# Location Quotient

Location Quotients are proportional measures which show how much the incidence of something in an area or spatial unit differs from a larger area or region in which it sits. It may be used, for example, to show the reliance on an industry within a city compared to the country as a whole, or the percentage of people residing within a local government area, compared to the state as a whole.

The standard output of the LQ is a ratio, indicating how much more or less the spatial unit’s incidence is, compared to the larger area.

For example, an LQ of 1 indicates no difference between the area of interest and the overall incidence; an LQ of 0.65 would indicate an incidence in the area of interest is 35% lower than the overall incidence; an LQ of 1.35 would indicate an incidence 35% higher than the overall incidence.

This tool uses the following formulae for its implementation:

$LQ= \left(\frac{p_i/P_i}{p_n/P_n} \right)$

Where:

$p_i$= count of the phenomenon in spatial unit $i$

$P_i$= total population within spatial unit $i$

$p_n$= count of the phenomenon in larger area $n$

$P_n$= total population within larger area $n$

### SET UP

For this worked example, we will calculate the location quotients for two industries in Western Australia. We first need to select our area and data:

Select Western Australia as your area.

Select ABS – Data by Region – Economy & Industry (LGA) 2011-2018 as your dataset with the following attributes:

• Year: 2018
• LGA Code
• LGA Name
• Number Of Businesses By Industry Mining No.
• Number Of Businesses By Industry Agriculture, Forestry And Fishing No.
• Number Of Businesses By Industry Total No

### Inputs

Once you have set up your data, open the Location Quotient tool (Tools → Indices→ Location Quotient). The input fields are as follows:

• Dataset Input: The dataset that you would like to run the location quotient tool on. Select ABS – Data by Region – Economy & Industry (LGA) 2011-2018.
• Location Quotient Key Column: The region or spatial unit key for the areas of interest. Select LGA Code.
• Location Quotient Region Variable: The attributes you would like to analyse, to see if their incidence is higher or lower in each area than overall.
• Select Number Of Businesses By Industry Agriculture, Forestry And Fishing No.
• Select Number Of Businesses By Industry Mining No.
• Location Quotient Region Total: The total count for each region. Select Number Of Businesses By Industry Total No.

The input parameters are summarised in the image below, once complete click Run Tool.

### Outputs

Once your analysis has run a dialogue box will open. Click Display to open the output table. For the Western Australian example used here, it should look something like the image below:

The output of the Location Quotient tool is a table. The table has the Location Quotient for each variable (xxx_LQ). This table can be downloaded as a CSV to your desktop. Missing rows of data in our example above correspond with regions that have no data in relation to mining or agriculture.

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