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Is Inequality Underestimated in Egypt? Evidence from House Prices

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  • Roy van der Weide
  • Christoph Lakner
  • Elena Ianchovichina

Abstract

Household income surveys often fail to capture top incomes, which leads to an underestimation of income inequality. A popular solution is to combine the household survey with data from income tax records, which has been found to result in significant upward corrections of inequality estimates. Unfortunately, tax records are unavailable in many countries, including most of the developing world. In the absence of data from tax records, this study explores the feasibility of using data on house prices to estimate the top tail of the income distribution. In an application to Egypt, where estimates of inequality based on household surveys alone are low by international standards, the study finds strong evidence that inequality is indeed being underestimated by a considerable margin. The Gini index of household per capita income for urban Egypt is found to increase from 39 to 52 after correcting for the missing top tail.

Suggested Citation

  • Roy van der Weide & Christoph Lakner & Elena Ianchovichina, 2018. "Is Inequality Underestimated in Egypt? Evidence from House Prices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(s1), pages 55-79, October.
    • Handle: RePEc:bla:revinw:v:64:y:2018:i:s1:p:s55-s79
    DOI: 10.1111/roiw.12338
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    Cited by:

    1. Branko Milanovic, 2018. "Towards an explanation of inequality in premodern societies: the role of colonies, urbanization, and high population density," Economic History Review, Economic History Society, vol. 71(4), pages 1029-1047, November.
    2. Belaïd, Fateh & Flambard, Véronique, 2023. "Impacts of income poverty and high housing costs on fuel poverty in Egypt: An empirical modeling approach," Energy Policy, Elsevier, vol. 175(C).
    3. Facundo Alvaredo & Lydia Assouad & Thomas Piketty, 2019. "Measuring lnequality in the Middle East 1990–2016: The World’s Most Unequal Region?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(4), pages 685-711, December.
    4. Nora Lustig, 2020. "The ``missing rich'' in household surveys: causes and correction approaches," Working Papers 520, ECINEQ, Society for the Study of Economic Inequality.
    5. Fabio Clementi & Vasco Molini & Francesco Schettino & Haider A. Khan & Michele Fabiani, 2023. "Polarization and its discontents: Morocco before and after the Arab Spring," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(1), pages 105-129, March.
    6. Lydia Assouad & Amory Gethin & Thomas Piketty & Juliet-Nil Uraz, 2021. "Political Cleavages and Social Inequalities in Algeria, Iraq, and Turkey, 1990-2019," Working Papers halshs-03215898, HAL.
    7. Piketty, Thomas & Alvaredo, Facundo & Assouad, Lydia, 2017. "Measuring inequality in the Middle East 1990-2016: The World’s Most Unequal Region?," CEPR Discussion Papers 12405, C.E.P.R. Discussion Papers.
    8. Francesco Savoia & Ioannis Bournakis & Mona Said & Antonio Savoia, 2024. "Regional income inequality in Egypt: evolution and implications for Sustainable Development Goal 10," Oxford Development Studies, Taylor & Francis Journals, vol. 52(1), pages 17-33, January.
    9. Gerton Rongen, 2018. "A new inequality estimate for urban India?: Using house prices to estimate inequality in Mumbai," WIDER Working Paper Series 181, World Institute for Development Economic Research (UNU-WIDER).
    10. Assouad, Lydia, 2023. "Rethinking the Lebanese economic miracle: The extreme concentration of income and wealth in Lebanon, 2005–2014," Journal of Development Economics, Elsevier, vol. 161(C).
    11. Janina Hundenborn & Ingrid Woolard & Jon Jellema, 2019. "The effect of top incomes on inequality in South Africa," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(5), pages 1018-1047, October.
    12. Vladimir Hlasny & Paolo Verme, 2022. "On the ‘Arab Inequality Puzzle’: A Comment," Development and Change, International Institute of Social Studies, vol. 53(2), pages 448-458, March.
    13. Hai‐Anh H. Dang & Peter Lanjouw, 2018. "Inequality trends and dynamics in India: The bird's-eye and the granular perspectives," WIDER Working Paper Series wp-2018-189, World Institute for Development Economic Research (UNU-WIDER).
    14. Gilbert Achcar, 2020. "On the ‘Arab Inequality Puzzle’: The Case of Egypt," Development and Change, International Institute of Social Studies, vol. 51(3), pages 746-770, May.
    15. Ingrid Woolard & Janina Hundenborn & Jon Jellema, 2018. "The effect of top incomes on inequality in South Africa," WIDER Working Paper Series 90, World Institute for Development Economic Research (UNU-WIDER).
    16. Caroline Krafft & Elizabeth E. Davis, 2021. "The Arab inequality puzzle: the role of income sources in Egypt and Tunisia," Middle East Development Journal, Taylor & Francis Journals, vol. 13(1), pages 1-26, January.
    17. Elena Ianchovichina & Lili Mottaghi & Shantayanan Devarajan, "undated". "Middle East and North Africa Economic Monitor, October 2015," World Bank Publications - Reports 22711, The World Bank Group.
    18. Nora Lustig, 2019. "The “Missing Rich” in Household Surveys: Causes and Correction Approaches," Commitment to Equity (CEQ) Working Paper Series 75, Tulane University, Department of Economics.
    19. Channing Arndt & Kristi Mahrt, 2017. "Is inequality underestimated in Mozambique?: Accounting for underreported consumption," WIDER Working Paper Series wp-2017-153, World Institute for Development Economic Research (UNU-WIDER).
    20. Ziad Koussa, 2023. "Revolution, Change, and Democratic Transition in Egypt Since 2011: A Critical Political Economy Approach," Contemporary Review of the Middle East, , vol. 10(2), pages 165-187, June.
    21. Gerton Rongen, 2018. "A new inequality estimate for urban India?: Using house prices to estimate inequality in Mumbai," WIDER Working Paper Series wp-2018-181, World Institute for Development Economic Research (UNU-WIDER).
    22. Channing Arndt & Kristi Mahrt, 2017. "Is inequality underestimated in Mozambique? Accounting for underreported consumption," WIDER Working Paper Series 153, World Institute for Development Economic Research (UNU-WIDER).
    23. Peter Lanjouw & Hai-Anh Dang, 2018. "Inequality trends and dynamics in India: The bird’s-eye and the granular perspectives," WIDER Working Paper Series 189, World Institute for Development Economic Research (UNU-WIDER).

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