Measuring socio-economic background using administrative data. What is the best proxy available?

Administrative data sources are increasingly being used to study socio-economic inequalities in education and health. Yet a well-known difficulty with such resources is the limited quality of information they hold about individual socio-economic position. Researchers, policymakers and practitioners using administrative data typically rely upon proxy indicators of individual socio-economic status, such as the Index of Multiple Deprivation (IMD) or eligibility for free school meals. But how well do these proxies actually capture socio-economic background? Relatively little existing work has considered this issue, with a particular dearth of studies drawing comparisons across the wide array of socio-economic status proxies now available. This study adds this evidence to the existing literature. Using a large, nationally-representative cohort study linked to administrative data, it is shown how eligibility for free school meals (averaged over the time a child has spent at school) is the best available proxy for childhood poverty, but is of limited use to researchers wanting to understand how key outcomes differ between young people from low, average and high socio-economic backgrounds. On the other hand, by combining individual and area level socio-economic proxies into a single continuous index, it is shown how administrative data can be used to produce robust estimates of family-income differences in key educational outcomes.