Household/individual income – income paid to a family (household) or an individual over a given period of time, including all income sources (wages, salaries, investments, superannuation, government payments). Household income better reflects standard of living than individual income for many people, as many are part of a household which has more than one source of income, and where income is pooled and used for the whole household.

Equivalised household/family income – the average income available to a household/family after adjusting for the size and structure of the household/family, to ensure different households are comparable.

Income can be measured as weekly, monthly or annual income. Annual is often more comparable, as it is more inclusive of small business owners such as farmers who often do not earn a weekly income, but have income earned in irregular amount through the year. Income can be measured before or after tax. There is often a preference for post-tax measures that reflect the funds available for day to day spending by the household.

Income provides only part of the picture of what a person or household/family needs for a good standard of living. The same income will achieve a very different standard of living depending on where a person lives, and the types of expenses they have. A person living with their partner in a home they own, with no children, will have much lower weekly expenses compared to a person living in a home with a large mortgage and four dependent children. The amount of income each needs to have the same standard of living is very different. Cost of living also varies significantly across communities: prices of fuel, food, and housing are very different depending on where you live in rural Australia. Therefore income alone should not be relied on to give a full picture of standard of living.

To support wellbeing, the goal should be that all people have access to sufficient income to provide a good standard of living, meaning they can afford housing, food, heating and cooling, transport and other key expenses without experiencing financial stress. The amount of income needed to achieve this changes over time with inflation, meaning there is a need to clearly define the threshold considered sufficient to achieve this each year. The goal should not be to achieve very high incomes, as evidence suggests incomes well above what is needed for a good standard of living do not provide significant wellbeing benefits additional to incomes that provide a good standard of living.

This indicator is sometimes reported with the following thresholds, each of which has advantages and disadvantages:

• % living above and below the poverty line: While there is no official poverty line in Australia, it is often defined as those who have 50% or less of the median household income. This means it changes each year. The Australian Council of Social Services examines two poverty lines, defined as those with 50% or less and those with 60% or less of median income. Find out more about measuring the poverty line at ACOSS. However, some argue that the poverty line is too low, with many who are above the poverty line still experiencing levels of financial stress that may impact their wellbeing.
• % earning a ‘living wage’, defined as a wage sufficient to meet everyday expenses. There is no agreement on what constitutes a living wage.
• % earning different levels of income. This presents data in bands to identify the distribution of income in a community. For example, it will show the proportion earning below $500 a week, between $500-999, between $1000-1499, between $1500-1999, and $2000 or above. However, this can be misleading unless the ranges are adjusted for inflation.
• Average income (mean or median). This is not considered a good measure, as it can hide important information about wellbeing. Image a community of 100 households has a median weekly income of $1,000. This may occur because all 100 households are earning $1,000 a week, However, it also may be a result of 80 household earning $500 a week and regularly experiencing financial stress, while the other 20 households earn $3,000 per week.
• Income inequality measures. These measures examine how unequal incomes are across a community. Presenting data the % earning different levels of income enables an understanding of income distribution. You can use more formal measures such as the Gini coefficient to calculate inequality levels. However, as noted earlier, evidence is mixed regarding the impact of income inequality on wellbeing, where it is strong regarding the impact of having an income insufficient to cover basic standard of living.

To interpret change, it is critical to set thresholds that identify at what point an individual or family is considered to have sufficient income to support their wellbeing (see above). It is also important to adjust for inflation: a rise in income does not necessarily mean living standards have risen. As rural communities do not have access to easy data on local inflation, typically inflation data used for adjustment are those produced for major cities in the Consumer Price Index.

Advantage: Objective indicator, data are available at least once every 5 years and increasingly more often through administrative data analysis

Disadvantage: Not a good measure on its own of standard of living, this should be combined with insights into cost of living to provide a fuller picture. Sometimes measures of financial stress and self-rated financial prosperity provide more useful and comparable data.

Income data for small areas is available from: ABS Census of Population and Housing: Data collected every 5 years, data available for multiple geographies (LGA, statistical areas, suburb and locality) and available via multiple ABS products. Data includes equivalised household income, household income, and individual income.

You can ask survey participants to report their personal or household income in a survey. However, care is needed in designing this, as income data is highly sensitive, and many people find it difficult to estimate their total household income. If asking this question in a survey, it is recommended not to ask people to write a single figure (e.g. to write a number in answer to ‘What was your total income after tax in the last financial year?). Many people struggle to recall their exact income. Instead, ask people to indicate which of a number of income categories they were in. These categories should be design to produce a reflection of the distribution of income in the community. For example, as of 2021, the ABS Census reported personal weekly income by identifying how many people in a given area earned the following weekly income:

Additionally, provide an option for people who do not wish to report their income, e.g. a category ‘prefer not to say’. This reduces the risk of a person choosing not to continue answering questions beyond the one about household income, and increases the likelihood they will continue to answer the remainder of questions on the survey.

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