaged household or a relatively disadvantaged person to reside in a relatively advantaged household.

Quantiles are created based on assigning, as near as is practicable, equal numbers of households into each quantile (rather than equal numbers of persons). As larger households tend to have higher index values, more advantaged deciles tend to contain larger numbers of persons.

As the IHAD is constructed using Census variables, when undertaking analyses involving cross-tabulation of the IHAD with other Census variables not included in the index, users should examine the variables contained within the index to aid in the interpretation of those results. Refer to Included variables below for details of variables that were included in the IHAD.

The index is designed to compare socio-economic characteristics of a household at a point in time, not to compare households over time. There are several issues that make longitudinal or time series analysis of IHAD difficult to interpret.

• The constituent indicators and indicator weights for the index are likely to have changed.
• The distribution of the standardised index values will have changed (e.g., a score of 800 does not represent the same level of disadvantage in different years).
• Census variable changes will affect the variables used to calculate the IHAD scores.

Topics represented in IHAD are limited to what variables are collected in the Census.

Measures relating to wealth, access to services, and social/community participation may provide more information about the relative advantage or disadvantage within a household, but these measures are not collected in the Census.

Long-term health conditions, asked for the first time in the 2021 Census, were not included in IHAD. This is to allow health researchers to analyse the relationship between health outcomes and socio-economic advantage/disadvantage. Adding health variables to IHAD would make these relationships less clear.

Other potential topics that could be associated with advantage and disadvantage but are not captured in the Census include crime, and the environment. If data were available on these topics, they may provide additional information about the level of advantage and disadvantage present within households that could result in households being assigned a different index value. 

Proportional totals may equal more than 100% due to rounding and random adjustments made to the data. When calculating proportions, percentages, or ratios from cross-classified or small area tables, the random error introduced can be ignored except when very small cells are involved, in which case the impact on percentages and ratios can be significant. For more information see Introduced random error / perturbation.

Scores

Household scores are created by adding together the weighted characteristics of that household. The scores for all households are then standardised to a distribution where the mean equals 1,000 and the standard deviation is 100.

Lower scores indicate relatively disadvantaged households compared to households with higher scores.

Scores are an ordinal measure on an arbitrary scale and do not represent the quantity of advantage or disadvantage (i.e. it’s not accurate to say a household with a score of 1,000 is twice as advantaged as a household with a score of 500).

Individual household scores are not available. Quantiles (deciles and quartiles) have been provided and should be suitable for most purposes.

Deciles

Every household is ordered from lowest to highest score, with the lowest 10 per cent of households given a decile number of one, the next lowest 10 per cent of households given a decile number of two and so on, up to the highest 10 per cent of households which are given a decile number of 10. This means that households are divided up into 10 equal sized groups, based on their score.

Quartiles

Every household is ordered from lowest to highest score, with the lowest 25 per cent of households given a quartile number of one, the next lowest 25 per cent is given a quartile number two and so on, up to the highest 25 per cent of households which are given a quartile number of 4. This means that households are divided up into four equal sized groups, based on their score.

This section outlines the variables used in the Index of Household Advantage and Disadvantage (IHAD). These variables have been derived from standard Census output variables.

IHAD indicators of disadvantage

The following variables are indicators of disadvantage. PUBLIC_RENT is the strongest indicator of disadvantage in the index. 

IHAD indicators of advantage

The following variables are indicators of advantage. DEGREE_DEPENDENT is the strongest indicator of advantage in the index. 

The following variables were initially considered for the index but were excluded due to being highly correlated with other variables.