Paper short abstract:

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Paper long abstract:

It is broadly accepted that economic inequality matters, but it is not clear what dimensions of inequality matter most. From wage differentials to the wealth gap, differences between regions or within households, absolute or relative inequality, differences between the tails of the distribution, or compared to the average, what should we be most worried about? Importantly, our choice of measures matter for other reasons. Depending on the precise measure of inequality used and the geography and timeframe considered, the gap between the rich and the poor and the direction of change can look very different. The choice of measure profoundly influences perceptions of economic inequality. In this way, institutions selecting the indicators to use can influence how publics understand the nature and extent of inequality and as such, measures are susceptible to the political interests of the institutions from which they emit.

This paper will explore some of the most frequently cited measures for economic inequality, including the indicator proposed for the SDGs , the World Bank's Shared Prosperity measure, and Oxfam's statistics on extreme wealth looking both at their technical qualities as well as the particular perspective of inequality they present and the interests underpinning them. We will also examine the potential of new measures not yet well understood, identifying the most appropriate measure(s) for inequality with respect to having the most relevance for the negative outcomes we are worried about and for informing policy.

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