Policymakers are liable to ‘treasure what is measured’ and overlook phenomena that are not. In an era of increased reliance on administrative data, existing policies also often determine what is measured in the first place. We explore this two-way interaction between measurement and policy in the context of the investment incomes and capital gains that are missing from the UK’s official income statistics. We show that these ‘missing incomes’ change the established picture of economic inequality over the past decade, revealing rising top income shares during the period of austerity. The underestimation of these forms of income in official statistics has hidden the impact of tax policies that disproportionately benefit the wealthiest. We urge a renewed focus on how policy affects and is affected by measurement.

This paper presents new statistical evidence on the long-term evolution of economic inequality in Portugal. Portuguese tax sources have been employed to estimate top income and wealth shares (TIS and TWS) from 1936 onwards. The new series shows that the Second World War had a negative and non-permanent effect on the evolution of TIS, but not on TWS, which increased until the mid 1950s. From the mid 1950s to the early 1980s, there was a sharp decline in TIS and TWS. Finally, during the 1990s, TIS increased again. The reasons behind the Portuguese distributive pattern seem to be more economic than political.