Fact Check
Minister of Housing, Construction and Cultural Affairs Sajith Premadasa quantifies the seriousness of the income disparity in Sri Lanka by citing the income difference between the highest (richest) and lowest (poorest) income quintiles in country. He cites their respective income shares as 54% and 4% respectively.
The standard economic statistic used to quantify the inequality between the highest and lowest income quintiles is called the income quintile ratio (IQR) – see below for an explanation. On the numbers cited by the Minister the IQR is 13.5 (computed as 54/4). These numbers also show a 50% gap in the income share between the highest and lowest quintiles (computed as 54 – 4).
FactCheck assessed the minister’s claim against the latest income statistics in the Household Income and Expenditure Surveys (HIES) of Sri Lanka. Exhibit 1 shows an analysis of the Ministers numbers against both the IQR and the gap in income share.
1. Income Quintile Ratio (IQR): The ‘income quintile ratio’ (also known as the 20:20 ratio) calculates the income share of the highest quintile as a ratio of the income share of the lowest quintile. According to the data for 2016 (the latest available HIES), the IQR is 10.6. This means that the richest 20% of households in Sri Lanka enjoys 10.6 times the income of the poorest 20% of households, and not 13.5 times as the minister’s claim implies. .
2. Gap in Income Share: We calculated this as the simple difference between the income share of the highest and lowest quintiles. In 2016, this gap was 46%, and not 50%, as suggested by the minister’s statement. This is because the statistics cited by the Minister differ from the latest income shares reported for the highest and lowest quintiles (by approximately 6 and 17 percent). However, past HIES statistics of 2009/10 and 2006/07 align closely with the minister’s claim (see Exhibit 1).
The direction of the errors in both numbers cited by the Minister serve to amplify the total error of the income disparity that is highlighted by his statement. That is, they underestimate the income share of the poorest quintile and overestimate the income share of the richest quintile.
By possibly drawing on statistics that are outdate, Minister Premadasa significantly overstates the income disparity in Sri Lanka. Therefore, we classify his statement as FALSE.
Note: The Minister’s statement is ambiguous on whether he is referring to the quintiles in terms of households or individuals (because household size varies, the two statistics are not equivalent). We have interpreted it to mean households, as that statistic is closest to his claim.
*FactCheck’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck will revisit the assessment.
Exhibit 1: Household income statistics (2006/07 – 2016)
Sources
- Department of Census and Statistics, Household Income and Expenditure Survey 2006/07, Page VII, available at: http://www.statistics.gov.lk/HIES/HIES2006_07Website/Publications/HIES200607Final%20ReportWeb%20.pdf
- Department of Census and Statistics, Household Income and Expenditure Survey 2006/07, Table 2.2, available at: http://www.statistics.gov.lk/HIES/HIES2006_07Website/Publications/HIES200607Final%20ReportWeb%20.pdf
- Department of Census and Statistics, Household Income and Expenditure Survey 2009/10, Page VII, available at: http://www.statistics.gov.lk/HIES/HIES2009_10FinalReportEng.pdf
- Department of Census and Statistics, Household Income and Expenditure Survey 2009/10, Table 2.2, available at: http://www.statistics.gov.lk/HIES/HIES2009_10FinalReportEng.pdf
- Department of Census and Statistics, Household Income and Expenditure Survey 2012/13, Page VII, available at: http://www.statistics.gov.lk/HIES/HIES2012_13FinalReport.pdf
- Department of Census and Statistics, Household Income and Expenditure Survey 2012/13, Table 2.2, available at: http://www.statistics.gov.lk/HIES/HIES2012_13FinalReport.pdf
- Department of Census and Statistics, Household Income and Expenditure Survey 2016 (2018), Page VII, available at: http://www.statistics.gov.lk/HIES/HIES2016/HIES2016_FinalReport.pdf
- Department of Census and Statistics, Household Income and Expenditure Survey 2016 (2018), Table 2.2, available at: http://www.statistics.gov.lk/HIES/HIES2016/HIES2016_FinalReport.pdf
- [last accessed: 2 October 2019]