Deciphering the Neighborhood Atlas Area Deprivation Index: the consequences of not standardizing

Abstract

The Area Deprivation Index (ADI) is a widely used measure recently selected for several federal payment models that adjusts payments based on where beneficiaries live. A recent debate in Health Affairs focuses on seemingly implausible ADI rankings in major cities and across New York. At the root of the issue is the importance of standardization of measures prior to calculating index scores. Neighborhood Atlas researchers are implicitly arguing that their choice to not standardize is of little consequence. Using the same data and methods as the Neighborhood Atlas, this paper focuses on this choice by calculating and comparing standardized and unstandardized ADI scores. The calculated unstandardized ADI nearly perfectly matches the Neighborhood Atlas ADI (r > 0.9999), whereas the correlation with a standardized version is much lower (r = 0.7245). The main finding is that, without standardization, the ADI is reducible to a weighted average of just 2 measures—income and home values—certainly not the advertised multidimensional measure. Federal programs that have incorporated the ADI risk poorly allocating scarce resources meant to reduce health inequities.