How to Calculate, Interpret, and Understand the Location Quotient

The location quotient is most frequently used in locational analysis, economic geography, and population geography, but it has much wider applicability. The location quotient (LQ) is an index for comparing an area's share of a particular activity with the area's share of some basic or aggregate phenomenon. An example would be to look at a census tract's share of a particular ethnic group population in comparison with a metropolitan area's share of that group. It is useful for calculating and mapping relative distributions. This article will describe how to calculate a location quotient, and interpret and understand what it means.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Database or spreadsheet software such as Excel

1. Open your area and regional data in the spreadsheet or database software program (such as Excel). There should basically be three columns of data to start out with: one column for the name of the particular case, and then two remaining columns of numerical data for each case: one variable for the base phenomenon (total population in our example) and one variable for the activity phenomenon being measured (ethnic group population in our example).

2. A location quotient is calculated using the equation
   LQi = ( Ai / ΣAi ) / ( Bi / ΣBi )
   where Ai is equal to the level of the activity in area i and Bi is the level of the base. Referring back to the ethnic group example in the introduction, Ai could be equal to the Hispanic population in a census tract, and Bi is equal to the total population in a census tract. The summation portion of the calculation is summing up the values for all census tracts in the region (in our example, the metropolitan area).

3. Location quotients (LQ) can be interpreted using the following conventions:
   -If LQ > 1, this indicates a relative concentration of the activity in area i (in our example this would be a particular census tract), compared to the region (in our example this would be a metropolitan area) as a whole.
   -If LQ = 1, the area has a share of the activity in accordance with its share of the base.
   -If LQ < 1, the area has less of a share of the activity than is more generally, or regionally, found.
   Going back to our example, if a particular census tract has a high location quotient (greater than 1) for the ethnic population being measured, then that particular census tract contains a greater concentration of persons of that particular ethnic group than are more generally found throughout the metropolitan region.