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7  Appendix

Household Economic Survey (HES), Technical Notes

Introduction

The Household Economic Survey (HES) was conducted on an annual basis from 1973 until the year ended March 1998; since the year ended June 2001, it has been conducted triennially. The HES provides a comprehensive range of statistics relating to income and expenditure. The statistics presented in the attached table are estimates of private household spending; other tables are available on request.

Definitions

Expenditure
All references to housing and total expenditure in this release refer to expenditure without net capital outlay and related expenses. All expenditure statistics referred to are net of sales and trade-ins and include Goods and Services Tax (GST).
Income
All references to income in this release refer to before-tax (gross) income.

Expenditure changes

Note that changes in spending may reflect changes in price levels, as well as the quantity or quality of the goods and services purchased. The average expenditure figures refer to all households surveyed, including those which did not report spending on the goods and services concerned.

Under-reporting of expenditure

For some items of expenditure, the total annual expenditure for all private households is less than that reported from other data sources. The main reasons for this are:

  • Expenditure by residents of non-private households or by those ineligible for the survey (for example, overseas visitors) is excluded from this survey.
  • Respondents to the survey forget or omit some types of purchases. This may include such items as cigarettes, alcoholic drinks, confectionery, newspapers and public transport fares.
  • Expenditure by children aged under 15 is not recorded in the survey.
  • There is a bias associated with non-response that affects some statistics.

No adjustments were made to the data to compensate for any under-reporting. Items for which under-reporting occurs in the HES are generally consistent with items that are under-reported in similar overseas surveys.

Survey scope

The target population for the HES is New Zealand-resident, private households living in permanent private dwellings. This means that the population does not include overseas visitors who expect to be resident in New Zealand for less than 12 months; people living in non-private dwellings such as hotels, motels, boarding houses, hostels, motor camps, homes for the elderly; patients in hospitals; residents of psychiatric and penal institutions; members of the permanent armed forces; members of the non-New Zealand armed forces; and overseas diplomats. Children at boarding schools are not surveyed, but expenditure on behalf of those children is included in the record-keeping of the parent or guardian.

For survey purposes, a ‘household’ comprises a group of people who share a private dwelling and normally spend four or more nights a week in the household. They must share consumption of food or contribute some portion of income towards the provision of essentials for living as a group.

Change in estimation methodology

Estimates for the 2000/01 survey have been revised due to improvements made to the estimation methodology used. The benchmarks used as part of the integrated weighting process have been updated.

Survey period

The survey was carried out over the period from 1 July 2003 to 30 June 2004. People were asked about their spending up to 12 months prior to the interview.

Expenditure data was collected by the following methods:

  • 12-month recall (for single payments of $200 or more)
  • latest payment (for regular commitments such as electricity, telephone, rates, rent, insurance and superannuation)
  • 14-day diary keeping.

Note that expenditure data collected by the diary covers a one-year period (from 1 July 2003 for households interviewed in that month, to 30 June 2004 for those interviewed then). Expenditure data collected by recall in the Expenditure Questionnaire covers a two-year period (one year back from 1 July 2003 for households interviewed in that month, through to 30 June 2004 for households interviewed then). Reported expenditure has not been adjusted for the effects of that difference in coverage.

Similarly, for information on income, each household member aged 15 years and over was asked about their income in the year prior to their interview date. As a result income data covers a two-year period depending on the month each household was interviewed.

Reliability of the survey estimates

The HES sample comprises 2,854 private households, sampled on a statistically representative basis from rural and urban areas throughout New Zealand. Information is obtained for each member of a sampled household that falls within the scope of the survey and meets survey coverage rules.

Two types of error are possible in estimates based on a sample survey: sampling error and non-sampling error. Sampling error can be measured, and quantifies the variability that occurs by chance because a sample rather than an entire population is surveyed. Relative sampling errors are calculated for average weekly expenditure and aggregate annual expenditure. Expenditure group and subgroup sampling errors are attached to Table 1 in the Hot Off The Press. For example, in 2003/04 the estimated average weekly household expenditure (excluding net capital outlay) was $888.40. This is subject to a percentage sampling error at the 95 percent confidence interval of plus or minus 3 percent. This means there is a 95 percent likelihood that the true value lies between $861.80 and $915.10.

The HES estimates are also subject to non-sampling error. Non-sampling errors include those arising from biases in the patterns of response and non-response, inaccuracies in reporting by respondents, and errors in the recording and coding of data. Statistics New Zealand endeavours to minimise the impact of these errors through the application of best practice survey methods and the monitoring of known indicators (eg non-response). The overall response rate was 73 percent for the 2003/04 year.

Source for all of the above: Statistics New Zealand (www.stats.govt.nz)

Table 1 – Average house price and median individual income, Regional Councils
  Estimated average income Estimated median house price House price to income ratio
Northland 17,659 274,694 15.6
Auckland 24,068 450,589 18.7
Waikato 21,501 268,807 12.5
Bay of Plenty 19,653 306,180 15.6
Gisborne 17,775 196,121 11.0
Hawkes Bay 19,373 281,854 14.6
Taranaki 20,945 214,930 10.3
Manawatu-Wanganui 19,327 172,935 9.0
Wellington 25,236 323,301 12.8
Tasman 19,001 341,141 18.0
Nelson 20,125 334,742 16.6
Marlborough 19,951 297,047 14.9
West Coast 17,388 153,090 8.8
Canterbury 20,661 283,728 13.7
Otago 18,650 272,719 14.6
Southland 21,093 138,925 6.6
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