Will you be living in a better socio-economic condition if you’re living in an area where people make a lot of money?
To many, the answer is an obvious yes. But I wanted to see a closer snapshot of how socio-economic conditions of an area is related to the level of income of the average person of the area.
For this, I decided to take a look into areas in Sydney. I picked Sydney for two reasons. The first reason is that there are good datasets on Sydney that show detailed information on the different local government areas (LGAs) across Sydney. The second reason is that I live here.
A scatter plot is a good way to show correlation. But I decided to use maps to make it more visual. And also because I like maps. Putting the data on the map required only one extra step because the NSW state government already provides spacial data on all the local government areas. All I had to do was clean and join.
I fetched the median income data and socio-economic index score data from the Australian Bureau of Statistics (ABS). After preparing the data and putting it on a map, I ended up with the following result.
On the map, there is a filter to flip between median income & socio-economic index score. The Socio-Economic Index for Areas (SEIFA) is derived from ABS. The score is an indicator of the socio-economic advantages and disadvantages in an area. A higher score is better.
So how does ABS determine this score? Well, according to their website, this is how it is done.
For SEIFA, the ABS continues to broadly define relative socio-economic advantage and disadvantage in terms of people’s access to material and social resources, and their ability to participate in society.
So, what are the takeaways?
- We do see that higher-income areas have a higher score which translates to better socio-economic conditions
- Many of the areas that score highly on the socio-economic index have median incomes that are 2-3 times higher than the national average. One example is Mosman, which has a 2016-17 median income of ~$161k which is approximately 3.34 times higher than that of the national average of ~$48k
- Interestingly, the socio-economic score does not exactly proportionately increase with an increase in median income
This analysis has its limitations. I did not look much in-depth. But the point of this whole exercise was to see a quick snapshot of the correlation between median income and socio-economic condition. And it did produce a few interesting insights. For future exercises, I’ll build on this and look more in-depth. And maybe also compare with other metropolitan cities across the world.