Conceptual framework

For IHAD 2021, the concept of household level socio-economic advantage and disadvantage is the same as that used in the Experimental IHAD 2016. That is, the ABS broadly defines relative household socio-economic advantage and disadvantage in terms of 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). This concept is described as ‘broadly defined’ in recognition of the many concepts that have emerged in the literature to describe advantage and disadvantage.

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. 

Since relative socio-economic advantage and disadvantage is a complex and multidimensional concept, it is difficult to condense into a single index with a manageable, accessible framework. The limitations of the data collected in the Census also place restrictions on the scope of the notion of advantage and disadvantage available to be used. The most important elements covered by SEIFA, the IHAD, and other socio-economic indexes developed around the world, include income, education, employment, occupation, housing, and family structure. Variables have been selected from these dimensions and are discussed further in the Description of candidate IHAD variables.

An important point to consider is both what is measured by a socio-economic index, and what is not measured. This helps clarify the ability of the index to accurately measure household relative socio-economic advantage and disadvantage (Wise and Mathews, 2011). Defining the concept behind IHAD provides more information on the index. 

This section gives a description of the concept behind IHAD. For a list of the variables included, refer to the Technical details for IHAD: variables and loadings.

The IHAD summarises information about the economic and social conditions of people within households, including both relative advantage and disadvantage measures.

Household scores are created by adding together the weighted measures of the 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.

A low score indicates relatively greater disadvantage and a lack of advantage in general. A high score indicates a relative lack of disadvantage and greater advantage in general. 

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

The individual household level IHAD scores are not available as outputs. Quantiles (deciles and quartiles) have been provided for analytical purposes.

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, with decile 1 representing the most disadvantaged households and decile 10 representing the most advantaged households. In practice these groups won’t each contain exactly 10% of households as it depends on the distribution of the IHAD scores. Note that the groups will have an approximately equal number of households, not an approximately equal number of persons.

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, with quartile 1 representing the most disadvantaged households and quartile 4 representing the most advantaged households. In practice these groups won’t each contain exactly 25% of households as it depends on the distribution of the IHAD scores. Note that the groups will have an approximately equal number of households, not an approximately equal number of persons.