'The rich get richer and the poor get poorer' is a common catchphrase that is often evoked in discussions about economic inequality. However, is this a true reflection of reality or just a widely held belief that is taken at face value? How do we tell?
It would probably take a few months to fully investigate all the factors that play a role in the complex issue of wealth concentration and to formulate a solid argument which could withstand full academic scrutiny.
However, as often happens in real life, we rarely have the necessary resources at our disposal, or the time, to do extensive research to get to the bottom of the issues we encounter. Therefore, a credible, quickly-determinable clue as to what that answer may be, and which allows us to make a more informed decision, is very often the most practical approach.
Map Deck's newly released Thematic Mapper app - with a unique in-map analytics functionality - offers everyone, even the most novice users, a simple solution that can aid in the search for answers to complex questions. Let’s explore how…
To begin our analysis we need information on the wealth of individuals, as well as statistics on how that wealth is changing over time.
Data on taxable incomes for postcodes for 2003–04 and 2013–14 income years, published by the Australian Taxation Office (ATO) and available for free perusal with MapDeck apps, is a good proxy. This information will give us an opportunity to test whether this widely held belief about rich getting always richer holds true in a spatial context. And in the process, we will also demonstrate how simple mapping tools can provide a reasonable answer - and quickly.
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| Distribution of taxable incomes (deciles) by postal areas - Adelaide [click to enlarge] |
The objective here is to test if top taxable incomes grow consistently at or above the growth rate of taxable incomes of the entire population of Australian taxpayers.
If yes, then this would indicate that wealth of the richest individuals is increasing faster than wealth of the rest of the population and consequently, that poorer people are becoming relatively poorer over time. This is a simple argument but proving or disproving it will be enough to give us a strong clue as to the likely conclusions that would be obtained from more thorough research.
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| Change in taxable incomes over a decade to 2013-14 - Adelaide [click to enlarge] |
It is always a good idea to clearly articulate assumptions and to identify limitations of the data you work with as it is not always possible to have the best and the most accurate information on hand for analysis.
In this case, for example, we defined “the rich” as taxpayers residing in postcodes with median taxable incomes in the top 10% in 2003-4 and in 2013-14.
The limitation of this approach is that we are looking only at the incomes and not the overall wealth of individuals. However, taxable incomes are a reasonable proxy for wealth. That is, wealth usually generates an income stream and even if only a part of that income is attributable to an individual, for example, due to the use of various tax minimisation schemes, growing wealth will be reflected in the growth of taxable incomes of those individuals.
We also assume here that residents of any given postcode are all alike which is an oversimplification but not an unreasonable one. In particular, it is true that postcodes comprise of populations with varying demographic and socio-economic status but summarising their collective characteristics into a single measure is an acceptable practice in data analysis. Therefore, a change in median taxable income for a postcode is a good representation of the change in wealth of its residents.
More of an issue is the fact that we are assuming that the 2016 postcode boundaries are exactly the same as those in 2013-14 and in 2003-04. However, yet again, this is a reasonable assumption since postcodes with the top taxable incomes are predominantly in capital cities and capital city postcodes remain relatively stable over time.
More assumptions and caveats could be listed but the main point here is the importance of being aware of the limitation of the data you are working with. It applies to any data and information, not only to that with spatial context.
It takes just a few moments to set up a map ready for analysis using MapDeck’s Thematic Mapper app. Firstly, we select and import into Thematic Mapper the postcode boundaries and ATO data, then join them using the data mixer functionality.
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| Thematic Mapper: data mixer |
We are interested in only 3 columns from the newly created table: the median taxable incomes for both 2003-4 and 2013-14, and the percent growth of median taxable incomes over the 10 year period. The information on the number of individual taxpayers per postcode is included just for context.
Selecting the “complex legend” option enables advanced data filtering functionality in Thematic Mapper. We set taxable income values to show the top 10% range only (these values are calculated and can be looked up when setting up legend styles for individual data sets from our table).
The last step is to remove empty postcodes from the map (that is, those with no data) and to import a map overlay showing main roads and localities to give our map additional spatial context (the Stamen’s Hybrid layer in this case).
Let’s now review the map, summarise the data and draw some conclusions.
From the map legend we know that:
- Top deciles of median taxable income were $33,503 to $68,017 in 2003-4 and $51,128 to $113,687 in 2013-14;
- Median taxable incomes for individual postcodes grew between 7% and 257% over a decade to 2013-14;
- Median growth in median taxable incomes was 50% (that is, in half of postcodes, median taxable incomes grew by less than 50% in the 10 year period and in the other half the growth was equal to, or greater than, 50% - therefore the 50% growth rate can be used as a national benchmark for further comparisons).
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| Growth in median taxable incomes 2003-04 to 2013-14, top income decile - Perth [click to enlarge] |
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| Growth in median taxable incomes 2003-04 to 2013-14, top income decile - Sydney [click to enlarge] |
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| Growth in median taxable incomes 2003-04 to 2013-14, top income decile - Melbourne [click to enlarge] |
In other words, our data and simple in-map analysis indicate that some rich neighbourhoods grew their incomes at less than the national median rate, hence getting relatively ''poorer'' over time with respect to the rest of the population.
Of course, this is only a clue as to what conclusions may possibly be drawn from more thorough research. However, the point is that is takes very little effort to conduct this kind of analysis using MapDeck’s online app and huge range of available data. This approach is not suited for all situations but it can provide valuable insight, and fast, to adequately support many important every day decisions.
Median Taxable Incomes, Australia 2003-4 and 2013-14 map and ATO data table used in this case study are available for free perusal for registered MapDeck users.
And for a limited time, all MapDeck users have the opportunity to try Thematic Mapper at no cost. The app is available for a free one month subscription until 20 December.
So, what is the big issue you would like to explore next? Use this invite code to sign up if you are not yet MapDeck user: f10dc1f2
About MapDeck:
MapDeck is an online marketplace for spatial information and simple-to-use, task-oriented tools to support a variety of activities, be it business or investment related, environment, community or policy focused.
We make spatial information and analysis ready data accessible to all. Locate, map, act!
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