IDEAS home Printed from
   My bibliography  Save this paper

What's Behind the Inequality we Measure: An Investigation Using Latin American Data


  • Miguel Székely
  • Marianne Hilgert


The use of income distribution indicators in the economics literature has increased considerably in recent years. This work relies on household surveys from 18 LAC countries to take a step back from the use of these indicators, and explore what`s behind the numbers, and what information they convey. We find: a) that the way countries rank according to inequality measured in a conventional way is to a large extent an illusion created by differences in characteristics of the data and on the particular ways in which the data is treated; b) Our ideas about the effect of inequality on economic growth are also driven by quality and coverage differences in household surveys and by the way in which the data is treated; c) Standard household surveys in LAC are unable to capture the incomes of the richest sectors of society; so, the inequality we are able to measure is most likely a gross underestimation. Our main conclusion is that there is an important story behind each number. This story influences our judgement about how unequal countries are and about the relation between inequality and other development indicators, but it is seldom told or known. Perhaps other statistics commonly used in economics also have their own interesting story, and it might be worth trying to find out what it is.

Suggested Citation

  • Miguel Székely & Marianne Hilgert, 1999. "What's Behind the Inequality we Measure: An Investigation Using Latin American Data," Research Department Publications 4188, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4188

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-382, May.
    2. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
    3. Cowell, Frank A & Victoria-Feser, Maria-Pia, 1996. "Robustness Properties of Inequality Measures," Econometrica, Econometric Society, vol. 64(1), pages 77-101, January.
    4. Cowell, Frank A & Jenkins, Stephen P, 1995. "How Much Inequality Can We Explain? A Methodology and an Application to the United States," Economic Journal, Royal Economic Society, vol. 105(429), pages 421-430, March.
    5. Lancaster, Geoffrey & Ray, Ranjan & Valenzuela, Maria Rebecca, 1999. "A Cross-Country Study of Equivalence Scales and Expenditure Inequality on Unit Record Household Budget Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(4), pages 455-482, December.
    6. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521438827, March.
    7. Michael Hurd & F. Thomas Juster & James P. Smith, 2004. "Enhancing the Quality of Data on Income: Recent Developments in Survey Methodology," Labor and Demography 0412001, EconWPA.
    8. Atkinson, A B, 1997. "Bringing Income Distribution in from the Cold," Economic Journal, Royal Economic Society, vol. 107(441), pages 297-321, March.
    9. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
    10. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    11. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-1434, November.
    12. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    13. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June.
    14. Anthony Atkinson & Timothy Smeeding & Lee Rainwater, 1994. "Income Distribution in European Countries," LIS Working papers 121, LIS Cross-National Data Center in Luxembourg.
    15. Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
    16. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, March.
    17. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    18. repec:dau:papers:123456789/10091 is not listed on IDEAS
    19. Ravallion, Martin, 1998. "Does aggregation hide the harmful effects of inequality on growth?," Economics Letters, Elsevier, vol. 61(1), pages 73-77, October.
    20. R. D. Plotnick & E. Smolensky & E. Evenhouse & S. Reilly, "undated". "The Twentieth Century Record of Inequality and Poverty in the United States," Institute for Research on Poverty Discussion Papers 1166-98, University of Wisconsin Institute for Research on Poverty.
    21. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    22. Atkinson, A.B. & Brandolini, A., 2000. "Promise and Pitfalls in the Use of 'Secondary' Data -Sets: Income Inequality in OECD Countries," Papers 379, Banca Italia - Servizio di Studi.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, vol. 112(476), pages 51-92, January.
    2. Miguel Székely & Marianne Hilgert, 1999. "Los años 90 en América Latina: otra década de pertinaz desigualdad," Research Department Publications 4191, Inter-American Development Bank, Research Department.
    3. Leonardo Gasparini & Matías Horenstein & Sergio Olivieri, 2006. "Economic Polarisation in Latin America and the Caribbean: What do Household Surveys Tell Us?," CEDLAS, Working Papers 0038, CEDLAS, Universidad Nacional de La Plata.
    4. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
    5. Leonardo Gasparini, 2005. "Income Inequality in Latin America and the Caribbean: Evidence from Household Surveys," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(1-2), pages 29-57, January-D.
    6. Timothy M. Smeeding, 2002. "Globalization, Inequality, and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study (LIS)," Center for Policy Research Working Papers 48, Center for Policy Research, Maxwell School, Syracuse University.
    7. Charlotte Guénard & Sandrine Mesplé-Somps, 2004. "Mesurer les inégalités : que captent réellement les enquêtes ? Analyse de deux enquêtes ivoirienne et malgache," Working Papers DT/2004/13, DIAL (Développement, Institutions et Mondialisation), revised Dec 2004.
    8. Miguel Székely & Marianne Hilgert, 1999. "The 1990s in Latin America: Another Decade of Persistent Inequality," Research Department Publications 4190, Inter-American Development Bank, Research Department.
    9. Morley, Samuel A., 2001. "Distribution and growth in Latin America in an era of structural reform," TMD discussion papers 66, International Food Policy Research Institute (IFPRI).
    10. Christopher Cramer, 2003. "Does inequality cause conflict?," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(4), pages 397-412.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:wpaper:4188. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Felipe Herrera Library). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.