Examining assessment equity with the Gini index in Ontario, Canada

Exploring research from the Journal of Property Tax Assessment & Administration, the Municipal Property Assessment Corporation (MPAC), in Ontario, Canada, uses the Gini Index as a complementary tool for measuring property assessment equity. Unlike the traditional measures (CODs, PRB and PRD), Gini Indices calculations do not rely on sales ratios but rather on a ranked cumulative distribution within the values themselves (prices and/or assessment) for its calculation. MPAC tested Gini Indices against current measures of equity for 129 residential market areas and examined the differences with the traditional measures of equity. An advantage of using Gini Indices is that the results are easily decomposable into distributive effects (vertical and horizontal equity measures), subgroup effects (price level or economic neighbourhood group comparison), and factor effects (regression independent variables used in model building). This granular decomposition allows MPAC to track sources of inequalities within market areas. Gini also provides a standard measure of horizontal equity across different market areas, unlike COD which requires different standards for different markets.