Household Economic Survey (Income) 2021

Methodology

Information on New Zealand households’ income, housing costs, and material well-being is based on data collected as part of the Household Economic Survey (HES) 2020/21.

###Changes made to HES questionnaire in 2020/21

Only minor changes were made to the way we collected data in HES 2020/21 compared with HES 2019/20:

• Questions on school enrolment for children aged 5 to 13 years old were changed to capture whether they were enrolled at a primary, intermediate, or secondary school.

• The way the self-complete questionnaire operates was changed to allow respondents to opt to have interviewers administer the questions instead of completing it as self-complete.

• For the questions relating to material well-being, wording improvements were made to some questions to make them easier to understand. The question about life satisfaction was changed from 5 categories (very dissatisfied, dissatisfied, neither dissatisfied nor satisfied, satisfied, very satisfied) to an 11-point continuous scale (0-10).

COVID-19 impact on collection period

The pandemic has impacted Stats NZ’s ability to conduct face-to-face interviews in respondent’s homes and no other means of interviewing were available. Therefore, interviewing was not conducted evenly over the whole year.

Interviewing was ceased for HES 2020/21 for the following periods (and regions):

• 1 July – 7 August 2020 (all New Zealand)

• 12 August – 20 September 2020 (all New Zealand)

• 21 September – 27 September 2020 (Auckland only)

• 1 March – 7 March 2021 (Auckland only)

• 24 June – 28 June 2021 (Wellington only).

Consequently, the sample size was reduced to just over 16,000 households from the planned 20,000 households. This is consistent with what was achieved in year ended June 2020 when interviewing ceased in March 2020. The reduced sample size means margins of error on the statistics are higher than designed for. Stats NZ analysed the data to check for any impact of this change in interview pattern, but no discernible impact was noted.

Reference and collection period

We collect HES data over the course of a year, from 1 July to 30 June. At the interview, the respondent is asked about their income in the previous 12 months. For example, an interview in November 2020 would collect the household’s income and wellbeing in the 12 months from November 2019. This means that households interviewed for the HES 2020/21 survey in 2020 will include some 2019 income, while those interviewed in 2021 will include some 2020 income.

Data input

Assignment of cases is centralised in Salesforce, a system that allows for real-time observation of response rates. The team of interviewers use BLAISE to conduct household surveys. BLAISE is a computer assisted interviewing (CAI) software that guides the interviewer through the correct sequence of questions. They are displayed one at a time and have automatic routing built in to make sure that respondents are only asked questions that are relevant to them.

Once submitted, the data is stored and a response is logged in our centralised tracking software, Salesforce. This allows for a real-time overview of progress in reaching the target response rates for demographic groups.

The data is then fed through various editing stages, before being loaded into the processing database, EPIC.

###Admin data is used to replace survey data

Despite our best efforts to obtain accurate information about respondents’ income, relying on survey responses for data of this nature inevitably introduces uncertainty. For example, respondents may not remember or may fail to disclose all sources of income over the past year to the interviewer. They may provide only ‘rough estimates’, describe income after tax, or forget changes to their regular income over the year. In some cases, family members may not know the income of other family members. Benefit income is often understated – as people can forget benefit income when it was received only for small periods throughout the year.

We combine survey data on income with admin data from the Integrated Data Infrastructure (IDI), a large research database managed by Stats NZ holding microdata about people and households. It contains full tax information related to individuals, including data provided by employers for each employee (the employee monthly schedule), self-employment income, and some investment income. We also use data provided by the Ministry of Social Development (MSD) about benefits paid, including Working for Families (WFF) tax credits, and accommodation supplement.

Since HES 2018/19 we have used admin data to provide annual salary and wage and government transfer income. In HES 2018/19, we asked respondents their income but used the admin data in the published statistics. Starting with HES 2019/20, respondents have not been asked to provide their income amounts for these income variables.

Some income sources are not currently available in the IDI, including investment income, some sources of irregular income, and non-taxable income. We collect these income variables directly from respondents.

Salary and wage income is provided on an individual’s pay day and is updated in the IDI on a quarterly basis. However, other income (for example, from self-employment) relies on individuals providing their tax returns, which may be delayed before being included in the IDI. Due to this timeliness issue, we use the self-employment income provided to us by the respondent.

Information on income received from the WFF scheme is available from IRD and from MSD and this data is used for relevant households. However, for some households this income is received annually and there can be delays in this information being incorporated in the IDI due to delays in filing tax returns. For this reason, annual income from WFF is estimated for some families and is revised in the following year when more information is available

Linking admin data

The use of admin data in HES requires linking individuals in HES to the IDI spine, a dataset to which all datasets in the IDI are linked to. This link to the IDI uses address, address history, name, sex, and date of birth.

The ‘link rate’ refers to the proportion of individuals in the HES sample that is successfully linked to the IDI. A high link rate ensures high quality data. The link rate of the overall HES sample in September 2021 to the IDI is 95 percent (with a false positive rate of 1.8 percent). The link rate for children is lower than for adults because in 2019/20 date of birth was not collected for children, while for 2020/21 sex-at-birth was not collected. This is not expected to affect the estimation of child poverty measures as we rely on the HES data to tell us about the presence of children in households. All income (including benefits) is allocated to the adults in the household.

Linking to the IDI enables us to assign admin income data (salaries and wages, and benefits) to all in-scope and eligible individuals aged 15+ from responding households, even if they themselves did not respond to the survey. This increases the number of usable responses in the dataset. Records unable to be linked to the IDI had wage and salary and benefit income imputed to reduce potential bias.

External influences

Changes in income and housing costs may be influenced by one-off real-world events. Events that could have influenced the HES 2020/21 data are:

• The COVID-19 pandemic impacted Stats NZ’s ability to conduct face-to-face interviews in respondent’s homes and no other means of interviewing were available. Therefore, interviewing for the HES 2020/21 was not conducted evenly over the whole year. Consequently, the sample size was reduced to just over 16,000 households from the planned 20,000 households.

• increase in the adult minimum wage from $17.70 to $18.90 effective 1 April 2020 and further to $20.00 effective 1 April 2021.

• increase in the starting out and training wage from $14.16 to $15.12 effective 1 April 2020 and to $16.00 effective 1 April 2021.

• increase in number of weeks of paid parental leave entitlement from 22 weeks to 26 weeks effective from 1 July 2020

• increase in maximum rate of paid parental leave from $585.80 to $606.46 effective 1 July 2020.

• changes to benefit system as part of Budget 2019 that came into effect on 1 April 2020

o section 192 deductions (formerly section 70A) were removed – these had applied to the benefits of sole parents who did not identify the other parent of their child and apply for Child Support

o main benefits began to be indexed by adjusting rates annually in line with any upwards percentage movement in the net average wage, rather than the consumers price index

o abatement thresholds for main benefits were increased

• policies implemented as part of government’s response to COVID-19

o increase of $25 in main benefit rates effective 1 April 2020

o Winter Energy Payment for 2020 doubled

o hours test for the In-work Tax Credit removed effective 1 July 2020

o introduction of COVID-19 Income Relief Payment which was a temporary short-term (up to 12 weeks) support for people who lost their jobs from 1 March to 30 October 2020 because of COVID-19.

o introduction of the four wage subsidy schemes over the period of March 2020 – March 2021, which were paid to employers and self-employed people who would otherwise have had to lay off staff or reduce their hours due to COVID-19

• New Zealand Superannuation rate (gross) increasing for single living-alone from $490.73 to $506.64 on 01 April 2021; single sharing from $451.29 to $466.03 on 01 April 2021; and ‘both partners qualifying’ from $372.27 each to $384.46 on 01 April 2021.

• increase in main benefit rates by 3.09 percent effective from April 2020 and by 3.1% effective from April 2021

• introduction of a new tax rate of 39% for those earning over $180,000 effective 1 April 2021

• Official Cash Rate (OCR) was unchanged at 0.25 from July 2020 to July 2021; the low OCR kept mortgage interest rates down.

Response rate for HES 2020/21

We set a target achieved sample rate of 70% and aim to achieve at least 20,000 responding households from 28,500 households that are initially selected. However, for HES 2020/21 due to COVID-19 restrictions we were unable to conduct face-to-face interviews for part of the collection period. In the periods we could conduct interviews we achieved complete responses from 16,196 households (overall achieved sample rate of 75.6 percent). While this is less than the desired sample size it is comparable to 16,151 achieved in HES 2019/20. The response rate for HES 2020/21 was 82.1 percent.

Response is also monitored at regional level and by NZDEP2013 status.

Achieved sample rate compared with the response rate

The achieved sample rate is calculated as the number of eligible households that responded divided by the total number of dwellings sampled. Essentially, it tells you what percentage of the sample responded to the survey. Expressing the achieved sample as a rate controls for population growth.

		Eligible responding
Achieved Sample Rate	=	____________________
		Ineligible + eligible responding + eligible non-responding

The response rate is calculated as the number of eligible households that responded to the survey as a proportion of the estimated number of total eligible households in the sample.

		Eligible responding
Response rate	=	___________________
		Eligible responding + eligible non-responding

The achieved sample rate differs from the response rate because it includes the ineligible dwellings in the denominator. This difference means that the response rate is particularly sensitive to the classification of household eligibility. As a result, the achieved sample rate is more stable over time than the response rate.

Imputation for HES 2020/21

Imputation in HES replaces missing values with actual values from similar respondents. For HES 2020/21, we imputed missing values for the following variables:

Income:

• employment earnings and government transfers where a respondent has not been linked to the IDI

• self-employment income where respondent is known to have such but has not provided a value

• investment income where respondent is known to have such but has not provided a value.

Housing costs:

• local and regional authority property rates for primary property

Person demographics:

• age

• gender

• sex at birth (used in the imputation of gender)

• ethnicity

• disability status for people over the age of 2 years

• highest qualification.

Sample errors

Sample error is a measure of the variability that occurs by chance because a sample rather than an entire population is surveyed. We can calculate the level of uncertainty around a survey estimate by exploring how that estimate would change if we were to draw many survey samples for the same time period instead of just one. This allows us to define a range around the estimate (known as a “confidence interval”) and to state how likely it is that the real value that the survey is trying to measure lies within that range. Confidence intervals are typically set up so that we can be 95% sure that the true value lies within the range – in which case this range is referred to as a “95% confidence interval”.

We calculate sample errors using the jackknife method which is based on the variation between estimates of different subsamples taken from the whole sample.

The tables below summarise the sample errors between 2015/16 and 2020/21 by income source and housing-cost type. The tables also indicate the variability of the estimates between the six surveys. Customers should take care when interpreting income or housing-costs estimates with sample errors greater than 20 percent – they are statistically less reliable than estimates with sample errors less than or equal to 20 percent.

Sampling errors for average annual household income, by income source (for households receiving that source of income)
Year ended 30 June, 2016-21
Income source	Level sampling error (%)
	2015/16	2016/17	2017/18	2018/19	2019/20(R)	2020/21
Wages and salaries	4.0	3.9	3.5	1.5	1.6	1.5
Self-employment	13.3	12.8	11.3	8.7	7.0	5.5
Investments	18.6	25.0	27.2	11.4	6.8	6.2
Private superannuation	22.9	21.2	20.4	20.4
New Zealand Superannuation and war pensions	2.1	2.5	2.0	1.2	1.0	1.2
Other government benefits	7.1	6.3	6.1	2.3	2.8	2.3
Other regular sources	28.2	22.6	14.7	6.9	7.2	7.7
Total Gross income	4.4	3.9	3.7	1.6	1.3	1.1
R Revised

Sampling errors for average weekly household expenditure, by housing cost type (for households with that type of expenditure)
Year ended 30 June, 2016 -21
Expenditure item	Level sampling error (%)
	2015/16	2016/17	2017/18	2018/19	2019/20(R)	2020/21
Property and ground rent	4.6	4.0	4.5	1.9	1.8	1.9
Other payments connected with renting	19.4	17.4	16.0	8.2	11.3	7.0
Total rent payments	3.8	4.4	4.8	2.0	2.0	2.0
Mortgage principal repayments	8.8	6.4	5.3	2.6	2.6	2.6
Mortgage interest payments	8.9	6.9	7.7	3.6	2.9	3.4
Application and service fees for mortgages	42.4	41.5	21.5	16.8	20.8	21.5
Total mortgage payments	7.6	5.4	5.8	2.3	2.3	2.4
Property rates	2.7	3.4	3.0	1.5	1.8	1.6
Building related insurance	5.0	3.8	3.4	2.1	1.7	1.7
Other housing costs	31.2	36.0	29.4	10.8	21.2	13.6
Total housing costs	4.4	3.6	3.9	1.7	1.6	1.9
R Revised

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