【Russia Amends Gini Coefficient Calculation Method to Advance Poverty Reduction Efforts】

On May 3, the Russian business newspaper Kommersant reported that Russia will adopt a new approach to measuring domestic income inequality: basing calculations on post-tax net income (where lower-income groups pay less tax), while also incorporating regional adjustments for income disparities across the country. The Federal State Statistics Service (Rosstat) officially announced the introduction of the Gini coefficient (index of income concentration) as a supplementary component of the new algorithm. Under the revised standard, Russia’s Gini coefficient for 2025 is calculated at 0.375—significantly lower than the previous estimate of 0.422.

Going forward, the Russian government may use this new data to track progress toward its national goal of narrowing income gaps nationwide—under the old methodology, the set national targets would become increasingly unattainable.

This updated measurement framework effectively reduces the apparent gap between rich and poor in statistical terms.

On April 29, Rosstat announced that it will continue using the traditional classical statistical method while introducing annually a new international standard: post-tax disposable income-based Gini coefficient, adjusted for regional variations in prices and income levels across Russia.

The Gini coefficient, named after Italian demographer Corrado Gini, ranges from 0 to 1: the closer the value approaches 1, the more severe the income polarization and wealth divide within society.

Russia has systematically tracked this indicator since 1995. Under the old methodology, the 2025 Gini coefficient rose sharply from 0.410 in 2024 to a historical high of 0.422—matching only the level observed in 2007 in recorded history. This trend runs completely counter to President Putin’s 2024 presidential decree setting key national economic targets: reducing the Gini coefficient to 0.37 by 2030 and further to 0.33 by 2036.

Russian officials stated that the old calculation method can no longer objectively reflect the current state of household income distribution. The two core factors driving this shift are:

1. Russia’s progressive five-tier personal income tax system, under which higher earners bear heavier tax burdens;

2. The newly implemented family tax deduction policy, which refunds personal income taxes for low-income working families with multiple children, thereby adjusting actual net income.

Olga Zolotareva, Director of the Center for Demography and Statistics at the Institute of Economic Strategy, explained that the new algorithm enables an objective assessment of the real impact of the state’s tax redistribution policies, while simultaneously eliminating distortions caused by regional price differences in income statistics.

Experts at the Presidential Academy of National Economy and Public Administration noted that measuring post-tax disposable income is the globally dominant standard used by Eurostat and the World Bank, offering international comparability.

In addition to Rosstat’s new figure of 0.375, Sberbank, leveraging data from the Higher School of Economics’ Living Standards Monitoring Program, independently estimated the Gini coefficient at approximately 0.3. Both new sets of figures have rekindled optimism among Russian authorities regarding achieving their national goal of reducing income inequality.

The new standard is likely to become Russia’s official primary metric for assessing income disparity in the future. The Ministry of Labor revealed that originally established national target thresholds based on the old algorithm will be similarly revised and adjusted specifically.

Russian academia also pointed out inherent limitations. Darya Medvedenikova, Deputy Researcher at the Presidential Academy’s Spatial Analysis Department, argued that even with improved algorithms, it remains impossible to fully capture the true extent of income inequality—Russia still harbors vast amounts of gray, unreported, and hidden cash income. While official estimates attempt to adjust for such income, precise quantification remains extremely difficult.

Micro-commentary

The old statistics showed Russia’s income inequality reaching a multi-year high, crossing the nation’s pre-set red line. Thus, Russia’s alignment with international standards—adding post-tax real disposable income measurements alongside regional price corrections—is essentially an optimization of statistical methodology, not a sudden improvement in economic fundamentals.

The old data made the 2030 and 2036 targets seem unattainable. The newly “refined” figures now align better with expectations, making them suitable for official performance evaluations and macroeconomic external reporting. The old algorithm will remain in place solely for historical longitudinal comparison.

Russia’s shadow economy and massive volume of informal cash income mean even the most sophisticated models cannot fully account for them. Consequently, the new coefficient will still underestimate the true scale of social wealth inequality.

Original article: toutiao.com/article/1864237800009728/

Disclaimer: The views expressed in this article are those of the author(s) alone.