NZDEP96 -- what does it measure?

• Author: Salmond, Clare
• Position: Index of deprivation for small areas - Statistical Data Included

Abstract

NZDep96 is an index of deprivation for small areas. Originally designed for use in health research, resource allocation and advocacy, it has now become a widely used social research tool. Concern has been expressed about possible errors arising as a result of its use as a measure of deprivation for individuals.

This paper explores the errors inherent in the use of the NZDep96 area index when the unit of analysis is the individual, by analysing 1996 Census data using both correlational and multilevel modelling approaches. The small area index of deprivation is shown to be weakly correlated with an individual deprivation index. It is concluded that, in the absence of individual information and with appropriate caveats, area deprivation may be used cautiously as a proxy for individual deprivation in some analyses. It is also noted that when NZDep96 is used as a legitimate residential attribute of individuals the precise causal mechanisms of an observed association are likely to be obscure.

In models of smoking behaviour incorporating both area and individual deprivation as explanatory variables, the association between area deprivation and individual smoking remains strong (albeit diminished) when individual deprivation characteristics are also taken into account. It is concluded that, in the case of smoking, and most likely for many other outcomes, the area index contains both compositional individual information and strictly contextual information. It is noted that including both areal and individual information in any model may help to identify associations at the level at which causality operates.

INTRODUCTION

NZDep96 is an index of deprivation for small areas. The index was created as a result of requests from a wide group of individuals employed in the health and social services sectors in government, university, and various social agencies, who wanted a small area measure of "need".

NZDep96 was created from 1996 Census data and based on the proportions of people in the small area with each of nine characteristics related to deprivation, as described under "Methods". The small areas were based on meshblocks, the smallest administrative area used by Statistics New Zealand. Information from neighbouring meshblocks was pooled, if necessary, so that, as far as possible, the small areas contained at least 100 people.

NZDep96, like its predecessor NZDep91, was designed originally for use in resource allocation, health research and advocacy. It has become a widely used social research tool. Concern has been expressed about the degree of error arising as a result of its use as a proxy measure of deprivation for individuals. This paper examines to what extent the area measure is a measure of contextual circumstances, an average indicator of individual deprivation, and/or a proxy or a legitimate indicator of individual deprivation.

The paper begins by describing the theoretical underpinning of the NZDep96 index and how it is being used. The paper then attempts to evaluate the relative extent of macro-level contextual information and micro-level individual information in the NZDep96 index by using individual data from the 1996 Census and both a correlational and a multilevel approach to analysis.

Deprivation

Socio-economic classifications have been developed from a number of theoretical and practical perspectives. Emphases include access to means of production (Marx 1981), possession of knowledge and skills (Edgell 1993), employment relations (Rose and O'Reilly 1997), social standing related to

occupation (Davis et al. 1997, Rose and O'Reilly 1997), and access to material and social resources (Townsend 1987, 1993).

Socio-economic deprivation describes access to material and social resources and has to some extent underpinned conceptions of social class and socio-economic status. It has been defined as a state of observable and demonstrable disadvantage relative to the local community or the wider society or nation to which an individual, family or group belongs (Townsend 1987). It is possible for an individual to be deprived in one or more respects.

Area-Based Measures of Deprivation

Area-based classifications of socio-economic deprivation have been developed over the past three decades in order to make summary measures available in circumstances when information is otherwise hard to collect or unavailable (Carstairs 1995, Morris and Carstairs 1991, Townsend 1990). They are usually based on aggregated personal information. The NZDep96 index of deprivation for small areas was developed from 1996 New Zealand Census data (Salmond et al. 1998b) and follows the earlier development of the NZDep91 index, based on 1991 Census data (Crampton et al. 1997, Salmond et al. 1998a). The NZDep96 index was derived from a weighted sum of nine adjusted proportions in a small area and has values from 1 to 10. High values of the index reflect relatively high levels of at least some of these proportions.

What Do Area-Based Indexes Measure?

Diez-Roux (1998) notes that whenever composite derived variables like NZDep96 are used in analyses, "they are assumed to be capturing group properties that are more than summaries of individual properties". That is, they are capturing both aggregated compositional properties of the individuals in the neighbourhood and contextual properties of the area extrinsic to individuals, such as public amenities. The contextual factors may be shaped by the properties of the group. For example, lack of amenities may be the result of lack of money to support them. Alternatively, the contextual factors themselves may shape the properties of the group -- such as a lack of youth activities encouraging young people to live elsewhere.

The NZDep96 area-based measure of deprivation, then, is a variable reflecting both aggregated compositional properties of the area and probably also contextual properties of the area. When the unit of analysis is an area, there is no cross-level problem with interpretation. However, when used where individuals are the unit of analysis, there are two possible interpretations, one of which is problematic.

The first interpretation considers the area of residence as an attribute of individuals. The deprivation of the area of residence is then also an attribute of individuals and thus a micro-level variable. In this case there is no cross-level interpretive difficulty, although reductionist causal pathways may be elusive.

The second interpretation, however, notes that the area measure is created from aggregated data and regards it as a rough approximation for an individual characteristic. In this view, the areal NZDep96 measure is interpreted as a micro-level variable measured with error. This invites an ecological fallacy, that is, an error arising as a result of making inferences about individuals on the basis of aggregated data (Gilman et al. 1994, Schwartz 1994). For example, as a result of likely heterogeneity of people in an area, it cannot be assumed that every resident of a deprived area is deprived. Researchers have found that the use of small spatial areas diminishes the extent of measurement error (Crayford et al. 1995, Hyndman et al. 1995). This paper explores what happens when the small area NZDep96 index of deprivation is used as a proxy for individual deprivation information.

In health research, associations with deprivation can be theorised as operating at different levels -- individual, family, neighbourhood, local authority, etc. -- each having a separate causal pathway. For example, at the small area level, living in deprived neighbourhoods may adversely affect health outcomes for individuals; and at the individual level, deprived individuals may be more likely to suffer various adverse health outcomes. An increasing number of studies are examining these multiple levels of association (Anderson et al. 1997, Duncan et al. 1999, Kleinschmidt et al. 1995, Reijneveld 1998, Shouls et al. 1996, Sloggett and Joshi 1994).

However, as pointed out by Macintyre and Ellaway (2000), there is frequently a lack of clarity in published research about whether the area-based measures are being used as neighbourhood indicators, or as if they characterise the individual -- either as an attribute, or as a characteristic measured with error. Although associations between deprivation and health can be investigated irrespective of this lack of theoretical clarity, nevertheless theoretical considerations are important since public health interventions should be designed to operate at the level at which causality operates.

Two recent New Zealand reports have explicitly addressed this issue of theoretical clarity. In one, the Ministry of Health (1999) noted the likely effect of using the area deprivation measure, instead of an individual measure, on the level of observed associations when the unit of analysis was the individual:

The deprivation index applies to areas, not people, and so captures contextual as well as compositional variables affecting socio-economic status. However, it is used in this report also as a proxy for individual socio-economic status when individual level data on income, education or occupation are not available. When used in this way, the heterogeneity that exists within meshblocks means that any socio-economic gradient in the outcome of interest will probably be under-estimated. (p. 65) Another recent report alerted the reader to the possibility of multiple causal interpretations (Salmond and Crampton 2000:61):

NZDep96 is an area-based index of deprivation. Thus the associations observed [in this chapter] relate to area-level deprivation, that is, compositional and contextual effects of material and social circumstances. Given the small size of the areas on which the index is based, and the strength and consistency of the associations demonstrated in this chapter, it is likely that causality is operating at both the area level and the individual...