Income Decile by Relative Change

Overview

The income decile by relative change metrics provide insights into how a policy reform affects household net income across different income deciles in relative terms. These metrics are part of the EconomicImpact class and measure the relative change in income due to the reform, expressed as a percentage of the baseline income.

Available Metrics

  1. distributional/by_income/relative: Calculates the relative change in household net income by income decile.

Metric Structure

Each metric returns a dictionary with the following keys:

  • relative: A dictionary where the key is the income decile, and the value is the relative change in income for that decile. The relative change is expressed as a percentage of the baseline income.

The values are rounded to several decimal places.

Example Usage

from policyengine import EconomicImpact

# Initialize the EconomicImpact class with a reform
impact = EconomicImpact(reform={
  "gov.hmrc.income_tax.rates.uk[0].rate": {
    "2024-01-01.2100-12-31": 0.55
  }}, country="uk")

# Calculate relative income change by income decile
relative_income_change = impact.calculate("distributional/by_income/relative")

# Print the result
print(f"Relative income change: {relative_income_change}")

Output

Relative income change: {'relative': {1: -0.0704, 2: -0.0809, 3: -0.1465, 4: -0.1559, 5: -0.1784, 6: -0.1823, 7: -0.1986, 8: -0.1832, 9: -0.1960, 10: -0.1392, 11: -0.0281}}

Interpretation

In this example:

  • The relative income change is negative across all deciles, indicating a reduction in household net income as a percentage of the baseline.

  • The highest relative decrease is observed in the 7th decile, with a reduction of approximately 19.86%.

  • The smallest relative decrease is in the 11th decile, at about 2.81%.

  • The relative changes vary by decile, reflecting the impact of the policy reform on different income groups.