Survey Under-Coverage of Top Incomes and Estimation of Inequality: What is the Role of the UK’s SPI Adjustment?

Richard Burkhauser, Nicolas Hérault, Stephen Jenkins and Roger Wilkins ()

No 23539, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Survey under-coverage of top incomes leads to bias in survey-based estimates of overall income inequality. Using income tax record data in combination with survey data is a potential approach to address the problem; we consider here the UK’s pioneering ‘SPI adjustment’ method that implements this idea. Since 1992, the principal income distribution series (reported annually in Households Below Average Income) has been based on household survey data in which the incomes of a small number of ‘very rich’ individuals are adjusted using information from ‘very rich’ individuals in personal income tax return data. We explain what the procedure involves, reveal the extent to which it addresses survey under-coverage of top incomes, and show how it affects estimates of overall income inequality. More generally, we assess whether the SPI adjustment is fit for purpose and consider whether variants of it could be employed by other countries.

JEL-codes: C81 D31 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (6)

Published as Richard V. Burkhauser & Nicolas Hérault & Stephen P. Jenkins & Roger Wilkins, 2018. "Survey Under-Coverage of Top Incomes and Estimation of Inequality: What is the Role of the UK's SPI Adjustment?," Fiscal Studies, vol 39(2), pages 213-240.

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Related works:
Journal Article: Survey Under‐Coverage of Top Incomes and Estimation of Inequality: What is the Role of the UK's SPI Adjustment? (2018)
Working Paper: Survey under-coverage of top incomes and estimation of inequality: what is the role of the UK’s SPI adjustment? (2018)
Working Paper: Survey Under-Coverage of Top Incomes and Estimation of Inequality: What Is the Role of the UK's SPI Adjustment? (2017)
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