Developing Spatial Microsimulation Estimates of Small Area Advangage and Disadvantage among Older Australians

Abstract

This paper presents innovative applications of spatial microsimulation techniques to develop estimates of the small area distribution of deep economic disadvantage and relative economic advantage among Australians 55 years and older, combining data on disposable income, main source of income, and housing tenure. The spatial microsimulation model produces synthetic small area measures of economic disadvantage and advantage among older people that are multidimensional. This approach recognises that income levels alone may not adequately capture the complexity of relative advantage and disadvantage among older people. We particularly focus here on addressing and investigating the limits of spatial microsimulation modelling, describing and testing a number of possible methods for validating the synthetic estimates and identifying ongoing challenges and opportunities in the estimation of older adults' economic characteristics at a small area level. We find that, once we have adjusted the benchmarks to better match our research and excluded from our analysis small areas for which the modelling is unable to produce accurate results (often because of small sample sizes or unusual population characteristics), we are able to accurately match our synthetic estimates with known small area data, with Pearson's R values between 0.95 and 0.98. Our final results show substantial small area differences in economic advantage and disadvantage among older Australians and point to the need for understanding the geographic aspects of diversity in the older population. Such an understanding will allow for the development and appropriate targeting of policy responses to the needs of older people of modest economic means.