Working Paper: NBER ID: w24177
Authors: Martin Ravallion
Abstract: Current global inequality measures assume that national-mean income does not matter to economic welfare at given household income, as measured in surveys. The paper questions that assumption on theoretical and empirical grounds and finds that prominent stylized facts about global inequality are not robust. At one extreme, theories of relative deprivation yield a nationalistic measure whereby global inequality is average within-country inequality, which is rising. Other theories and evidence point instead to an intrinsic value to living in a richer country. Then parameter values consistent with subjective wellbeing imply far higher global inequality than prevailing measures, though falling since 1990.
Keywords: Global Inequality; National Income; Economic Welfare; Relative Deprivation
JEL Codes: D3; D6; I3; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher national income (H59) | individual welfare (I30) |
| Higher national income (H59) | individual welfare (negative effect through relative deprivation) (D63) |
| Higher national income (H59) | individual welfare (positive effect through better public services) (I38) |
| Higher national income (H59) | individual welfare (net positive impact) (D60) |