The ubiquitous five-digit ZIP code that Americans use daily for mail delivery and online forms is being misused for data analysis, leading to potentially flawed business decisions and masked societal issues.
A new analysis reveals that ZIP codes, originally designed in 1963 as mail delivery routes rather than geographic boundaries, are proving inadequate for modern geospatial analysis needs.
"ZIP codes don't represent real boundaries but rather routes, and they don't represent how humans actually behave," explains Dr. Tony Grubesic, Professor at Arizona State University. "They're one of the quirkier 'geographies' in the world."
The analysis found stark disparities within single ZIP codes. For example, in Dallas, one ZIP code (75206) showed household income ranging from $9,700 to $227,000 when examined at a more granular level, despite having an official median income of $63,392.
The most extreme income disparities were found in urban ZIP codes:
- Miami Beach, FL (33139): $241,344 difference
- Cleveland, OH (44120): $237,501 difference
- New York, NY (10013): $233,559 difference
These variations can mask critical trends and lead to poor decision-making. During the Flint water crisis, Michigan officials' use of ZIP code data effectively concealed the severity of lead contamination because ZIP codes crossed multiple municipal boundaries.
Better alternatives exist for geospatial analysis:
- Full street addresses with geocoding
- Census units (blocks, tracts)
- Spatial indexing systems like H3 and quadkey
While ZIP codes remain popular due to their familiarity and ease of collection, experts warn that continued reliance on them for analysis could lead to flawed business strategies and overlooked social issues.
Organizations are advised to transition to more precise geographic units that better reflect actual population patterns and human behavior. This shift would enable more accurate insights for business decisions, public health monitoring, and social services delivery.