Missing incomes in the UK: evidence and policy implications

Arun Advani, Tahnee Ooms and Andrew Summers

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Policymakers are liable to ‘treasure what is measured’ and overlook phenomena that are not. In an era of increased reliance on administrative data, existing policies also often determine what is measured in the first place. We explore this two-way interaction between measurement and policy in the context of the investment incomes and capital gains that are missing from the UK’s official income statistics. We show that these ‘missing incomes’ change the established picture of economic inequality over the past decade, revealing rising top income shares during the period of austerity. The underestimation of these forms of income in official statistics has hidden the impact of tax policies that disproportionately benefit the wealthiest. We urge a renewed focus on how policy affects and is affected by measurement.

Keywords: tax policy; investment income; capital gains; top incomes; welfare measurement; income inequality (search for similar items in EconPapers)
JEL-codes: F3 G3 J1 N0 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2022-04-22
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Published in Journal of Social Policy, 22, April, 2022. ISSN: 0047-2794

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http://eprints.lse.ac.uk/114263/ Open access version. (application/pdf)

Related works:
Working Paper: Missing incomes in the UK: Evidence and policy implications (2021)
Working Paper: Missing Incomes in the UK: Evidence and Policy Implications (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:114263

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