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Appendix – Classifying households by income group

To analyse the impacts of transport network pricing on fairness we classified all households in the model into three equal groups (High, Middle and Low) to reflect their income. In addition, we constructed a fourth group composed solely of those households receiving concessions, such as those on a pension.

We didn’t use household income to classify households because how well-off a household is depends on how many people the income is supporting. For example, a single person with an income of $100,000 could live quite comfortably.

However if a couple’s combined income was $100,000 and they were supporting three school-aged children, they would have to be a lot more careful in managing their expenditure.

Classifying different households with different combinations of dependants into comparable groups is complicated. So we follow the ABS guidelines on how to do this – which involves calculating what is called a `equivalised household income’ and classifying according to this. [18]

This applies common sense ideas like shared expenses means you don’t need to double household income when you double the number of people to maintain a certain lifestyle and that little children are less expensive than teenagers.

[18] For more information see www.abs.gov.au/ausstats/ abs@.nsf/Lookup/2901.0Chapter31502016

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