TNAG-0606-FCO40-754-Monitoring-progress-made-on-planning-papers-on-Hong-Kong-1977 — Page 96

2

(b)

(c)

income inclusive of bread winners of other

households. There was also a net outward

migration during the taking of the By Census; income of these people would not have been included elsewhere. Taking these factors together, using the 1976 de facto approach has probably resulted in a downward bias to incomes reported. So, in an imperfect attempt to remove the bias, zero income households have been excluded

from the 1976 data in the table in paragraph 1;

income under-reporting inevitably exists in both statistical enquiries. Thus, whether or not the comparison of distribution of income betwen the two years is meaningful depends on whether or not the degree of under-reporting (over time and between households of different income ranges) was such that the percentage distributions shown were seriously affected. We do not know the answer;

inflation between 1971 and 1976 hampers comparison. There is no alternative, but to assume inflation hit each income bracket equally. In support of this the three consumer price indices (one for each of three different income brackets) have not shown

a very wide divergence.

Comparison of income distribution in 1971 and 1976

3. Despite these difficulties, some preliminary work on comparing the income distribution of households in 1971 and 1976

has been done.

4. The Lorenz Curve (which plots the cumulative percentage of incomes against the cumulative percentage of households) for 1976 was hardly distinguishable from the one for 1971 implying that the distribution of income has remained fairly constant. This is also borne out by calculations of the Gini coefficient (which measures the area between a 45° line

and the Lorenz Curve).

The value of a Gini coefficient lies

between 0 and 1 with a higher value signifying larger inequality.

CONFIDENTIAL

/The.....