`bunchr`: Analyze bunching in a kink or notch setting
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Itai Trilnick
2026-01-25

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The `bunchr` package is meant to help analyze bunching in a labor and
public economics setting. `bunchr` allows easy viewing of bunching
histograms, creation of counter-factual distributions, and estimation of
the elasticity of earnings w.r.t. the net-of-tax rate in **kink** and
**notch** settings. At the time of writing these lines, I am unaware of
any other R package doing so. I hope to keep improving this package so
it is useful to many researchers.

To validate the kink analysis, results from `bunchr` are compared with
an existing *Stata* utility function that was used in a peer reviewed
article by Chetty, Friedman, Olsen, and Pistaferry (see vignette). I am
happy to get comments and references to other codes for bunching
analysis.

Below are a few words about bunching analysis, kinks, and notches. For
more information, references, and examples, please see the package
vignettes.

In many cases, tax and welfare programs have points where incentives
change in such way that people are expected to bunch at one side of
point. For example, people are expected to bunch at the point where
income tax rates increase, creating a **kink** in their budget lines. In
another case, beneficiaries of Social Security Disability Insurance in
the US are not allowed to work and earn above a certain dollar amount,
and those who cross that threshold risk losing all their benefits. This
creates a **notch** in their budget lines, and bunching is expected (and
seen) at that earning level.

**Kinks** and **notches** create opportunities to measure the earning
elasticity w.r.t the net-of-tax rate. This parameter is considered
sufficient statistic for calculating welfare from changes in tax regimes
and welfare programs, and could also be used to devise optimal tax
rates.
