610/2022 Arun Advani, Andy Summers, Hannah Tarrant

Information about the share of total income held by the richest 1%, or other top income groups, is increasingly used to discuss inequality levels and trends within and between nations. A top income share is the ratio of the total income held by the top income group divided by total personal income (the ‘income control total’). We compare two approaches to estimating income control totals: the ‘external’ approach used by the World Inequality Database, and an augmented ‘internal’ approach. We argue in favour of the latter, with reference to five desirable properties that a top share series would ideally possess. The choice matters: our augmented ‘internal’ approach yields estimates of the UK top 1% share that are around 2 percentage points higher than the ‘external’ approach.

Public Policy

Journal of the Royal Statistical Society Series A: Statistics in Society

https://doi.org/10.1093/jrsssa/qnac008