Which statistical test can be used to evaluate horizontal and vertical inequities?

The price-related differential (PRD) is specifically designed to evaluate both horizontal and vertical inequities in property assessments. Horizontal inequity occurs when properties with similar characteristics are assessed differently, leading to unfair treatment among comparable properties. Vertical inequity, on the other hand, occurs when properties of different values are assessed disproportionately, which can distort the equity among different property types or value segments.

PRD serves as an essential statistical tool for measuring these inequities by comparing the relationship between assessed values and sale prices across different property categories. A PRD value of 1.0 indicates fairness, while values above or below this mark suggest the presence of inequities—whether horizontally or vertically. Therefore, employing the PRD allows assessors to identify systemic issues in the appraisal process, making it a valuable metric for ensuring equity in property valuation and assessment practices.

In contrast, options such as range analysis, standard deviation, and median comparison do not directly measure horizontal and vertical inequities. While they provide some information on data distribution and central tendency, they lack the specific focus on assessing property value relationships that is inherent to the PRD.