Inequality Transparency Index
The Inequality Transparency Index is an evolutive and collaborative tool describing the availability and quality of information on income and wealth inequality in a given country.
Why is the access to quality data critical?
The past decades have been witness to important developments in the measurement of income and wealth inequality. However, available information on income and wealth distributions remains particularly scarce across the world. This situation is mostly due to the opacity of the financial system, the types of tools used by statistical administrations to track inequality and sometimes the reluctance of governments to publish data they have in hand. As a consequence, it is particularly difficult to know which groups of the population benefit from economic progress and to build efficient public policies dedicated to the decrease of inequality.
However, having public access to quality data on the distribution of income and wealth is a condition for peaceful and informed debates on economic matters and public policies. In the current digital age, access to basic information on the distribution of income and wealth growth should be considered as a public good. In order to give a sense of the road ahead, the World Inequality Lab has developed, at the occasion of the 2019 Human Development Report and in partnership with the United Nations Development Program, the Inequality transparency index.
Highlights from the Inequality Transparency Index
Best-case scenario: The maximum grade of 20/20 corresponds to an ideal situation where countries would publish yearly distributional accounts on wealth and income with household surveys matching with administrative tax records. This makes it possible to have precise information on income and wealth statistics among all income and wealth groups, including those at the very top, as well as precise information of social and demographic characteristics of the population. As of 2020, we are still very far from this situation and the maximum grade that we find is 16.5/20.
Currently, numerous countries still produce very little data (tax data, in particular is extremely rare). Even in countries which produce yearly data on wealth and income (sometimes including tax data), the quality of this data is far from the ideal 20/20 situation. All countries, including those with high grades in 2020 are still lagging behind basic transparency standards.
In particular, the automatic transmission of banking information in OECD countries has not yet proven to significantly enhance wealth data production. All in all, we are still waiting for OECD countries to produce distributional accounts (see DINA guidelines). In general, inequality data remains completely insufficient as of 2020. Even in countries which obtain the higher grades, there is an urgent need for improvement if we are to obtain precise distributional national accounts.
(as of November 2020)
- 28 countries have a score of “0”, which means that neither survey data nor fiscal data is available in this country. They appear in a striped pattern on the map. For these countries, the best we can do is to estimate their level of inequality via regional imputation, i.e. by assuming that they have a similar level of inequality as countries in the same region and/or with similar average income or political system.
- 8 countries have scores between 13 and 16.5, which are the highest grades given to date: Denmark, Italy, Sweden, Uruguay, France, the United-States, the United Kingdom and Norway. However, each of these countries needs to make a fair amount of progress in order to reach fully transparent inequality statistics. This is particularly true regarding the measurement of inequality of wealth and capital income, for which no country in the world is fully transparent.
How is our income and wealth inequality transparency index constructed?
The Inequality transparency index has 2 objectives:
- The production of an assessment of the state of inequality data availability throughout the world.
- The creation of an incentive for countries to take step in publishing transparent data and allowing easier access for researchers. For the moment, we encounter numerous situations where the data exists but is so hard to access that it is almost unavailable.
The index inequality transparency index ranges from 0 to 20 for each country, and is constructed around two dimensions:
- In the first dimension, we differentiate between four different sources of data: income surveys, income tax data, wealth surveys and wealth tax data.
- In the second dimension, we evaluate various components for each of these sources: quality, frequency of publication and access to the data.
>> Download the technical note 2020/12 for a detailed insight on the construction of the index
>> Download our transparency data table 2020 to understand how the index is calculated
The needed developments in inequality data transparency and availability will require serious efforts by statistical agencies and governments over the world. This is by no means unfeasible. The research community and civil society actors are willing to help authorities go in this direction
- This index is an evolutive tool. If information is released by a country, we will thrive to ensure that the index reflects these changes.
- This is also your index. If you have had access to information that is not reported in our database, do not hesitate to contact us and we will be happy to review the index.
- Any question? Contact firstname.lastname@example.org.
- Burq, F., Chancel, L. (2020). Inequality Transparency Index. World Inequality Lab Technical Note 2020/12.
- Burq, F., Chancel, L. (2020). Transparency data table 2020, World Inequality Lab Data File to Technical Note 2020/12.
- Alvaredo, F. et al. (December 2019). Escaping the Inequality-Data Dark Ages. Project Syndicate.
- Alvaredo, F. et al. (September 7, 2020). Distributional National Accounts Guidelines. Methods and Concepts Used in WID.world.
- United Nations Development Program (2019). Human Development Report.