BusinessCompany NewsLies, damn lies and statistics …

Lies, damn lies and statistics ...

In terms of looking at the official figures for inequality of disposable income for recent years, average income inequality peaked under Mrs (now Lady) Thatcher, declined slightly under John Major then dropped sharply under New Labour.

The above statement which looks plausible, has only one slight problem: it is approaching 100% wrong. Inequality of disposable income is measured by the Office for National Statistics via the so-called ‘gini coefficient’ (GC). This represents inequality on a scale of 0 to 100, with 0 representing total equality and 100 total inequality. The GC averaged 29.9 under Lady Thatcher, 34.1 under John Major and 35.0 in Labour’s first five years to March 2002 (the most recent year for which figures are available).

Thus average inequality of disposable incomes has been one sixth higher under Labour than under Lady Thatcher. Moreover, GC in the year to March 2002 (at 36.0) was the highest on record.

Overall, perhaps chancellor Gordon Brown has not been quite as redistributive as some of his right-wing critics would have us believe; however, I suspect that anyone who points this out is unlikely to be nominated by the Treasury for an OBE!

  • Maurice Fitzpatrick is head of economics at Numerica.

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