Inequality Impact¶
Overview¶
The inequality impact metrics provide insights into how a policy reform affects income distribution. These metrics are part of the EconomicImpact
class and include measures of income inequality and concentration of income among the top earners.
Available Metrics¶
inequality/gini
: Calculates the Gini coefficient, which measures income inequality.inequality/top_1_pct_share
: Calculates the income share of the top 1% of earners.inequality/top_10_pct_share
: Calculates the income share of the top 10% of earners.
Metric Structure¶
Each metric returns a dictionary with the following keys:
baseline
: The metric value before the reform.reform
: The metric value after the reform.change
: The absolute change in the metric value due to the reform.change_percentage
: The percentage change in the metric value due to the reform (only for Gini coefficient and top 1% share).
All values are rounded to 2 decimal places for baseline, reform, change, and change percentage.
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": 0.25}},
country="uk"
)
# Calculate Gini coefficient impact
gini_impact = impact.calculate("inequality/gini")
# Calculate top 1% income share impact
top_1_pct_share = impact.calculate("inequality/top_1_pct_share")
# Calculate top 10% income share impact
top_10_pct_share = impact.calculate("inequality/top_10_pct_share")
# Print the results
print(f"Gini coefficient impact: {gini_impact}")
print(f"Top 1% income share impact: {top_1_pct_share}")
print(f"Top 10% income share impact: {top_10_pct_share}")
Output¶
Gini coefficient impact: {'baseline': 0.43, 'reform': 0.43, 'change': -0.00, 'change_percentage': -0.39}
Top 1% income share impact: {'baseline': 0.09, 'reform': 0.09, 'change': 0.00, 'change_percentage': 1.96}
Top 10% income share impact: {'baseline': 0.31, 'reform': 0.31, 'change': 0.00, 'change_percentage': 0.64}
Interpretation¶
In this example:
The Gini coefficient decreases slightly from 0.43 to 0.43, indicating a small reduction in income inequality.
The income share of the top 1% increases from 9.12% to 9.30%, reflecting a slight rise in concentration among the highest earners.
The income share of the top 10% increases from 31.02% to 31.21%, showing a minor rise in the share of income held by the top 10% of earners.