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Missing incomes in the UK: evidence and policy implications

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  • Advani, Arun
  • Ooms, Tahnee
  • Summers, Andrew

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.

Suggested Citation

  • Advani, Arun & Ooms, Tahnee & Summers, Andrew, 2022. "Missing incomes in the UK: evidence and policy implications," LSE Research Online Documents on Economics 114263, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:114263
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    Cited by:

    1. Arun Advani & George Bangham & Jack Leslie, 2021. "The UK's wealth distribution and characteristics of high‐wealth households," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 397-430, September.
    2. Arun Advani & Helen Hughson & Andy Summers, 2023. "How much tax do the rich really pay? Evidence from the UK," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 39(3), pages 406-437.
    3. Krenek Alexander & Schratzenstaller Margit, 2022. "A Harmonized Net Wealth Tax in the European Union," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 242(5-6), pages 629-668, December.
    4. Advani, Arun & Summers, Andy & Tarrant, Hannah, 2020. "Measuring UK top incomes," CAGE Online Working Paper Series 490, Competitive Advantage in the Global Economy (CAGE).

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    More about this item

    Keywords

    tax policy; investment income; capital gains; top incomes; welfare measurement; income inequality; CUP deal;
    All these keywords.

    JEL classification:

    • N0 - Economic History - - General
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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