MONET 2030: Distribution of equivalised disposable income (S80/S20)


SDG 10: Reduce inequality within and among countries

Swiss target 10.4: Inequalities and differences that are no longer justified due to societal trends will be progressively eliminated with future revisions of laws.

Significance of the indicator
The indicator shows the distribution of the equivalised disposable income, i.e. the income after government transfers, e.g. taxes and social benefits. It shows the factor by which the percentage of income of the upper 20% of the population exceeds that of the lowest 20% of the population. The indicator thus shows the income inequality that still exists despite taxes and social transfers. The greater the indicator value, the greater the inequality in the distribution of disposable income. To ensure equality of opportunity and equitable distribution, a reduction in the indicator is pursued for the benefit of sustainable development.

Help for interpretation:
For 2015, the share of disposable income of the upper 20% of the population was around 5 times greater than that of the lowest 20% of the population.

To illustrate the redistribution achieved by government transfers, the present indicator can be considered together with the indicator “distribution of equivalised primary income” that is used to monitor the Swiss target 10.1.

International comparability
Quintile share ratio S80/S20 is an income distribution measure that is used internationally. Due to data availability, the indicator is not comparable at international level.


Tables

Methodology

The indicator shows the quintile share ratio S80/S20 of the equivalised disposable income. Income after government transfers is considered as disposable income. State or state-regulated pensions, social benefits and regular transfers from other households are considered as social transfers/income. State or state-regulated expenditure such as social insurance contributions, taxes,  basic health insurance premiums and regular financial support to other households are considered as transfer expenditure.

The quintile share ratio S80/S20 compares in a given population the share of the income of the richest 20% with that of the income of the poorest 20%. The further the quotient deviates from 1, the greater the inequality of the spread of income between these population groups.

The data come from the Federal Statistical Office’s Household Budget Survey (HBS) that records detailed information on household incomes and consumption.

Definitions

Equivalent income (primary, gross or disposable)
The equivalent (primary, gross or disposable) income is calculated from the (primary, gross or disposable) income of each household divided by the number of persons it consists of by means of the household equivalence scale. In order to take into ac-count economies of scale (a family of four persons does not have to spend four times more than a single person to ensure the same standard of living), a weight of 1.0 is assigned to the oldest person in the household, a weight of 0.5 to all other per-sons aged 14 and above and a weight of 0.3 to each child aged under 14 (these values correspond to the OECD's new equivalence scale); the «equivalence size» of the household is equal to the total values assigned to the people in that household.

Disposable income
The disposable income is calculated by deducting the compulsory expenditure from the gross income. This includes mandatory expenses, such as social security contributions (contributions to retirement and survivors' pensions and disability benefits, company pension schemes etc.) and taxes, health insurance premiums (basic insurance), regular payments to other households (e.g. alimony).

Sources

Targets

Swiss target 10.4: Inequalities and differences that are no longer justified due to societal trends will be progressively eliminated with future revisions of laws.

International target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.

Contact

Federal Statistical Office Section Environment, Sustainable Development, Territory
Espace de l'Europe 10
CH-2010 Neuchâtel
Switzerland

Contact

Remark

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